Texas Register, Volume 42, Number 43, Pages 5913-6056, October 27, 2017 Page: 6,030
5913-6056 p. ; 28 cm.View a full description of this periodical.
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be attached to the resale certificate. The resale certificate must also
state the type business engaged in by the purchaser and the type items
sold in the regular course of business. A resale certificate may be ac-
cepted from the out-of-state retailer even if the Texas retailer ships or
delivers the taxable item directly to a recipient located inside Texas.
(3) The Texas retailer is not responsible for determining
whether the out-of-state retailer is required to hold a Texas sales and use
tax permit or to enter a Texas permit number on the resale certificate.
(4) Foreign purchasers, other than purchasers from Mex-
ico, who are not engaged in business in Texas and do not hold a Texas
sales and use tax permit, may issue a properly completed resale certifi-
cate, as described in paragraph (2) of this subsection, in lieu of paying
tax on the purchase of taxable items for sale in the normal course of
business when the items are delivered or shipped to a location outside
of Texas but within the United States or Mexico.
(5) An out-of-state or foreign purchaser who acquires
goods or services from a Texas seller for resale in Texas should refer
to 3.286 of this title for information on their responsibilities.
(6) A purchaser, whether from Texas, Mexico, or another
foreign country, may not issue a resale certificate for taxable items pur-
chased for resale outside the United States or Mexico. See subsection
(b)(5) of this section. Purchasers who purchase taxable items in Texas
for sale outside the United States or Mexico must comply with the re-
quirements of 3.323 of this title to claim exemption from the Texas
sales tax.
(e) Taxable use of items purchased for resale; items removed
from tax-free inventory.
(1) Divergent use; paying tax on fair market rental value.
When a taxable item is removed from a valid tax-free inventory for
use in Texas, Texas sales tax is due. When a taxable item purchased
under a resale certificate is used for any purpose other than retention,
demonstration, or display while holding it for sale, lease, or rental, or
for transfer as an integral part of a taxable service, the purchaser is
liable for sales tax based on the value of the taxable item for the period
of time used.
(A) The value of tangible personal property is the fair
market rental value of the tangible personal property. The fair market
rental value is the amount that a purchaser would pay on the open mar-
ket to rent or lease the tangible personal property for use. If tangible
personal property has no fair market rental value, sales tax is due based
upon the original purchase price.
(B) The value of a taxable service is the fair market
value of the taxable service. The fair market value is the amount that a
purchaser would pay on the open market to obtain that taxable service.
If a taxable service has no fair market value, sales tax is due based upon
the original purchase price.
(C) At any time the person using a taxable item may
stop paying tax on the value of the taxable item and instead pay sales
tax on the original purchase price. When the person elects to pay sales
tax on the original purchase price, credit will not be allowed for taxes
previously paid based on value.
(2) Donation of taxable item. A purchaser who gives a
valid resale certificate instead of paying tax on the purchase of a tax-
able item is not liable for sales tax on the taxable item when donated to
an organization exempt under Tax Code, @151.309 (Governmental En-
tities), or 151.310(a)(1) and (2) (Religious, Educational, And Public
Service Organizations), provided the purchaser did not make a taxable
use of the donated taxable item prior to its donation.(3) Use of taxable item as a trade-in. A purchaser who
gives a valid resale certificate instead of paying tax on the purchase
of a taxable item is liable for sales tax if the purchaser uses the tax-
able item as a trade-in on the purchase of another taxable item. Tax
must be paid on the original purchase price of the taxable item used as
a trade-in.
(4) Use of taxable item outside Texas. Texas sales or use
tax is not due on a taxable item removed from a valid tax-free inventory
for use by the purchaser outside the state.
(5) Lost or destroyed inventory. Texas sales or use tax is
not due on tangible personal property purchased under a valid resale
certificate that is totally destroyed or permanently disposed of by the
purchaser in a manner other than for use or sale in the normal course
of business. For example, documented theft, casualty damage or loss,
or disposal in a landfill. This does not apply to consumable items that
are completely used up or destroyed by the purchaser in the course of
performing a service in Texas.
(f) Improper use of a resale certificate; criminal offenses.
(1) A person may not issue a resale certificate at the time
of purchase for a taxable item if the person knows the item is being
purchased for a specific taxable use.
(2) Any person who intentionally or knowingly makes,
presents, uses, or alters a resale certificate for the purpose of evading
Texas sales or use tax is guilty of a criminal offense. For more
information, see 3.305 of this title (relating to Criminal Offenses and
Penalties).
(g) Content of a resale certificate. A resale certificate must
show:
(1) the name and address of the purchaser;
(2) the number from the sales tax permit held by the pur-
chaser or a statement that an application for a permit is pending before
the comptroller with the date the application for a permit was made.
If the application is pending, the resale certificate is valid for only 60
days, after which time the resale certificate must be renewed to show
the permanent permit number. If the purchaser holds a Texas sales and
use tax permit, the number must consist of 11 digits that begin with a
1 or 3. Federal employer's identification (FEI) numbers or social secu-
rity numbers are not acceptable evidence of resale. See also subsection
(d)(2) of this section regarding registration numbers for retailers out-
side Texas;
(3) a description of the taxable items generally sold, leased,
or rented by the purchaser in the regular course of business and a de-
scription of the taxable items to be purchased tax free by use of the
certificate. The item to be purchased may be generally described on
the certificate or itemized in an order or invoice attached to the certifi-
cate;
(4) the signature of the purchaser or an electronic form of
the purchaser's signature authorized by the comptroller and the date;
and
(5) the name and address of the seller.
(h) Form of a resale certificate. A resale certificate must be
substantially either in the form of a Texas Sales and Use Tax Resale
Certificate or a Border States Uniform Sale for Resale Certificate.
Copies of both certificates are available at comptroller.texas.gov or
may be obtained by calling our toll-free number 1-800-252-5555. A
seller may also accept as a resale certificate the Uniform Sales and
Use Tax Certificate-Multijurisdiction promulgated by the Multistate
Tax Commission and available online at http://www.mtc.gov. The42 TexReg 6030 October 27, 2017 Texas Register
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Texas. Secretary of State. Texas Register, Volume 42, Number 43, Pages 5913-6056, October 27, 2017, periodical, October 27, 2017; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth897027/m1/118/: accessed July 16, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.