Texas – Resale and Exemption Certificates

SALT Report 3263 – Resale and exemption certificates are one of the most (if not the most) impacting errors found during sales and use tax audits.  As technology has progressed the expectation to produce timely, valid documentation has escalated.  Be mindful of this obligation and do your best to ensure proper contemporaneous compliance.  Errors are more easily solved at the time of the transaction as opposed to years later when the questions are asked all at once with short timelines for delivery.

“You must make sure that the resale certificate is properly completed.  As a seller, you should always note the general character of the purchaser’s business. If the nature of the business is such that the property purchased would not normally be resold, you should question the use of the certificate. For example, a resale certificate describing the business as a service station should not be accepted for the purchase of a sofa or similar item not regularly sold by service stations.  You should not accept the certificate if you know or have reason to believe the property is being purchased for other than resale.  You must retain the resale certificates (for 4 years) that you accept from others to substantiate claims that a sale was for resale and therefore not subject to tax.”

For Further Information:

Texas FAQ Resale Certificates