Sale Tax Reseller Or Exemption Certificates

A taxable item that is purchased for resale is exempt from sales or use tax if the seller accepts a properly completed Form 01-339, Texas Sales and Use Tax Resale Certificate (PDF), instead of collecting the sales tax due. The resale certificate is the seller’s evidence as to why sales tax was not collected on that transaction and should be retained in the seller’s books and records for four years.

You can use a resale certificate to purchase the following items tax free:

• taxable items (tangible personal property and taxable services) that you intend to resell in the form or condition in which you acquired it from your vendor or that you intend to resell as an integral part of other merchandise or taxable service
• tangible personal property that you buy to lease or rent to your customer
• a taxable service performed on tangible personal property in your resale inventory
• tangible personal property that you buy to use in performing a taxable service when you transfer the care, custody and control of the tangible personal property to your customer

If you use the merchandise that you purchased by issuing a resale certificate, then you owe tax on the merchandise. (For example, you purchased brooms for resale, but pulled one out of inventory and used it to sweep your store.) You must pay the sales tax either on the fair market rental value for the period of use of the merchandise or on your purchase price of the item. You can do this by including this amount in the “taxable purchases” line of your return.