Could a company use its multistate sales-tax exemption certificate in Texas, and when would it need a Texas sales-tax permit?

Plain-English summary

The multistate sales-tax exemption certificate submitted by the company did not meet Texas requirements for either a resale certificate or an exemption certificate, so a Texas seller could not accept it in place of tax.

The Comptroller needed more facts to decide whether the company itself required a Texas permit. If it performed any of the activities listed in Rule 3.286(a)(1), it had to obtain a permit and collect and remit applicable Texas tax.

A company engaged in business in Texas had to collect tax on taxable Texas sales unless it received a valid, properly completed Texas resale or exemption certificate. It still had to report every Texas sale in total sales, including certificate-supported sales. A seller with less than $1,000 of state tax to report during a year could file annually under the cited rule.

Common questions

Was the submitted multistate certificate acceptable? No.

Did the letter conclusively decide that the company needed a permit? No. More facts were required.

Must certificate-supported sales still appear in total sales? Yes.

Citations and references

• Comptroller Rules 3.285, 3.286, and 3.287.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9008L1038G11

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774
BOB BULLOCK
Comptroller August 23, 1990

Dear **:

We received your letter questioning whether your company is required
to obtain a Texas tax permit.

We need more information to determine if your company is required to
obtain a Texas tax permit. If your company is performing any of the
activities listed in section (a)(1) of Rule 3.286 relating to seller's
and purchaser's responsibilities, then your company is required to
obtain a Texas tax permit and collect and remit the applicable Texas
tax to the State. I am sending an application for a tax permit under
separate cover.

If your company is engaged in business in Texas, then the company
must collect and report the applicable Texas tax on all its Texas
sales of taxable items unless a valid and properly completed resale
or exemption certificate is received in lieu of the tax. You must
file a report and enter all Texas sales into the "Total sales" box on
the report even if you accept certificates in lieu of the tax. En-
closed are copies of Rules 3.285 and 3.287 relating to resale certifi-
cates and exemption certificates.

The multi-state sales tax exemption certificate you enclosed does not
meet the requirements for a Texas resale certificate or a Texas exemp-
tion certificate; therefore, this certificate is not acceptable.

Sellers having less than $1,000 state tax to report during a year may
file yearly returns. See Rule 3.286 section (f)(1).

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

If you have any questions you may call or write Tax Correspondence.
You may call toll free 1- 800- 252- 5555, or our regular number is
512/463-4600. My extension is 3-4658.

Sincerely,
Sherry Buckley
Tax Correspondence