A company bought a used forklift at a Texas auction intending to export it abroad, but the forklift needed major repairs first and sat at a Texas repair facility for several months before shipping. The company sought a refund of the sales tax it paid, arguing it never stored or actually used the forklift — only had it repaired. Does the export exemption apply?

Plain-English summary

A company bought a used 1962-model rough terrain forklift at a Texas auction in September 1997, intending it for use at its inspection yard and ultimately for export. The forklift needed major repairs before it could be shipped abroad, and sat undergoing repairs at a Texas facility from around the purchase date through the first week of January 1998 (the company submitted invoices for three separate repair jobs). The company argued it had never stored or actually used the forklift itself, and — with proof of the eventual export attached — asked for a refund of the Texas sales tax paid on the original purchase, believing the export exemption should apply.

The Comptroller denied the refund. The reasoning: having the forklift refurbished/repaired in Texas AFTER the company had already taken title to it counts as a USE of that forklift IN Texas — and that use causes the loss of the export exemption on the original purchase, regardless of the fact that the company itself never operated the equipment and it was eventually shipped out of the country as promised.

What this means for you

Businesses buying used equipment in Texas intending to export it

Don't assume the export exemption survives just because you personally never "use" the equipment in the operational sense. Having repair/refurbishing work done on equipment you already own, while it's still in Texas, counts as a taxable USE that can forfeit the export exemption — even if the equipment is later genuinely exported with documentation to prove it.

Exporters planning repairs before shipment

If equipment needs significant repair work before it can be shipped, consider the sequencing and location of that repair carefully — repairing it in Texas after taking title appears to trigger loss of the export exemption under this letter's reasoning, a real cost to factor into export equipment deals.

Accountants and tax professionals

This letter draws a strict line: "use" for export-exemption purposes isn't limited to operational use by the buyer — it extends to having the property refurbished/repaired while the buyer holds title, even absent any operational deployment in Texas.

Common questions

Q: I bought used equipment in Texas planning to export it, but it needed repairs before shipping. Does the export exemption still apply?
A: Not necessarily — having the equipment repaired in Texas after taking title counts as a taxable use, per this letter, which can forfeit the export exemption on the original purchase.

Q: Does it matter that the company never operated the forklift itself and later proved the export actually happened?
A: No — the Comptroller found the refurbishing itself to be the disqualifying "use," regardless of operational use or eventual proof of export.

Q: Can I rely on this letter for my own export equipment purchase?
A: No. It's based on the facts presented, and the letter notes the opinion may change on additional or different facts.

Citations and references

No specific Tax Code section or rule number was cited in this letter; the Comptroller applied the general principle that use of property in Texas (including repair/refurbishing) after taking title forfeits the export exemption.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9803317L

Original ruling text

March 12, 1998

Dear Ms. **:

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

We bought 1-EA Rough Terrain Forklift, used Mdl. "Pro Lift" 1962, to be used at
our Inspection Yard located in **, this equipment was purchased at
an auction, that took place on September 11, 1997 in **, as per
invoice attached from ** for US $ **.

The Forklift needed major repairs before being shipped abroad and was during
the repair services at ** facilities until the first week of
January 98. Please find attached copies of invoices for three different jobs
done to this Forklift.

Based on this situation stated above that reflects that have not stored, nor
made use of the Forklift, we would appreciate very much if you grant us with
the refund of the sales tax paid for the amount of US $ **. Proof
of export is being attached to this letter.

Response: The refurbishing of the forklift after your firm had taken title to
the forklift is a use of that forklift in Texas and causes the loss of the
export exemption on the original purchase of the forklift.

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

You may call me toll free at 1-800-531-5441, ext. 3-4680. The direct line is
512/463-4680. You may also write to Tax Policy, Comptroller of Public
Accounts. The email address is .

Sincerely,

Al Van Allen
Tax Policy Division