Does a company's proposed Multi-Jurisdictional Sales Tax Certificate form comply with Texas resale certificate requirements?

Plain-English summary

A taxpayer had written to Tom Duffy at the Texas Comptroller's office asking whether its Multi-Jurisdictional Sales Tax Certificate form met Texas requirements. Wade Anderson, Assistant Director of Tax Administration, answered on the office's behalf.

The bottom line: the submitted form certificate met the Comptroller's basic requirements, with one exception. Texas's sales tax act limits resale certificates to purchases of items for resale within the geographical limits of the United States, its possessions, and territories. The Comptroller's own recommended form already contains this limitation, and Anderson suggested the taxpayer add a note about it to the instructions on the back of its form (as a third note) so the limitation would be clearly disclosed to users of the certificate.

Anderson also flagged an upcoming change: Governor Bush had recently signed a bill that would allow vendors from Mexico to issue resale certificates, though the provision wasn't yet in effect. Once it took effect, Texas planned to use a border-states uniform resale certificate that requires information the taxpayer's form did not capture — specifically, a copy of the vendor's application for registration with the Mexican government and the vendor's federal identification number.

What this means for you

Businesses designing or using multi-jurisdictional resale certificate forms

If you use or distribute a multi-jurisdictional resale certificate for use in Texas, make sure the form's instructions disclose that Texas resale certificates can only be used for property purchased for resale within the United States and its possessions and territories. The Comptroller treated the absence of this disclosure as the one gap keeping an otherwise-compliant form from being fully adequate, and recommended adding it as a note in the instructions.

Accountants and tax professionals advising on certificate compliance

When reviewing a client's resale certificate form against Texas requirements, check that it addresses the U.S.-only geographic limitation on resale purchases. This letter shows the Comptroller will approve a form with that one caveat noted, rather than reject it outright, but the limitation still needs to be spelled out for users of the form.

Businesses that purchase from or sell to vendors in Mexico

Watch for the border-states uniform resale certificate referenced in this letter. At the time of this letter, a bill had been signed allowing Mexican vendors to issue resale certificates, but the provision was not yet effective. Once effective, the Comptroller indicated it would require a copy of the vendor's Mexican government registration application and the vendor's federal identification number — information not captured by a standard multi-jurisdictional certificate form.

Common questions

Q: Did the Comptroller approve the taxpayer's Multi-Jurisdictional Sales Tax Certificate form?
A: Yes, the letter states the form certificate met the Comptroller's basic requirements, with one exception concerning the geographic limitation on resale purchases.

Q: What was the one problem with the form?
A: It didn't disclose that Texas resale certificates may only be used for items purchased for resale within the United States and its possessions and territories. The Comptroller's own recommended form includes this limitation, and Anderson suggested the taxpayer add a note explaining it to the instructions on the back of its form.

Q: Could resale certificates from Mexican vendors be accepted in Texas at the time of this letter?
A: Not yet. A bill allowing vendors from Mexico to give resale certificates had been signed by Governor Bush but had not yet gone into effect.

Q: What would change once the Mexico-vendor provision took effect?
A: Texas would begin using a border-states uniform resale certificate requiring additional information not on the taxpayer's form — a copy of the vendor's application for registration with the Mexican government and the vendor's federal identification number.

Citations and references

No specific statutes or cases were cited in this letter; it addresses the Texas sales tax act's general geographic limitation on resale certificates.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9506L1351G04

Original ruling text

June 14, 1995

Dear **:

Recently, you wrote Tom Duffy concerning ***'s Multi-Jurisdictional
Sales Tax Certificate. He asked that I answer your inquiry.

The form certificate meets our basic requirements with one exception. Under
our sales tax act, a resale certificate may only be given for items purchased
for resale within the geographical limits of the United States, its
possessions, and territories. Our recommended form contains this limitation.
I would suggest you address this problem in the instructions on the back of
your form as a third note.

In addition, a bill has recently been signed by Governor Bush which will allow
vendors from Mexico to give resale certificates. This provision does not go
into effect for several months. However, when it becomes effective, we
will be using a border states uniform resale certificate which requires
information not otherwise provided for on your form, e.g. a copy of the
vendor's application for registration with the Mexican government and the
vendor's federal identification number.

I hope this satisfactorily answers your question. If you need additional
information, please write me at 111 E. 17th Street, Austin, Texas 78774, or
call me at 1-800 531-5441, extension 3-4004.

Sincerely,

Wade Anderson
Assistant Director Tax Administration

NOTE: Previous Accession Number 9506187L