A Texas Resale Certificate allows businesses to purchase inventory without paying sales tax. This certificate is also sometimes called a Sales Tax Exemption Certificate or a Texas Sales and Use Tax Resale Certificate, but regardless, this certificate helps business owners from tying up cash when buying inventory to sell.
Learn more about what a resale certificate is, how to get one, and more.
Table of ContentsWhen retailers purchase products to resell, they often don’t pay state sales tax to the supplier on the purchase. The sales tax will still be paid, but instead of the retailer paying sales tax, the retailer charges sales tax to their customer on the final value of the merchandise. The collected sales tax is then sent by the retailer to the Texas Comptroller of Public Accounts.
For instance, when a specialty tea shop in Texas sources exotic tea blends to sell in their store, the use of a resale certificate means the shop owner doesn’t have to pay sales tax on their inventory. Instead, when the tea is sold to the customer who will consume it, the retailer applies sales tax to the full cost of the tea at this point.
The tea shop gathers the sales tax from all its transactions throughout a given period, usually at the end of the month. After the month ends, the store sends this collected sales tax to the state.
It is important to note that the sales tax exemption is only intended to be used for inventory that will be resold and not intended for the tax-free purchase of items used in normal business operations, such as paper, pens, etc.
Before a business starts selling products or providing taxable services, it must first get a Texas Sales Tax Permit from the Texas Comptroller of Public Accounts. The Sales Tax Permit is sometimes referred to as a seller’s permit, sales tax number, or sales tax license. After registering, an 11-digit Texas Sales and Use Tax Permit Number will be provided by the Comptroller’s office and will be used on the Resale Certificate.
Step 1: Begin by downloading the Texas Sales and Use Tax Resale Certificate Form 01-339
Step 2: Identify the name, address, and phone number of the purchaser
Step 3: Enter the Texas Sales and Use Tax Permit Number, or if the purchaser is out-of-state, include their state’s sales tax permit number
Step 4: Include the name and street address of the seller
Step 5: Provide a description of the items to be purchased
Step 6: Describe what the buyer’s business sells
Step 7: The purchaser will certify the property being purchased is for resale and sign and date the certificate.
Only one certificate is needed if tangible personal property purchases are exclusively made for resale. The blanket certificate should state that all purchases will be resold in the normal course of business.
There is no cost for a resale certificate in Texas.