Texas Resale Tax Certificate Verification (2024)

FAQs

How to fill out a resale certificate in Texas? ›

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.

Texas Resale vs.

Intended Use: The Resale Certificate is used for buying products intended for resale, while the Exemption Certificate is used for tax-exempt organizations or specific types of transactions.

What does it cost to get a Texas Resale Certificate? Nothing. Resale certificates in Texas are free.

Higher reported sales

Gross sales reported is the single biggest driving factor in the audit selection process. It is simple math: the higher your reported sales, the higher your potential tax exposure. The Comptroller knows this, so they audit larger businesses on a more regular basis.

Usually the resale certificate is considered part of the transfer fees to transfer the property from the seller to the buyer. This cost is normally borne by the buyer. However, the parties in the purchase and sale contract can agree to have the seller pay it or to split the cost instead of it being a buyer cost.

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.

A seller's permit is a state license that allows you to sell items at the wholesale or retail level and to issue resale certificates to suppliers. Issuing a resale certificate allows you to buy items you will sell in your business operations without paying amounts for tax to your suppliers.

The resale certificate must also state the type business engaged in by the purchaser and the type items sold in the regular course of business. A resale certificate may be accepted from the out-of-state retailer even if the Texas retailer ships or delivers the taxable item directly to a recipient located inside Texas.

While associations have their own sets of rules, some requirements are alike for all Texas transactions with mandatory associations. In Texas, the seller must provide a resale certificate to the buyer by the deadline stated in the purchase contract.

What tax rate do I use? The Texas state sales and use tax rate is 6.25 percent, but local taxing jurisdictions (cities, counties, special-purpose districts and transit authorities) also may impose sales and use tax up to 2 percent for a total maximum combined rate of 8.25 percent.

Who qualifies for sales tax exemption in Texas? ›

Tax-exempt customers

Some customers are exempt from paying sales tax under Texas law. Examples include government agencies, some nonprofit organizations, and merchants purchasing goods for resale. Sellers are required to collect a valid exemption or resale certificate from buyers to validate each exempt transaction.

Too many deductions taken are the most common self-employed audit red flags. The IRS will examine whether you are running a legitimate business and making a profit or just making a bit of money from your hobby. Be sure to keep receipts and document all expenses as it can make things a bit ore awkward if you don't.

Auditors examine financial documents and compare total sales revenue with sales that resulted in the collection of sales tax. The process also involves a review of sales tax payable against the sales tax the company actually paid.

The types of tests that can be performed will vary by company, but the audit team will generally send confirmations to customers, examine invoices, or vouch customer payments to the bank statement.

You will need to apply using form AP-201, Texas Application (PDF). Email the application to sales.applications@cpa.texas.gov or fax the application to 512-936-0010. To complete the application, you will need the following documentation: Sole owner's Social Security number.

A seller's permit is a state license that allows you to sell items at the wholesale or retail level and to issue resale certificates to suppliers. Issuing a resale certificate allows you to buy items you will sell in your business operations without paying amounts for tax to your suppliers.

In order to stay in compliance with the state's tax laws, you need to file certain paperwork for your business. Unlike some states, Texas does not issue special reseller licenses or permits. However, businesses are required to issue resale certificates.