If an air waybill (bill of lading) covering exported merchandise doesn't itself fully describe the goods, can an attached invoice be used to tie the shipment to the purchase for export tax purposes?

Subject

Air Waybill Should Be Accompanied By Invoices In Order To Tie Purchases To Exports

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9305L1241F11

Plain-English Summary

This May 27, 1993 letter from the Comptroller's Tax Administration Division (signed by Al Van Allen) responds to a taxpayer's question about documenting exported merchandise for sales tax purposes.

The taxpayer had submitted a copy of an air waybill along with copies of the invoice and packing list that were attached to it. The problem was that the air waybill itself did not have a sufficiently detailed description of the goods — even though it was always accompanied by the invoice and packing list, which the letter says "have to go together in order for the items to be exported." The taxpayer explained that the waybill's description was kept vague because customers were concerned the boxes would be opened in transit if the contents were spelled out. On the advice of the taxpayer's local tax office in San Antonio, the air waybill was revised to add the explanation "jeans... as per attached cargo invoice **."

The Comptroller's response: an invoice attached to a bill of lading (such as an air waybill) will be allowed to identify the goods covered under that bill of lading, but two conditions must be met — the notation tying the invoice to the waybill must be made by the shipping company itself (not added afterward by the taxpayer or anyone else), and the notation must clearly identify a specific invoice. The letter also reminds the taxpayer that a retailer claiming a sales tax refund on exported merchandise must document the export consistent with Rule 3.323, a copy of which was attached to the letter.

What This Means For You

If you export merchandise and claim a sales tax exemption or refund

Your export documentation needs to clearly tie the shipped goods back to a specific sales invoice. If the bill of lading or air waybill alone doesn't fully describe the merchandise, an attached invoice can fill that gap — but only if the shipping company itself notes the connection at the time of shipment, and the notation specifically identifies the invoice (not just a vague reference).

If your waybill descriptions are intentionally vague (for security or other reasons)

This letter shows the Comptroller understands that shippers sometimes keep waybill descriptions general (here, out of concern that detailed descriptions could prompt tampering in transit). That's acceptable, but only if the waybill is paired with an invoice and packing list, and the connection between them is documented properly by the carrier.

If you are correcting export paperwork after the fact

The key limitation in this letter is timing: the notation identifying the invoice must be made by the shipping company, not added later. Retroactively annotating a waybill yourself will not satisfy the Comptroller's requirement — the connection has to come from the carrier's own documentation.

If you are an accountant or tax professional advising an exporter

Point your client to 34 Tex. Admin. Code Rule 3.323, which governs the documentation retailers must keep to substantiate an export-based sales tax refund or exemption. This letter is a practical illustration of Rule 3.323 applied to an air waybill/invoice pairing.

Q&A

Q: Can an invoice be used to identify goods on a bill of lading that lacks a detailed description?
A: Yes. The Comptroller will allow an invoice attached to a bill of lading to identify the goods covered by that bill of lading, subject to two conditions described below.

Q: What conditions must be met for the invoice to count?
A: The notation connecting the invoice to the bill of lading must be made by the shipping company (not added later by someone else), and the notation must clearly identify a specific invoice.

Q: Why was the taxpayer's original air waybill description so vague?
A: The taxpayer explained that customers were afraid the boxes would be opened in transit if the description were more specific, so the waybill did not originally spell out the contents.

Q: What did the taxpayer do to fix the problem?
A: On the advice of the local tax office in San Antonio, the air waybill was revised to add an explanation (e.g., "jeans... as per attached cargo invoice **") tying it to the specific invoice.

Q: What rule governs a retailer's sales tax refund on exported merchandise?
A: 34 Tex. Admin. Code Rule 3.323, which the letter references and which was attached to the original response.

Q: Is this letter something other taxpayers can rely on?
A: This is an official Comptroller letter ruling published on STAR, but under 34 Tex. Admin. Code Rules 3.1 and 3.10, it can only be the basis of a detrimental reliance claim for the taxpayer to whom it was directly issued.

Original ruling text

May 27, 1993

Dear ****:

Thank you for your recent letter which is restated in part with response
below.

Enclosed is a copy of the airway bill, with copies of the invoice
and packing list attached.

Apparently the problem was that the airway bill did not have
sufficient description even though it is always accompanied by the
invoice and packing list. They all have to go together in order for
the items to be exported.

The reason why the airway bill did not have sufficient explanation,
is because the customers are afraid that the boxes will get open in
transit.

As per advice of your local tax office in San Antonio, the airway
bill now reflects the additional explanation of "jeans... as per
attached cargo invoice ** ."

Response: We will allow an invoice attached to a bill of lading to
identify the goods covered under the bill of lading if the notation is
made by the shipping company and not at a later time. The notation must
clearly identify a specific invoice to be valid.

A retailer who makes a sales tax refund on exported merchandise must do
so in keeping with Rule 3.323 (attached).

This opinion is rendered 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

NOTE: Previous Accession Number 93070055.6 and/or 9307055L