Do I need to charge Texas sales tax on an invoice when I deliver goods to a customs broker or deliver them myself for export into Mexico?

Plain-English summary

A retailer worried about having to add Texas sales tax to every invoice sent to Mexican customers, because Mexican import duties are calculated on the full invoice amount, including the Texas sales tax, even when that tax is later refunded. The retailer had understood that delivering the goods personally, or handing them off to a customs broker, still required charging tax on the invoice.

The Comptroller's office corrected that understanding: you do not need to add Texas sales tax to the invoice if you deliver the item to a customs broker for delivery into Mexico, or if you deliver the item into Mexico yourself. In both situations you know the goods are headed to Mexico, but the law still requires proof that the goods were actually exported. That proof comes from the customs broker — either the bill of lading from the common carrier the broker used, or the broker's own certification that the goods were exported.

The rule is different when a customer picks up or receives the goods in Texas (including delivery to the customer's own Texas warehouse). In that case, the retailer must collect the tax up front and can only refund it once the customer provides proof the goods were later exported. If the retailer skips charging tax on such a Texas delivery and the customer never provides export proof, the retailer bears the risk of owing the tax. But if tax wasn't charged and proof of export does show up later, the Comptroller's office says it will not assess tax on that sale.

What this means for you

Retailers and exporters selling to Mexican customers

If you deliver goods directly into Mexico, or hand them to a customs broker who will move them into Mexico, you can leave Texas sales tax off the invoice — as long as you obtain and keep proof of export (the broker's bill of lading or export certification). This avoids stacking Texas sales tax into the base on which Mexican import duty is calculated.

Businesses delivering to customers within Texas

If the customer takes possession in Texas — even at their own Texas warehouse — you must still charge the tax at the time of sale. You can only refund it later if the customer supplies proof the goods were subsequently exported. Leaving tax off such an invoice without that proof puts you at risk of owing the tax yourself.

Common questions

Q: Do I need to charge sales tax if I ship goods to a customs broker who will move them into Mexico?
A: No, as long as you obtain proof of export from the broker — either the bill of lading of the common carrier used, or the broker's certification that the goods were exported.

Q: What if I deliver the goods into Mexico myself?
A: Same answer — no need to add the tax to the invoice, provided you keep proof of the export.

Q: What if my Mexican customer picks up the goods at my Texas location or at their own Texas warehouse?
A: That is a Texas delivery, so you must charge the tax at the time of sale. You can only refund it if the customer later provides proof the goods were exported.

Q: What happens if I don't charge the tax and the customer never proves export?
A: You remain at risk for the tax. Conversely, if you didn't charge tax and proof of export is later provided, the Comptroller's office will not set up tax on that sale.

Citations and references

No statutes or rules are cited in this 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/9303968L

Original ruling text

March 10, 1993

Dear **:

During your meet last Thursday with the Comptroller, you expressed your
concerns about having to add tax to all your invoices to Mexican customers. You
are worried about losing customers because of this requirement. When items are
imported into Mexico, import duties are placed on the entire charge including
the Texas sales tax, even if the tax is ultimately refunded. You had been told
that if you deliver the goods to the customer yourself or deliver them to a
customs broker, you still must charge the tax on the invoice. I am happy to
tell you that you need not add the Texas sales tax to an invoice if you deliver
the item to a customs broker for delivery into Mexico or if you deliver the
item yourself.

In both cases, you know the items will enter Mexico. However, the statute does
require that you keep proof that the goods actually were exported. So you must
obtain from the customs broker the bill of lading of the common carrier used by
the broker or the brokers' certification that the goods were exported.

When you deliver items to a customer in Texas, you must collect the sales tax
and may only refund it if the customer presents proof that the items were
subsequently exported. This would include deliveries to warehouses in Texas
owned by your customers. Should you fail to include the tax on your invoice,
you will be at risk should the customer fail to subsequently provide you proof
of export. However, should you not include the tax and proof of export is
subsequently provided to you, we will not set up tax on the sale.

Should you have any further questions, please feel free to call me at
1-800-531-5441, extension 3-4004.

Sincerely,

Wade Anderson
Assistant Director Tax Administration