Could a retailer accept an exemption certificate from a property manager buying for the FDIC or RTC without receiving the title and agency documents?

Plain-English summary

A retailer sold office supplies to apartments managed by a company acting for the Resolution Trust Corporation. An earlier June 10 letter required the retailer to receive both an exemption certificate and documentation showing the RTC's ownership and the manager's agency authority.

The June 25 letter relaxed that documentation policy. The retailer could accept an exemption certificate stating that the purchases were made by or for the RTC or FDIC, signed by either the management company or the FDIC/RTC. The management company still had to keep title-transfer documentation and a written agency agreement for audit, but it no longer had to give copies to the retailer with the certificate.

The retailer could also issue refunds based on the exemption certificate alone.

What this means for you

Under this 1991 policy, the seller's file could consist of the exemption certificate, while the purchasing agent retained the supporting ownership and agency records. The exemption depended on the FDIC or RTC owning the managed property and authorizing the manager to buy on its behalf.

Common questions

Who could sign the exemption certificate? Either the management company or the FDIC/RTC.

What records did the management company have to retain? Proof that title had transferred to the FDIC/RTC and a written agreement designating the manager as purchasing agent.

Did the retailer need copies of those records? Not under the revised June 25 policy.

Could the retailer refund tax based only on the certificate? Yes.

Citations and references

• No statute or administrative rule was cited in the letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9106L1116G03

Original ruling text

June 25, 1991

Dear ***:

On June 10, 1991 I sent you a letter discussing what documentation to get
along with an exemption certificate from apartments managed by a management
company acting on behalf of the Resolution Trust Corporation (RTC). We have
slightly changed our policy so that you may now accept an exemption
certificate from a management company that states that the items being
purchased are made by or for the RTC (or the FDIC); the certificate may be
signed by either the management company or the FDIC/RTC. The management
company is being required to keep on hand, in case of audit, the following,
but we no longer ask that copies be given to the retailer along with the
certificate.

1. documentation from the FDIC/RTC showing that title to the property
   being managed has actually been transferred to the FDIC/RTC, and

2. a written agreement between the FDIC/RTC and the management company that
   designates the management company as the FDIC/RTC's agent and authorizes the
   management company to make purchases on its behalf.

You may also give refunds on the basis of an exemption certificate alone.

I hope that this makes it easier to deal with accounts involving the
FDIC/RTC, and I further hope that we haven't inconvenienced you too much
by changing the policy.

If I may be of further assistance please do not hesitate to write or call
me at 1-800-531-5441, ext. 3-4677 or 512-463-4677.

Sincerely,

Lucy Glover
Manager, Tax Administration

June 10, 1991

Dear **:

As I understand it, you are selling office supplies to the ABC Apartments.
These apartments are managed by a management company acting on behalf of
the Resolution Trust Corporation (RTC).

You may accept an exemption certificate signed by either the RTC or the
Management Company if you also get the following:

• documentation showing when the property's title was transferred to the
  RTC

• a copy of the agency agreement between the RTC and the management
  company.

This policy also applies to sales to the FDIC.

If I may be of further assistance please do not hesitate to write or call
me at 1-800-531-5441, ext. 3-4677 or 512-463-4677.

Sincerely,

Lucy Glover
Manager, Tax Administration