Can a NAFTA Certificate of Origin be used as proof that goods were exported, for Texas sales tax purposes?

Subject

North American Free Trade Agreement (Nafta) Certificate Of Origin — Not Proof Of Export

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9402L1288C02

Plain-English Summary

A taxpayer asked the Texas Comptroller's office whether a North American Free Trade Agreement (NAFTA) Certificate of Origin could serve as acceptable proof that goods had been exported from the United States, for purposes of the Texas sales tax exemption for exported goods. The Comptroller's office said no. It explained that while it does not want to impose unreasonable burdens on industry, it is bound by the specific requirements of the law. Texas Tax Code Sec. 151.307 requires very specific documentation to prove export, and a NAFTA Certificate of Origin is not one of the documents that satisfies that requirement. The letter enclosed the text of Sec. 151.307 for the taxpayer's reference.

What This Means For You

If you sell goods that end up being shipped out of the country: A NAFTA Certificate of Origin — even though it is a legitimate customs/trade document — cannot be used by itself to substantiate a Texas sales tax export exemption. You need the specific documentation required under Tax Code Sec. 151.307 to support that the sale qualifies as an export for Texas sales tax purposes.

If you are relying on trade-compliance paperwork for tax purposes: Documents created for one purpose (like establishing NAFTA-eligible origin for tariff purposes) are not automatically valid for a different purpose (like proving a sale is tax-exempt as an export). Check the specific proof-of-export documentation requirements in Sec. 151.307 rather than assuming other customs or trade documents will suffice.

Q&A

Q: Does a NAFTA Certificate of Origin prove that goods were exported for Texas sales tax purposes?
A: No. The Comptroller's office stated that the NAFTA Certificate of Origin is not helpful for sales tax purposes in proving that items have been exported.

Q: What does Texas law require to prove export for sales tax purposes?
A: The letter states that "[t]he law requires very specific documents to prove export," citing Tax Code Sec. 151.307, and enclosed the text of that section for the taxpayer, but did not itemize the specific documents within the letter itself.

Q: Is this ruling specific to the facts submitted by the taxpayer?
A: Yes. The letter notes that "[t]his opinion is rendered based on the facts you submitted. Other facts, though similar, may yield different results."

Citations

• Tex. Tax Code § 151.307 (enclosed by the Comptroller's office as governing the documentation required to prove export)

Original ruling text

February 23, 1994

Dear **:

Thank you for your recent letter regarding the acceptability of the
North American Free Trade Agreement Certificate of Origin as proof that
goods have been exported from this country for Texas sales tax purposes.

The Comptroller's office does not wish to impose unreasonable
burdens on industry, but we are limited by the parameters of the law
itself. The law requires very specific documents to prove export. The
North American Free Trade Agreement Certificate of Origin is not helpful
(for sales tax purposes) in proving that items have been exported. I am
enclosing the text of Tax Code Sec. 151.307 for your reference.

This opinion is rendered 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) 5315441 (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

NOTE: Previous Accession Number 9402091L