When a Texas retailer sells goods to a foreign customer who takes them out of the country, how soon must the goods be exported and what documents prove the export for purposes of getting the sales tax refunded or not charged?

Subject

Customs Broker — 30 Days Period For Exporting Goods

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9407650L

Plain-English Summary

A Texas seller (through someone who appears to have been a customs broker or export-documentation specialist) wrote to the Comptroller's office with a batch of questions about proving that goods sold to a Mexican customer had actually been exported, so that Texas sales tax would not apply (or could be refunded).

The Comptroller's office answered that the specific sale in question did not qualify: the goods, purchased between October 30, 1993, and January 7, 1994, were not exported within the 30-day window set out in 34 Tex. Admin. Code Rule 3.323(c)(3). It also rejected the submitted air waybill — signed only by the customer — as adequate proof of export under Rule 3.323(c)(1), because the customer had apparently hand-carried the goods into Mexico. In that situation, the customer needed either a proof of export signed by a licensed customs broker or Mexican import documentation; an airline's or customer's own signature is not enough.

The letter then walks through five follow-up questions of general application: goods sitting in a Texas exporter's warehouse before their first use are not subject to the 30-day presumption at all; an air waybill not signed by the carrier's representative is not acceptable; a "Hand Carry" notation on shipping paperwork doesn't by itself defeat a refund, but the customer still must produce one of the rule's accepted proofs; a customer who hand-carries goods on a flight still needs a customs-broker-signed proof of export or import documentation (an airline merely watching the customer board is not sufficient); and each separate export shipment needs its own signed proof of export — a single "summary" document covering multiple shipment dates will not be accepted.

What This Means For You

Retailers selling to foreign (including Mexican) customers

If you sell goods that a customer will personally carry across the border, don't rely on the customer's own signature on an air waybill or shipping document to support a tax-exempt export sale or a refund claim. You need a proof of export signed by a licensed customs broker, or import documentation issued by the destination country's customs authority (e.g., Mexican customs). Airline boarding, "Hand Carry" notations, and unsigned or customer-signed waybills are not, by themselves, sufficient.

Businesses tracking the 30-day export window

The 30-day clock in Rule 3.323(c)(3) runs from the date of purchase, and it triggers a presumption: export within 30 days is presumed to mean no taxable use occurred in Texas. If export happens after 30 days, the presumption disappears and the customer bears the burden of affirmatively proving the goods were never used in Texas before export. Note the important carve-out: goods sitted in a bona fide exporter's warehouse before their first use are not subject to the 30-day presumption in the first place.

Businesses with multiple/staggered export shipments

Each shipment needs its own, separately signed proof of export. You cannot consolidate several export dates into one "summary" air waybill or export certificate and expect it to satisfy the rule for all of the underlying transactions — the 30-day analysis is applied transaction-by-transaction.

Tax professionals and customs brokers

This letter is a useful illustration of how strictly the Comptroller's office reads the documentary proof requirements of Rule 3.323(c)(1): carrier certification of physical export (or a customs-broker-signed proof of export, or foreign import documentation) is what counts, not circumstantial evidence like waybill annotations or airline observation of boarding.

Q&A

Q: Was the merchandise in this case exported within the 30-day timeframe under Rule 3.323(c)(3)?
A: No. The goods were purchased between October 30, 1993, and January 7, 1994 — well outside the 30-day window described in the taxpayer's letter.

Q: Is an air waybill signed only by the customer acceptable proof of export under Rule 3.323(c)(1)?
A: No. Because the customer apparently hand-carried the goods into Mexico, the customer instead needed either a proof of export signed by a customs broker or import documentation from the Mexican government.

Q: If merchandise is stored or warehoused in Texas before its first use, must it still be exported within 30 days of purchase to qualify for a tax refund?
A: The Comptroller presumes that merchandise exported within 30 days was not purchased for use in Texas; after 30 days, the customer must instead prove no Texas use was made. Merchandise held in an exporter's warehouse is not subject to the 30-day presumption at all.

