Did a Texas seller need a separate exemption certificate when a government agency supplied an official purchase order or state voucher?

Plain-English summary

The requester asked what a seller needed to document tax-free sales to exempt entities such as public schools.

The Comptroller said an official purchase order from a federal, state, city, or county government agency was sufficient proof of exempt status, so a separate exemption certificate was not required. State of Texas purchase vouchers already printed the exemption-certificate information. One of those forms of documentation was required, but duplicating the same information was unnecessary.

Sellers still had to maintain resale or exemption documentation in their records for taxable items sold without collecting tax. The exempt entity should provide the documentation at the time of purchase, and a seller retained the choice to accept or reject a resale or exemption certificate.

What this means for you

The letter avoided duplicate paperwork, not documentation altogether. Sellers needed a qualifying government purchase order, state voucher, or other necessary exemption record in their files.

Common questions

Was a separate exemption certificate required with an official government purchase order? No.

Did a State of Texas voucher supply exemption information? Yes.

Did the seller still need records supporting the untaxed sale? Yes.

Could a seller reject a resale or exemption certificate? Yes; the letter called acceptance the seller's prerogative.

Citations and references

• The letter did not cite a numbered statute, regulation, or case.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9105L1107G04

Original ruling text

May 8, 1991

Dear ***:

Thank you for your recent letter regarding sales made to exempt entities
such as public schools.

As official purchase order issued by a federal, state, city or county
government agency is sufficient proof of the entity's exempt status, and an
exemption certificate is not required. The exemption certificate information is
printed on the State of Texas purchase vouchers. One or the other is required,
and because the purchase order contains the exemption certificate information,
it becomes a duplicated effort to provide an exemption certificate.

Sellers are required to maintain in their records resale and/or exemption
certificates in order to qualify sales of taxable items where no tax was
collected. An exempt entity should provide the necessary documentation to the
vendor at the time of purchase.

It is a seller's prerogative whether to accept or reject a resale or
exemption certificate.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, you may call me toll
free at 1-800-531-5441, extension 5-0330. The regular number is 512/463-4600,
or write Tax Administration Division.

Sincerely,

Bettie U. Peterson
Tax Administration Division