When could a Texas seller avoid collecting tax on exported goods, and what documentation was required for Texas delivery?

Plain-English summary

The letter said new export legislation effective August 26 covered all export sales, not only exports to Mexico. For oil-and-gas equipment such as drill pipe, casing, and tubing, the seller could take an exemption certificate from the purchaser.

For other sales, if neither title nor possession had passed to the customer, the sale was not complete and tax was not due. Obtaining export documentation before title or possession passed meant the seller did not need to collect tax.

If the seller delivered goods to a customer in Texas, it had to assume sales tax was due until it received documentation substantiating an exemption.

Common questions

Could listed oilfield exports use an exemption certificate? Yes.

Was tax due before the sale was complete? No, when neither title nor possession had passed.

What if goods were delivered to the customer in Texas? The seller presumed tax due until it received exemption proof.

Citations and references

The reproduced letter cites no numbered statute or rule and does not identify the August 26 legislation.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8511L0678E14

Original ruling text

November 4, 1985

Dear ***

This is to document our phone conversation about the new export
legislation which took effect August 26. The legislation covers all
export sales including but not limited to Mexican exports.

One simple way to handle equipment exports related to the oil and gas
industry is take an exemption certificate from the purchaser. This is
especially relevant to your sales of drill pipe, casing and tubing. I'm
enclosing a rule for your reference.

On other sales, if neither title nor possession to the goods has passed
to the customer, then the sale is not complete and tax is not due. If you
obtain the export documentation prior to passage of title or possession to the
customer, there would be no need for you to collect the tax.

If you deliver goods to a customer in Texas you should assume that sales
tax is due and act accordingly until you receive documentation to
substantiate exemption.

We'd be glad to participate in a conference call with your personnel or to
respond to any written questions at your discretion.

If you have any questions or need more information, please call us at
1-800-252-5555 toll free from anywhere in Texas. You may write us at the
Tax Administration Division.

Sincerely,

Tax Policy Section
Tax Administration Division