![Texas Sales Tax Exemptions | Sales-for-Resale](https://www.taxconnections.com/taxblog/wp-content/uploads/JASON-HENDRIX-12.jpg?resize=90%2C90&ssl=1)
The Texas Tax Code provides that, as a general matter, Texas sales and use tax are imposed on sales of “tangible personal property” or “taxable services.” [1] However, various exemptions apply to these items to provide relief to taxpayers where public policy dictates it should be given. One of the more common exemptions is the “sale-for-resale” exemption. Broadly speaking, the sale-for-resale exemption provides that the purchase of a taxable item can be exempt from Texas sales and use tax if the purchaser intends to resell the item as, or as part of, another taxable transaction.
Complexities may arise in determining whether a sale-for-resale has occurred. Additionally, another layer of issues exists with respect to proving the exempt nature of a transaction.
The Sale-for-Resale Exemption
Texas Tax Code 151.302(a) provides that the “sale for resale” of a taxable item is exempted from Texas sales and use tax. [2] The phrase “sale for resale,” in turn, is defined to include several different transactions. Most commonly, a “sale for resale” means a sale of:
“…tangible personal property or a taxable service to a purchaser who acquires the property or service for the purpose of reselling it as a taxable item as defined by Section 151.010 in the United States of America or a possession or territory of the United States of America or in the United Mexican States in the normal course of business in the form or condition in which it is acquired or as an attachment to or integral part of other tangible personal property or taxable service…” [3]
Or…
“…a taxable service performed on tangible personal property that is held for sale by the purchaser of the taxable service…” [4]
Recent Comments