Could a Texas purchaser use wholly electronic purchase orders to claim resale, exemption, or direct-payment treatment?

Plain-English summary

The requester wanted to use electronic purchase orders to claim resale, exemption, and direct-payment treatment. The Comptroller said the sales-tax law and rules required those certificates to be signed, so a wholly electronic exemption-documentation system was not acceptable.

The approved approach was to keep a traditional signed certificate meeting Rule 3.287 or 3.288 on file with the seller. Later paper or electronic purchase orders could then claim the appropriate exemption and refer to the existing certificate.

What this means for you

The 1991 letter allowed electronic transaction documents to work with, but not replace, the signed exemption certificate on file.

Common questions

Could an electronic purchase order alone document the exemption? No.

Could electronic orders be used after a signed certificate was filed? Yes.

Citations and references

• 34 Tex. Admin. Code Rules 3.287 and 3.288 — certificate requirements 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/9107L1126F12

Original ruling text

July 25, 1991

Dear **:

I hope this letter will satisfactorily resolve the questions raised in
our meeting concerning CORP ABC's use of electronic purchase orders.

As I pointed out to ** in our earlier correspondence on this
matter, both the sales tax act and our rules require that resale
certificates be signed. There is a like requirement for exemption
certificates, including direct payment exemption certificates.

For, this reason we are still unable to agree to the use of a wholly
electronic system for claiming and documenting an exemption. However,
we believe the procedure discussed in our conference will- satisfy the
statutory requirements, and be acceptable for CORP ABC's purposes as
well.

The concept is that there must be on file with the seller a traditional
signed resale or exemption certificate that meets the requirements
prescribed in our rule 3.287 or 3.288 (34 Tex. Admin. Code Sections 3.287
and 3.288). Based on that document, purchase orders, whether issued in
written form or electronically, would simply claim the appropriate
exemption and refer to the existing certificate.

I trust this answers your questions and meets your needs. If you have
further questions, we will be glad to work with you.

Sincerely,

Martin Cherry
Chief, General Law Section