Could a nonresidential sub-repairman issue a resale certificate using the general repairman's sales-tax permit number?

Plain-English summary

Each separate legal entity selling taxable tangible property or taxable services had to obtain and maintain its own sales-tax permit.

A sub-repairman could not issue a resale certificate using the general repairman's permit number. Such a certificate was invalid and would not be accepted in audit. Without its own active permit and a valid, properly completed certificate issued at the time of sale, the supplier charged tax.

The letter also distinguished nonresidential repairmen from sales-tax "contractors," a term limited to new construction, residential repair or remodeling, and nonresidential maintenance under the cited rules.

Common questions

Could a sub-repairman borrow the general repairman's number? No.

Did each entity need its own permit? Yes.

What did the supplier do without a valid certificate? Collect tax.

Citations and references

• 34 Tex. Admin. Code Rules 3.285, 3.286, 3.357, and 3.291

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8911L0965G07

Original ruling text

November 3, 1989

Dear ***:

I am responding to your letter regarding acceptance of resale certificates
from remodelers/repairmen of non-residential realty.

You explained that some of the repairmen are under the impression that they
may issue a resale certificate bearing the taxpayer number of another entity
(the general contractor) for whom they are working. You stated that this
results in one repairman (entity) issuing multiple resale certificates with
multiple taxpayer numbers.

You are responsible for accepting a properly completed resale certificate at
the time of sale. You may accept this certificate in good faith if you lack
actual knowledge that the certificate is not valid.

Each separate legal entity that is selling taxable items, tangible personal
property or taxable services, must apply for and maintain a sales and use tax
permit. This means that every repairman and sub-repairman and
sub-to-the-sub-repairman that is repairing or remodeling non-residential
improvements to realty must apply for and maintain their own permit.
A sub-repairman may not issue a resale certificate validated by the general
repairman's taxpayer number. Any certificates issued by a sub-repairman with
the general repairman's taxpayer number are invalid and will not be accepted
in the event of audit.

If the sub-repairman does not have his own active sales tax permit and does not
issue a properly completed and valid resale certificate to your company at the
time of sale, charge the appropriate sales and/or use tax. Please feel free to
notify this office of any party that is not complying with this statutory
requirement. This information can be provided anonymously.

A sales tax permit (taxpayer number) is issued to each separate legal entity
and cannot be transferred to or used by another entity. I am enclosing
Rules 3.286 and 3.285 which explain seller's and purchaser's responsibilities
and the proper issuance of resale certificates. I also enclosed Rule 3.357.

I feel that I should also point out that repairmen or remodelers of non-residential
realty are not contractors for the purposes of sales and use taxes. The industry
may use the term to apply to various businesses that work under or according to
"contracts", or even all businesses improving realty; however, contractors for the
purposes of sales and use tax application are limited to those entities who are
performing new construction, residential repair or remodeling, or n on-residential
maintenance. Please see Rules 3.357 and 3.291 for more exact clarification.

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

You may also write to Tax Correspondence, Comptroller of Public Accounts.

Sincerely,

Tax Policy Division
Tax Correspondence