Could a Texas seller accept a later-dated resale certificate for an earlier sale and obtain a refund of tax returned to the customer?

Plain-English summary

The Comptroller did not approve the refund immediately, but explained how the seller could cure the documentation.

A resale certificate dated after the sale could cover the earlier transaction because the customer held a valid Texas sales tax permit when the December 6, 1985 transaction occurred. The customer still had to complete a certificate containing all information required when the certificate was issued on July 20, 1989.

The seller also needed written confirmation that the customer had not claimed, and would not claim, the same tax as a credit on its own return. After refunding the tax, the seller had to obtain the customer's written acknowledgment that the payment represented sales tax paid in error and submit copies of the certificate, confirmations, and refund material to the Comptroller.

For this particular claim, the letter required a valid refund request by January 20, 1990, when its stated four-year limitations period would expire. That deadline is historical and specific to this transaction.

Common questions

Did the resale certificate have to be issued on the sale date? No, provided the customer held a valid permit when the transaction occurred and supplied a currently complete certificate.

Why was a no-credit statement required? To prevent the customer and seller from both seeking recovery of the same tax.

Could the seller simply repay the customer and keep the records internally? No. The letter required written acknowledgment and copies of the supporting information to be sent to the Comptroller.

Is January 20, 1990 a general refund deadline? No. It was the transaction-specific deadline stated in this 1989 letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8908L0958A08

Original ruling text

August 23, 1989

Dear Mr. **:

Your request for refund has been forwarded to me for review. I cannot approve
the refund at this time for the following reasons. Please review the information
provided and resubmit the refund request with the required information.

First of all, it is possible to accept a resale certificate with a current date
that covers a previous transaction as long as the entity issuing the resale
certificate held a valid sales tax permit at the time the transaction occurred.
COMPANY A (**) held a sales tax permit on December 6, 1985, the
date of the transaction in question. However, you must request that COMPANY A
complete a certificate that provides all the information currently required on
a resale certificate based on the date the certificate is issued to your
company, July 20, 1989. I am enclosing a copy of the rule and current resale
certificates for your use.

Because COMPANY A is also a permitted seller for Texas, it is possible that
they take credit on their own return for tax paid to a supplier on a taxable
item that was resold (rerented) in a taxable manner before making any use of
the item. You must obtain written documentation from COMPANY A that they have
not taken a credit on their own return, nor will they take a credit on their
own return for the tax which they are requesting your company to refund.

Once you obtain the properly completed and current resale certificate along
with the documentation that COMPANY A HAS NOT/WILL NOT take credit for this
tax, which you are refunding, on their own sales tax return, you may refund the
tax to COMPANY A. COMPANY A must accept and acknowledge (in writing) that the
monies being refunded is for sales tax paid in error. You must send copies of
all this information to this agency in order to obtain your refund.

I am enclosing copies of all rules relating to this response. I am also
including a copy of instructions specifically relating to the refund procedure.
Your properly completed and valid refund request must be received by this
office before January 20, 1990. This is the date the four year statute of
limitations will expire.

You may forward the documentation, a copy of this letter, and your request for
refund to:

Credits & Refund Claims Verification
Revenue Accounting
Comptroller of Public Accounts
Capitol Station
Austin, TX 78711

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

You may write me at Tax Correspondence, Comptroller of Public Accounts.

Sincerely,

Tax Policy Division
Tax Correspondence