Can a Texas vehicle-accessory installer refund sales tax when installed parts leave Texas in a vehicle driven to Mexico?

Plain-English summary

The Comptroller said the installer should not refund Texas sales tax on vehicle parts and materials installed in Texas before the vehicle was driven to Mexico.

The customers were Mexican nationals with Mexican-plated vehicles, and they could obtain proof of export from a customs broker. That did not change the result. The letter said goods purchased in Texas had to be shipped directly outside the state before any use in Texas to qualify for an export refund. Installation on the vehicles occurred in Texas, so the goods did not meet that condition.

What this means for you

Vehicle repair and accessory businesses

Do not treat a transaction as an exempt export merely because the customer later drives the finished vehicle out of Texas. Under this letter, installing the item in Texas is a Texas use before export.

Cross-border customers

Foreign license plates and customs-broker proof that a vehicle later crossed the border were not enough to support a refund on parts already installed in Texas.

Common questions

Did the customer qualify for a refund after driving the vehicle to Mexico? No.

Did proof of export from a customs broker change the result? No. The letter required direct shipment outside Texas before any Texas use.

What products did the business install? The letter listed vinyl tops, luggage racks, pinstripes, rocker panels, gold packages, electric sunroofs, alarms, and window tint as examples.

Citations and references

The letter states the export condition but does not cite a specific statute or administrative rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9201L1155C13

Original ruling text

January 30, 1992

Dear **:

This is in response to your letter asking about refunding sales
tax on parts and materials installed on motor vehicles that are
driven into Mexico after the work is completed.

Your business installs on motor vehicles items such as vinyl tops,
luggage racks, pinstripes, rocker panels, gold packages, electric
sunroofs, alarms, window tint, etc.

Your business is located close to the Mexican border and many of
your customers are Mexican nationals and their vehicles have
Mexican license plates.

Sales tax should not be refunded on parts and materials installed
on vehicles in Texas that are subsequently driven across the
border into Mexico and the owner obtains proof of export from a
customs broker.

Goods purchased in Texas must be shipped directly outside the
state prior to any use in Texas in order to qualify for a refund
from tax as an export.

This opinion is based on the facts that you presented. Different facts,
though similar, might lead to different answers. If you have any
questions, feel free to write or call me at 1-800-252-5555,
extension 5-0330, or 512/463-4600.

Sincerely,

Bettie Peterson
Tax Administration Division