How To Get A Resale Certificate In Texas

Texas has a population of approximately 29 million, which makes it an excellent location for just about any business. If you have considered selling goods or services within this state, you have an above-average chance of thriving. One of the basic things you should do before your venture begins is to ensure you comply with the set tax laws.

In Texas, one is not required to have a reseller permit or license. However, if you intend to buy and resell items within the state a reseller certificate will help save you money on taxes as you will not be required to pay sales taxes on items in which you intend to resell.

In a hurry? You can download your Texas Resale Certificate from the Texas Comptroller site.

Read on to learn more details, including how to get a resale certificate in Texas.

Resale Certificate General Description

Taxable items intended for resale are not subject to sales tax in Texas. If you are running an auto spare part shop, for instance, the inventory acquired from the wholesaler is exempt from tax. This is because you plan to sell your merchandise to your customers and amass tax from the sales.

So, what happens when you approach the wholesaler?

If you produce a resale certificate, the wholesaler will allow you to purchase the goods tax-free. In the same regard, a sales tax will be included in the goods if you fail to produce this certificate. This is irrespective of the size of the purchase you make.

Your resale certificate proves that you plan to resell the goods purchased, making it unnecessary to collect sales tax at that point.

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How Do I Obtain A Resale Certificate In Texas?

Obtaining a resale certificate in Texas is not as challenging as many may assume. You merely need to fill it out. You can get this form in PDF on the Texas Comptroller's website or by clicking HERE. This is the same site you should visit to get other necessary business tax forms.

Filling out the forms is easy-peasy. The process merely requires providing basic information such as your Texas sales tax permit number, a general description of your type of merchandise, your name, and your address. If you apply for a blanket resale certificate, it will remain valid for as long as the authorities don't revoke it in writing.

Guide for Filling out Form 01-339

One certificate is enough to show that all purchases are intended to be resold and, therefore, exempt from taxation. This makes the process of filling out Form 01-339 relatively easy because you can always apply for a blanket certificate. For you to avoid getting into trouble with the taxman and for a seller to accept your certificate, it is crucial to have filled out Form 01-339 correctly.

Here is a step-by-step guide on how to fill out this important form.

Step 1

Download Form 01-339- Texas Sales and Use Tax Resale Certificate

Step 2

Provide basic information about your name, phone number, and address

Step 3

Key in the Texas Sales and Use Tax Permit Number

Step 4

Provide the name and address of a seller

Step 5

Describe the items to be acquired in brief

Step 6

Describe your business and what you sell in brief

Step 7

Indicate that the property you want to buy is for resale. Include the date on the certificate and sign.

How and When To Use A Resale Certificate

Once you have obtained your resale certificate, you must submit it to a seller anytime you want to acquire resale goods. It is illegal for a seller to allow you to purchase goods tax-free if you fail to produce your original resale certification.

As the holder of a resale certificate in the state, your responsibilities include:

Don't use the resale certificate when purchasing goods not intended for resale.
If you opt not to resell an item you purchased tax-free using the certificate, make sure you take care of the taxes you are owned.
Don't use the certificate as a means to evade taxes. This is illegal and can be charged as a felony or misdemeanor, depending on the accumulated taxes that are evaded. Evaded taxes amounting to more than $750 but less than $20,000 can attract third-degree felony charges. On the other hand, evaded taxes amounting to $20,000 or more attract second-degree felony charges.

Sellers also have responsibilities that cannot be escaped when accepting resale certificates. They include:

You have to confirm the proper completion and validity of the resale certificate.
Don't accept certificates if you suspect the goods being bought are not for resale purposes.
You must keep each retail certificate for about four years in your records. This allows you to validate claims that goods bought were for resale and hence exempted from tax.

What Should You Do If Someone Presents To You a Texas Resale Certificate?

Whether you are a wholesaler or retailer, someone may present a resale certificate when making a purchase. Here are the steps to take:

Step 1- Do a Brief Verification Process

It is crucial to confirm that the Texas resale certificate presented is filled out with all the essential information. This may include the buyer's name and the items they sell, a general description of the goods bought for resale purposes, and the name of your store. Additionally, ensure you get the address and signature of the buyer.

The need to verify that a certificate contains all the vital information must not be underestimated. If any of the details are missing and you still proceed to offer a tax-free purchase, you may end up in trouble in case of an audit.

Step 2- Verify the Authenticity of the Certificate

If a Texas resale certificate has all the needed information, this is a good sign. However, it would be best to protect yourself further by checking the validity of the document with the state. This can easily be done online through a Comptroller's Sales Tax Permit Search.

Step 3- Keep Your Records

Having the certificate on file is essential, just in case the auditors knock on your door because of sales taxes that were dodged. Usually, a buyer can use the same certificate as long as their information does not change, and they continue trading in the same selection of products.

Unique History of Texas Resale Certificates

Texas resale certificates, however, differ from the federal and state versions. Resale certificates in Texas were first implemented as a legislative solution to curb tax fraud by required requiring people who buy goods for resale to out-of-state resellers to complete a certificate detailing certain information about their business and deliver it to the out-of-state seller, who is required to retain the certificate for at least 6 months.

What is a Texas Seller's Permit?

A Texas Reseller Certificate-often referred to as a Texas Sales Tax Exemption certificate is a document that wholesalers can provide to sellers to indicate not to charge sales tax because the products are intended to be resold.

Why is the Texas Comptroller of Public accounts?

The Texas Comptroller is one of the largest state agencies that serve citizens of the state. The comptroller's office primarily collects taxable services and revenue and keeps the books for the state government.

What are the rules for resellers in Texas?

You can use a texas resale certificate tax-free for items that you intend to resell in the same condition within the state of Texas. You can also use it for a property that you own that you lease or rent to customers.

How much is a reseller permit in Texas?

A texas resale certificate is completely free and can be downloaded from the Texas Comptroller website. It is intended for those engaged in business that is intending to make non-taxable purchases for resale.

Conclusion

There you have it, detailed information about how to get a resale certificate in Texas, how to use it, and even the responsibilities you have as a certificate holder. We hope this post answers all the questions you may have and helps you avoid paying duplicate sales tax, especially if you want to start a venture within the state.