How To Use a Texas Resale Certificate

by TaxJar October 19, 2016

If you buy products to resale in the state of Texas, you can avoid paying sales tax on your purchase by using a Texas resale certificate. Always keep in mind that you should only use your resale certificate to buy items you intend to resale. Any other use of the resale certificate by an individual is usually considered unlawful. (Yikes!)

If You Wish to Use a Texas Resale Certificate

Using a resale certificate in Texas is fairly straightforward, you can print one online.

In Texas, unlike in other states, resale certificates and sales tax permits are not interchangeable. (Though, if you live and have sales tax nexus in Texas and are buying something for resale in Texas then you should have a Texas sales tax permit.) Texas retailers who accept resale certificates can also accept out-of-state resale certificates. You can also generally use a Texas resale certificate if you intend to buy items and then resell them across the border in Mexico.

Keep in mind that if you are registered for a Texas sales tax permit, you are required to collect sales tax from your Texas buyers.

If You are Presented with a Texas Resale Certificate

If you are a retailer with nexus in Texas and your buyer presents you with a resale certificate, you should do the following:

Make sure the Texas Resale Certificate form is completely filled out – This includes the buyer’s name and what they sell, your store name, and a detailed description of the items bought for resale. You should also have the buyer’s address and signature. Don’t skip this step, because it could protect you in case of an audit!
Check it with the state – Use this link to verify a Texas resale certificate. You can see where to verify retail certificates from every state here.
Keep it on file – Again, this is to protect yourself in case an auditor comes knocking and asks why you didn’t collect sales tax from a certain customer. As long as the none of the buyer’s info has changed and they are buying the same types of products from you for resale, the Texas resale certificate should not expire.

I hope this has shed some light on using resale certificates in Texas. Want to learn more about TaxJar? Get started here to learn how TaxJar works!