Does a Texas computer retailer need to collect Texas sales tax on computers and parts it ships to customers outside Texas, and can it buy those components tax-free?

Plain-English summary

A retailer, describing "total confusion about whom to tax," asked about the taxability of computers it sells and ships outside Texas. The Comptroller confirmed the retailer is not required to collect Texas sales tax on computers or parts shipped to customers outside Texas — but it must retain documentation, such as postal receipts or other shipping records, to substantiate those out-of-state sales if audited.

The letter also confirms the retailer may purchase the computer components and repair parts it resells tax-free, even for computers ultimately sold to out-of-state customers, by issuing a resale certificate to its own supplier when buying those components.

What this means for you

Computer and electronics retailers shipping out of state

Don't collect Texas sales tax on out-of-state shipments, but keep your shipping/postal documentation on file to prove the destination if the Comptroller ever audits those sales. You can still buy your inventory of components and repair parts tax-free with a resale certificate, regardless of where the finished product ends up being sold.

Common questions

Q: Do I need to collect Texas sales tax on a computer I ship to an out-of-state customer?
A: No, but you must keep documentation (postal receipts, shipping records) proving the item was shipped outside Texas.

Q: Can I buy computer parts tax-free if I'm going to resell the finished computer out of state?
A: Yes — use a resale certificate with your supplier; the ultimate out-of-state destination of the sale doesn't change that.

Q: Can another retailer rely on this exact letter?
A: No. This is a Texas STAR letter ruling binding on the Comptroller only for the taxpayer it addresses (34 Tex. Admin. Code Rules 3.1, 3.10); confirm your own facts with a tax professional.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9709820L

Original ruling text

September 17, 1997

RE: Total confusion about whom to tax

Dear *****:

I received your email. You asked that we address the taxability of computers
you sell and ship outside of Texas.

You are not required to collect Texas tax on computers or parts that you ship
outside Texas. You must retain documentation such as postal receipts or
shipping documents to substantiate these sales.

You may purchase the computer components and repair parts that you resell tax
free even if the computer is sold to a customer outside of Texas. To purchase
these items tax free, you must issue a resale certificate to your supplier.

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

I hope this information is helpful. If you have any questions, please do not
hesitate to contact me. I can be reached by phone at 1-800-531-5441, extension
5-0037, or by e-mail at . Our mailing address is Tax
Policy Division, Comptroller of Public Accounts, P. O. Box 13528, Austin, Texas
78711.

Sincerely,

Lindey Osborne
Tax Policy Division