Can a retailer exempt a sale as an export at the time of the transaction because it ships directly to a customs broker, and how soon can it refund tax to a purchaser once a licensed customs broker certifies the goods were exported?

Plain-English summary

A retailer that ships goods directly to a customs broker for export asked whether it could treat the sale as tax-exempt at the time of the sale itself, since it was already shipping to the broker.

The Comptroller's answer: no — the export exemption can't be applied at the moment of sale. Proof of export must come first, and comes in one of two forms: a pedimento de importaciones (a Mexican customs document the retailer was already receiving, but only one to three weeks after the sale), or a stamped certification from a licensed U.S. Customs Broker under Rule 3.360, which may arrive faster.

But getting that certification faster doesn't mean the retailer can refund the tax right away. House Bill 2406 amended Tax Code Sec. 151.307 to impose a minimum waiting period before a retailer may refund tax paid on a purchase once it has a licensed customs broker's export certification: the retailer must wait until the 24th hour after the stated time of export if the retailer is in a Texas county bordering Mexico, or the 7th day after the stated date of export if the retailer is in a non-border county. A retailer that refunds tax early, or refunds against undocumented or improperly documented certification, is liable for the refunded tax plus interest. The amendment took effect September 1, 1999, but its refund-timing restrictions only start applying to refunds claimed on or after January 1, 2000.

One more wrinkle: a separately stated freight charge is normally taxable as part of the total sales price — but if the underlying sale is exempt as an export, the export exemption covers the freight charge too.

What this means for you

Retailers selling for export through customs brokers

You cannot treat a sale as tax-exempt at the point of sale just because you're shipping to a customs broker — you need actual proof of export first (pedimento or customs-broker certification), and even after getting a customs-broker certification, a mandatory waiting period (24 hours for border-county retailers, 7 days for others) applies before you can refund the tax you collected.

Businesses processing export refund claims on or after 2000

Refunding tax too early, or on incomplete/improper documentation, makes the retailer liable for the refunded amount plus interest — so timing and documentation both matter, not just eventually getting the right paperwork.

Accountants and tax professionals

A clean example of a statutory refund-timing safe harbor (Sec. 151.307, as amended by House Bill 2406) layered on top of the general export-documentation rule (Rule 3.360), plus a reminder that a freight charge follows the taxability of the underlying sale.

Common questions

Q: Can a retailer treat an export sale as tax-exempt right at the time of sale?
A: No — proof of export (a pedimento or a licensed customs broker's certification) must be obtained first.

Q: How soon can a retailer refund tax after getting a customs broker's export certification?
A: Not before the 24th hour after the stated export time (border counties) or the 7th day after the stated export date (non-border counties), for refunds claimed on or after January 1, 2000.

Q: What happens if a retailer refunds the tax too early or without proper documentation?
A: The retailer is liable for the refunded tax amount plus interest.

Q: Is a separately stated freight charge on an export sale taxable?
A: It's taxable as part of the sales price generally, but if the sale itself is exempt as an export, the exemption extends to the freight charge too.

Q: Can I rely on this letter for my own export sales today?
A: This letter reflects the law as it stood when the refund-timing amendment first took effect in 1999-2000; confirm current requirements, since STAR documents can become outdated even without being marked superseded.

Citations and references

Statutes and rules:

• Texas Tax Code Sec. 151.307 (export exemption; refund timing restrictions, as amended by House Bill 2406)
• 34 Tex. Admin. Code Rule 3.360 (Customs Brokers)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9909569L

Original ruling text

September 7, 1999

Dear Ms. **:

Thank you for your letter concerning the export exemption and the documentation
required as proof of export. You asked whether you may exempt the sale for
export at the time of the transaction because you ship directly to the customs
broker for export.

You may not exempt the sale at the time of purchase because you require proof
of export from the purchaser before the export exemption claimed by the
purchaser is sustained with acceptable documentation. You are currently
receiving pedimento de importaciones proof of export which is acceptable.
However, you receive the pedimento from one to three weeks after the sale. You
may also accept as proof of export a stamped certification document from a
licensed United States Customs Broker which certifies the property was exported
to Mexico. See Rule 3.360 on custom brokers.

This may or may not speed up the process of your getting proof of export.
However, a recent change in the sales tax law provides certain restrictions
regarding the time period that must elapse before a retailer is allowed to
refund the tax to the purchaser when the purchaser provides a stamped
certification from a licensed customs broker that the goods were exported.
House Bill 2406 amended Texas Tax Code Sec. 151.307 to provide that a retailer
who receives the certification of export by a licensed customs broker may not
refund the tax paid on that purchase before the 24th hour after the hour stated
as the time of export on the documentation, if the retailer is located in a
county that borders the United Mexican States; or the seventh day after the day
stated as the date of export on the documentation, if the retailer is located
in a county that does not border the United Mexican States. Any retailer who
makes a refund before the time prescribed or that makes a refund that is
undocumented or improperly documented is liable for the amount of the tax
refunded with interest. Although the law is amended effective September 1,
1999, the provisions begin to apply to refunds claimed on or after January 1,
2000.

A separately stated charge for freight is taxable as part of the total sales
price when billed by the seller to the purchaser. If the purchase is exempt as
an export, the exemption applies to the total price including the freight
charge.

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

You may call me toll free at 1-800-531-5441, ext. 5-0030. The direct line is
512/475-0030. You may also write to Tax Policy, Comptroller of Public
Accounts.

Sincerely,

David Somerville
Tax Policy Division