Could a foreign retailer buy auto parts tax-free in Texas for resale in El Salvador using a Texas resale certificate?

Plain-English summary

A foreign retailer wanted a Texas sales-tax permit so it could buy auto parts tax-free for resale in El Salvador. The Comptroller refused.

The letter said Texas's resale treatment applied only when the purchased items would be resold within the geographical limits of the United States, its territories, or possessions. Resale in El Salvador therefore did not support a Texas resale certificate.

The supplier did not have to collect Texas tax if it shipped the parts out of the country. If the foreign retailer picked them up in Texas, it had to pay tax and then provide acceptable proof of export to the supplier to receive a refund on the exported items.

What this means for you

The delivery method controlled the immediate collection result. Direct foreign shipment by the Texas supplier avoided collection, while a Texas pickup required payment first and documented export before a refund.

Common questions

Could the foreign retailer get a permit solely for these purchases? No.

What if the Texas supplier shipped the parts abroad? The supplier was not required to collect Texas tax.

What if the buyer picked up the parts in Texas? The buyer paid tax and later supplied proof of export for a refund.

Citations and references

• 34 Tex. Admin. Code Rule 3.285(a) — resale certificates
• 34 Tex. Admin. Code Rule 3.323(c) — acceptable proof of export

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9106L1113G09

Original ruling text

June 5, 1991

Dear ***:

Thank you for your letter of May 22, 1991, requesting permission to
purchase auto parts tax free in Texas for resale in El Salvador.

We cannot issue a Texas sales tax permit to you for the purpose of
buying items tax free for resale in El Salvador. Please refer to section (a)
of the enclosed Rule 3.285 on resale certificates. Texas tax law exempts sales
for resale only if the items purchased will be resold with the geographical
limits of the United States, its territories and possessions.

There is one way to buy the auto parts without paying Texas sales tax to
your suppliers. The supplier is not required to collect the tax if the
supplier ships the parts out of the country.

If you pick up the parts in Texas, you will be required to pay Texas
sales tax at the time of purchase. You will then be required to provide proof
of export to the supplier to receive a refund of the Texas tax that you paid on
exported items. Section (C) of Rule 3.323-Imports and Exports lists acceptable
proof of export.

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

Please feel free to contact me if you have any additional questions. You
may write me, call toll free 1-800-252-5555 from anywhere in the United States
or phone 512/463-4600.

Sincerely,

Julie Pesl
Tax Administration Division