Can a freight forwarder's bill of lading and receipt serve as proof of export for a Texas sales tax exemption, even if the buyer's name isn't on the bill of lading?

Plain-English summary

A freight forwarder wrote to the Comptroller asking how to properly document export sales so its retailer clients could support a sales tax exemption. The forwarder explained it could give sellers a bill of lading plus a receipt showing it took possession of the merchandise in the U.S., and it had three follow-up questions about edge cases.

The Comptroller's answers, all keyed to the export-documentation rule (Rule 3.323):

1. Multiple clients, one shipment, one bill of lading. Even if a combined shipment leaves the country under one bill of lading naming only one shipper, while U.S. Customs' own Shippers Export Declaration lists multiple invoices/shippers, that Customs declaration doesn't help prove export for Texas sales tax purposes. What counts under Rule 3.323(c)(1)(D) is a copy of the bill of lading (identifying the specific items exported) together with the freight forwarder's receipt showing the purchaser delivered the goods to the forwarder.

2. Buyer/consignee not shown on the bill of lading. Where a purchasing agent buys in the U.S. under his own name but ships to a company or representative abroad, so the actual buyer never appears on the bill of lading, that's still fine under the freight-forwarder method (Rule 3.323(c)(1)(D)) -- the consignee's name isn't important there. The Comptroller does note that a different proof-of-export method, Rule 3.323(c)(1)(A), does require the bill of lading to show the seller as consignor and the purchaser as consignee.

3. Customs brokers' export certificates. Some sellers were asking for a broker's export certificate instead of the freight-forwarder's bill of lading and receipt (sometimes because a seller wouldn't accept a pedimento, i.e., Mexican import paperwork). The Comptroller said no: a licensed customs broker can only certify that goods were exported if the broker personally witnessed the goods being exported or irrevocably committed to export -- not merely by reviewing documents that show export occurred.

What this means for you

Freight forwarders and exporters

If you're a freight forwarder helping retail clients document export sales, a bill of lading identifying the specific exported items, paired with your own receipt showing the customer delivered the goods to you, is enough to satisfy Rule 3.323(c)(1)(D) -- you don't need the buyer's name on the bill of lading, and a Customs Shippers Export Declaration won't substitute for this documentation.

Retailers selling for export

If a customer wants a sales tax exemption on an export sale, don't insist on a customs broker's certificate as the only acceptable proof -- a bill of lading plus freight forwarder receipt can be enough, and brokers legally can't just paper-certify export without having witnessed it.

Customs brokers

You cannot issue an export certificate based solely on reviewing shipping documents. Texas requires that you (or your agency) actually see the goods being exported or irrevocably committed to the stream of export before certifying.

Common questions

Q: Does the consignee's name need to appear on the bill of lading to prove export?
A: Not under the freight-forwarder documentation method in Rule 3.323(c)(1)(D) -- the ruling says the consignee's name isn't important there. It only matters under the separate method in Rule 3.323(c)(1)(A), which requires the bill of lading to show the seller as consignor and the purchaser as consignee.

Q: Can a Shippers Export Declaration be used as proof of export for sales tax purposes?
A: No. The ruling states the Shippers Export Declaration "is not helpful (for sales tax purposes) in proving that items have been exported," even though it's the Customs document that lists all shippers/invoices in a combined shipment.

Q: Can a customs broker just issue an export certificate based on paperwork?
A: No. A broker may only certify export when the broker physically sees the goods being exported or being irrevocably committed to the stream of export -- not simply by reviewing documents that show goods were exported.

Q: Does this letter apply to my situation?
A: This letter is based on the facts the freight forwarder submitted, and the Comptroller expressly notes "other facts, though similar, may yield different results." It also can be used as a detrimental-reliance defense only by the taxpayer it was issued to.

Citations and references

Rules cited:

• 34 Tex. Admin. Code Rule 3.323(c)(1)(D) (freight forwarder's bill of lading + receipt as proof of export)
• 34 Tex. Admin. Code Rule 3.323(c)(1)(A) (bill of lading showing seller as consignor, purchaser as consignee)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9303L1230B12

Original ruling text

March 29, 1993

Dear ***:

Thank you for your recent letter which is restated in part with responses
below.

As a freight forwarder, we can provide to the seller the bill of lading
and a receipt of our taking possession of the merchandise in the U. S. to
show proof of export. However, we have questions regarding the following
situations.

Situation: Several of our clients purchase from several retailers, and we
ship in one shipment with one bill of lading. Even though the shipment is
exported with only one shipper (consignor) showing on the bill of lading,
the shipment leaves the country with several invoices, thus more than one
shipper. For U.S. Customs purposes, the shippers export declaration is the
only document showing the listing of all goods shipped on the bill of
lading.

Response: To be acceptable proof of export, the bill of lading must
identify the specific items being exported. A copy of the bill of lading
together with the receipt from your firm showing that the purchaser
delivered the items to you are sufficient documentation to prove export
under Rule 3.323(c)(1)(D). The Shippers Export Declaration is not helpful
(for sales tax purposes) in proving that items have been exported.

Another question concerns the buyer (consignee) where a purchasing agent
comes to the U.S. and buys under his name but ships to a company outside
the U.S. or even to another person that is representing him in regards to
handling in the other country. As such, the buyer will not be shown on
the bill of lading. Do these deviations of the rule inhibit the proof of
export?

Response: The name of the consignee shown on the bill of lading is not
important for proving export under Rule 3.323(c)(1)(D). In this
situation, the items purchased are delivered to a freight forwarder and
both the freight forwarder's receipt and bill of lading are delivered to
the retailer by the customer requesting a sales tax refund. Proof of
export under Rule 3.323(c)(1)(A) does require a bill of lading showing
the seller as consignor and the purchaser as consignee.

Situation: Even though we can supply a freight forwarder's proof of
export with the bill of lading and receipt of merchandise, sellers have
still requested a brokers export certificate. Clients have also come to
us requesting an export certificate when a seller refuses to accept the
pedimento (formal import documentation from the country of destination).
We assume this is due to the seller not being familiar with the rule on
proof of export. In these cases, can we obtain from a licensed broker an
exemption certificate for our client to simplify the concern of client,
seller, or buyer, with presenting the proof already available to the
broker in order to obtain a certificate?

Response: No. Customs brokers may only certify that goods have been
exported when they physically see the goods being exported or being
irrevocably committed to the stream of export. They may not certify that
goods have been exported simply by seeing documents showing that goods
have been exported.

This opinion is based on the facts you submitted. Other facts, though
similar, may yield different results.

If you have questions or need more information please call or write. You
may reach me by calling toll free, (800) 531-5441 (ext.34680). My direct
line number is (512) 463-4680. The number for FAX transmissions is (512)
475-0900. You may write to me in care of Tax Administration Division.

Sincerely,

Al Van Allen
Tax Administration Division