Could a Mexican farmer use Texas's agricultural exemption certificate to buy qualifying veterinary supplies tax-free?

Plain-English summary

A veterinary-supply seller asked whether Mexican farmers and ranchers had to pay Texas sales tax on purchases that would qualify for agricultural exemption when bought by a Texas farmer.

The Comptroller said the statute did not distinguish between U.S. and Mexican farmers. An item that a Texas farmer could buy tax-free with an exemption certificate also could be sold tax-free to a Mexican farmer using an exemption certificate.

When a Mexican customer had to pay tax, the customer could prove export and request a refund under Rule 3.323. STAR now alerts readers that H.B. 268 added a registration-number requirement for certain agricultural and timber exemptions effective January 1, 2012.

What this means for you

Foreign residence did not disqualify the customer under this letter; the item still had to qualify for the agricultural exemption and the required documentation had to be supplied.

Common questions

Did the agricultural exemption apply only to Texas farmers? No.

Could any item be purchased tax-free? No, only an item that qualified for tax-free sale to a Texas farmer.

What if the Mexican customer paid tax? The customer could use the export proof and refund procedures in Rule 3.323.

Is there a later registration requirement? Yes, effective January 1, 2012 according to STAR's H.B. 268 alert.

Citations and references

• 34 Tex. Admin. Code Rule 3.296 — agricultural exemption rule enclosed with the letter
• 34 Tex. Admin. Code Rule 3.323 — export and refund procedure cited by the letter
• H.B. 268, 82nd Regular Legislative Session (2011) — later registration-number requirement described in STAR's alert

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9105L1107F11

Original ruling text

ALERT: This document may be affected by changes to the Tax Code which was amended by H.B. 268, 82nd Reg. Legislative Session, 2011. The amendment required persons claiming a sales tax exemption for certain agricultural and timber products to apply for and provide a registration number issued by the Comptroller, effective 01/01/2012.

May 2, 1991

Dear ****:

I just want to take a minute to follow up our phone conversation with a
written response.

As I understand it, you sell veterinary supplies primarily to farmers and
ranchers. These individuals may be in the U.S. or in Mexico. You asked about
charging tax to your Mexican customers.

The sales tax statute does not distinguish between farmers in the U. S.
and those in Mexico. Any item that may be sold tax free on an exemption
certificate to a Texas farmer may be sold tax free on an exemption certificate
to a Mexican farmer. I am enclosing a copy of rule 3.296 and a sample
exemption certificate for your files.

Mexican customers who are required to pay tax on their purchases may
prove export and request a tax refund by following the procedures in the
enclosed rule 3.323.

This opinion is based on the facts you presented. Other facts, though
similar, may yield different results.

If you have questions or need more information, please call our toll-free
number 1-800-531-5441. My direct line number is 512463-4680 (FAX (512)
475-0900). You may write to me in care of Tax Administration Division.

Sincerely,

Al Van Allen
Tax Administration Division