What records does a Texas retailer need to document that merchandise was exported to Mexico, and can the refund be issued as store credit instead of cash?

Plain-English summary

A Texas seller asked the Comptroller's office whether it could document exports to Mexico by attaching cash register tapes — showing SKU or UPC codes — to a customs broker's export certification, instead of writing out a detailed description of each item by hand. The seller also asked whether it could refund the sales tax as store credit (on a Dillard credit account) or as a credit to the customer's bank card, rather than paying cash.

The Comptroller agreed with both practices. Under Rule 3.323(e)(4), an auditor must be able to tie the export documents back to the original taxable sale, and records that don't include a detailed, specific description of the items purchased aren't good enough — if the export exemption isn't properly documented, the Comptroller can assess the refunded tax back against the seller. Because the seller's cash register tapes carried SKU or UPC codes that give an exact description of the merchandise, the letter concluded those tapes satisfy the rule, so long as they are securely attached to the broker's certification form and individually signed by the broker. The seller must still keep the original invoice of the sale. Separately, the letter confirmed there's nothing wrong with crediting the tax back to a store account or bank card instead of issuing a cash refund.

The letter notes the answer is based on the specific facts submitted, and that other, similar facts could lead to a different result.

What this means for you

Retailers selling to Mexican customers for export

If you sell goods that customers export to Mexico and rely on a customs broker's certification to document the export exemption, attaching your cash register tapes (with SKU or UPC codes) can satisfy the "detailed, specific description" requirement in Rule 3.323(e)(4) — but only if the tapes are firmly attached to the certification and the broker signs each one individually. You must also keep the original sales invoice, since an audit needs to be able to trace the export documents back to the original transaction. If the documentation isn't sufficient, the Comptroller can assess the tax against you as the seller, not the customer.

Retailers issuing export-related refunds

You don't have to refund the tax in cash. Crediting the amount to the customer's store charge account or bank/credit card is an acceptable substitute for a cash refund.

Common questions

Q: Do I have to write out a description of every exported item by hand for the customs broker's certification?
A: No. Cash register tapes that show SKU or UPC codes can serve as the itemized description, as long as they are securely attached to the certification form and each tape is individually signed by the customs broker.

Q: What else do I need to keep besides the cash register tape?
A: The seller must retain the original invoice of the sale. An auditor needs to be able to tie the export documents to that original taxable transaction.

Q: What happens if my export documentation isn't detailed enough?
A: Refunds made based on undocumented or improperly documented export exemptions will be assessed against the seller.

Q: Can I refund the tax as store credit instead of cash?
A: Yes. The letter confirms that crediting a customer's store charge account (such as a Dillard account) or bank card account, instead of issuing a cash refund, is acceptable.

Citations and references

Rules:

• 34 Tex. Admin. Code Rule 3.323(e)(4) (export documentation must let an auditor tie the export paperwork back to the original taxable transaction; insufficient documentation exposes the seller to assessment)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9303L1224C12

Original ruling text

March 1, 1993

Dear ***:

Thank you for your recent letter regarding the proper method of
documenting that merchandise has been exported to the Republic of
Mexico. You specifically asked about customs broker's certifications
identifying specific items by means of attached cash register tapes.

The cash register tapes you enclosed contain SKU or UPC codes, either of
which you say gives an exact description of the merchandise. This meets
the requirement in Rule 3.323(e)(4) restated below:

In an audit, the auditor must be able to tie the export documents to the
original taxable transaction. The seller must retain the original invoice
of the sale. Cash register receipts and other records of the original
taxable transaction that do not include a detailed, specific description
of the items purchased are not sufficient to tie the export documents to
the original taxable transaction. Refunds made pursuant to undocumented
or improperly documented export exemptions will be assessed against the
seller.(emphasis added)

The customs broker's certification may include copies of cash register
tapessuch as you submitted in lieu of a description of the items exported
if they are securely attached to the form and signed individually by the
broker.

You also asked whether credit could be given on either Dillard credit
accountsor bank card accounts in lieu of cash refunds. This is fine.

This opinion is based on the facts you submitted. Other facts, though
similar, may yield different results.

If you have questions or need more information, please call or write. You
may reach me by calling toll free, (800) 531-5441 (ext. 34680). My direct
line number is (512) 463- 4680. The number for FAX transmissions is (512)
475-0900. You may write to me in care of Tax Administration Division.

Sincerely,

Al Van Allen
Tax Administration Division