Q: If an air waybill is not signed by a representative of the licensed carrier, is it acceptable proof of export?
A: No.

Q: Does a "Hand Carry" notation on an air waybill and Shippers Export Declaration affect whether sales tax can be refunded?
A: No effect by itself, but the customer must still meet one of the proof-of-export standards in the rule.

Q: If a customer hand-carries merchandise on an airline flight, what documentation is required before sales tax can be refunded — is a carrier's certification that it witnessed the customer boarding with the merchandise enough?
A: The customer must have either a proof of export signed by a customs broker or import documentation; certification by an airline that it witnessed boarding is insufficient proof.

Q: If merchandise was exported on various dates, can one "summary" air waybill covering the last export date be used instead of separate signed waybills for each shipment?
A: No. Separate proofs of export must be provided for each shipment; a summary document is not acceptable, and the 30-day rule applies separately to each transaction.

Citations

• 34 Tex. Admin. Code Rule 3.323(c)(3) — 30-day presumption for export of goods sold to a foreign customer
• 34 Tex. Admin. Code Rule 3.323(c)(1) — acceptable documentation to substantiate export (proof of export signed by a licensed customs broker, or foreign import documentation)

Original ruling text

July 19, 1994

Dear **:

Recently, you wrote Mike Doyle concerning several questions involving export
documentation. Mr. Doyle is no longer with our office, so I am taking the
liberty of answering your questions. Concerning the specific sales to a
Mexican customer, my answers are as follows:

Was the merchandise exported within the 30 day timeframe in Texas Code Rule
3.323(C)(3)?

Answer: No. Under the description in your letter, the goods were purchased
between October 30, 1993, and January 7, 1994.

Is the enclosed "COMPANY A" air waybill, which is signed only by the customer,
acceptable documentation under Rule 3.323(C)(1) to substantiate that the
merchandise was exported?

Answer: No. Because the customer apparently hand-carried these items into
Mexico, the customer needs to present either a proof of export signed by a
customs broker or import documentation form the Mexican government.

In addition, you asked five general questions:

1. If the merchandise is stored or warehouse in Texas prior to its first use,
   must it still be exported within 30 days of the purchase date to be eligible
   for the refund of tax?

Answer: We will presume that merchandise exported within 30 days was not
purchased for use. After that, the customer must prove no use was made.
Merchandise held in an exporter's warehouse is not subject to the 30-day
presumption.

2. If an air waybill is not signed by a representative of the licensed carrier,
   would the documentation be acceptable as proof of exportation?

Answer: No.

3. Does the fact that an air waybill and Shippers Export Declaration indicate
   "Hand Carry" in the Air Waybill Number/Bill of Lading category have any effect
   on whether or not sales tax can be refunded?

Answer: No, but the customer must meet one of the proofs in our rule.

4. If a customer actually "hand carries" merchandise with him on an airline
   flight, what documentation would be required before sales tax can be refunded?
   Can a licensed carrier merely witness the customer boarding the plane with the
   merchandise and thus certify its export or would import documentation be the
   only acceptable proof?

Answers: The customer must have either a proof of export signed by a customs
broker or import documentation. The certification by an airline is
insufficient proof.

5. If the merchandise was exported on various dates, must separate signed air
   waybills be provided for each shipment or can one "summary" air waybill be
   provided indicating the last date merchandise was exported? How would the
   30-day rule apply to a case of this nature?

Answers: Separate proofs of export must be provided; a summary is not
acceptable. The 30-day rules applies to each separate transaction.

I hope this satisfactorily answers your questions. Should you need more
advice, please feel free to contact me at 111 East 17th Street, Austin, Texas
78774, or give me a call at 1-800-531-5441, extension 3-4004.

Sincerely,

Wade Anderson
Assistant Director, Tax Administration

cc: Joe Galvan, Manager, Tax Administration