Could a buyer purchasing goods only for export outside the United States obtain a Texas permit and use resale certificates?

Plain-English summary

A buyer acquired goods in Texas only after securing a foreign customer and immediately shipped the goods outside the United States without storing them in Texas. The buyer asked for a Texas sales-tax permit.

The Comptroller refused. The letter said a 1969 legislative change excluded sales outside the United States and its possessions from the definition of a sale for resale. The buyer therefore could not use a resale certificate for export-only purchases, and issuing a permit would invite improper use of a permit number.

Instead, the buyer had to give vendors proof of export. The letter listed a bill of lading from a licensed and certificated carrier, a customs broker's certificate, destination-country entry documents, or a bill of lading supported by a freight forwarder's receipt.

A vendor could collect tax and refund it after receiving proof, or agree not to collect tax on the understanding that proof would follow. The letter treated that timing as a matter for private negotiation between buyer and vendor.

What this means for you

Export buyers

Under this historical letter, export documentation—not a resale certificate—supported tax-free treatment when goods were bought solely for sale outside the United States and its possessions.

Texas vendors

Decide how to manage documentary risk. The source allowed either collecting and later refunding tax or waiting for promised export proof, subject to the parties' agreement.

Common questions

Could the export buyer obtain a Texas permit for these purchases? No.

Could it issue resale certificates? No, because the letter said export sales were outside the resale definition.

What proof of export did the letter accept? Specified carrier bills of lading, a customs broker's certificate, destination entry documents, or a bill of lading backed by a freight forwarder's receipt.

Could a vendor collect tax first? Yes, and refund it when the export documents arrived.

Citations and references

The letter referred to a 1969 legislative amendment and an attached export rule but gave no bill, Code section, or rule number.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9202L1161G14

Original ruling text

February 14, l992

Dear **:

***** talked to me concerning your obtaining a sales
tax permit. Because you only purchase property for export out of the United
States, we can not issue you a permit. In l969, the Legislature amended the
definition of "sale for resale" to exclude sales outside the United State and
its possessions. Therefore, a resale certificate cannot be given for items
purchased for sale outside the United States. This being the case, issuing you
a sales tax permit could only result in your violating the sales tax act any
time you gave a vendor your permit number on resale certificate instead of
paying tax.

The proper way to handle your purchases and avoid the payment
of Texas tax is to give the vendor proof of export for the goods. This proof
may be either a bill of lading from a licensed and certificated carrier, a
customer brokers' certificate, entry documents from the country of
destination, or a bill of lading supported by a freight forwarder's receipt.
The requirement are more fully set out in the attached rule.

As I understand your method of doing business, you already
have a foreign customer before purchasing good. Once the items are purchased,
they are immediately shipped to the customer and are not stored in Texas. The
vendor may either collect tax and then refund it when you provide the proof of
export documents or agree not to collect tax upon the understanding the
documents will be provided. Some vendors will insist on collecting the tax and
then refunding it in order to avoid any risk of proof not being provided.
However, this is a matter of private negotiation.

I hope this satisfactorily answers your inquiry.

Sincerely,

Wade Anderson
Assistant Director
Tax Administration