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How To Get A Texas Resale Certificate

How To Get A Texas Resale Certificate

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How To Get A Texas Resale Certificate

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.

Related: Guide to starting a business in Texas

What is a Texas Resale Certificate?

When 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.

Steps to fill out the Texas Sales and Use Tax Resale Certificate (Form 01-339

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.

Texas Resale Certificate FAQs

How much does a Texas Resale Certificate cost?

There is no cost for a resale certificate in Texas.

Does a Texas Resale Certificate Expire?

Texas Sales and Use Tax Resale Certificates don’t expire, though a vendor should periodically request a new one every few years to ensure all information is up to date.

Where do I file the Texas sales tax exemption certificate?

In Texas, the Resale Certificate of Exemption is not filed with any government agency. Instead, it is kept by the seller (the business selling the merchandise for resale).

How often is Texas sales tax due?

Most new businesses in Texas are set up to file and pay sales and use tax monthly, but depending on the amount of tax collected, your business may have an annual filing requirement instead.

Are sellers required to accept resale certificates?

Sellers are not required to accept resale certificates for tax-free purchases; however, most do. If the vendor doesn’t accept the certificate, the buyer will have to pay sales tax on the merchandise being purchased. In most cases, a credit will be provided on the Texas sales tax filing. 

What steps should a business take to accept a resale certificate?

When a business is presented with a resale certificate, the seller has the burden of proof to verify that the buyer’s information is correct and to keep these records. Failing to verify this information may result in the seller being liable for Texas sales taxes.

Before accepting a resale certificate, a seller should:

– Review the resale certificate to make sure it is completely filled out. 
– Verify the purchaser has a valid Sales Tax Permit by visiting the Texas Comptroller of Public Accounts Taxpayer Search database.
– Sellers are also responsible for examining the certificate and evaluating whether the goods sold are reasonably consistent with the purchaser’s line of business.  For example, if the buyer’s business is a car dealership but wants to purchase office supplies tax-free, the seller should investigate further.  
– Keep a file of resale certificates and records of tax-free transactions for four years. 

Is a Resale Certificate the same as a Sales Tax Permit?

No – The Sales Tax Permit and Resale Certificate are commonly thought of as the same thing, but they are actually two separate documents. The Sales Tax Permit allows a business to sell and collect sales tax from taxable products and services in the state, while the Resale Certificate allows the retailer to make tax-exempt purchases for products they intend to resell.

Author

  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

How To Get A Texas Resale Certificate

How To Get A Texas Resale Certificate

13 Responses

  1. hi I had a question? so once the form is filled, I don’t send it to anyone ? I’m just confused, I have my sales and use tax permit but I didn’t know about the resellers until now and I’ve bought product to resell so I’m just stuck on what to do next. I did pay tax on the items I’ve bought already, would I have to include tax in those prices ill be selling the product? how to I get the permit after filling out?

    1. Hi Andrea – This is a common question, and the only time you send off a resale certificate is when a vendor you are buying merchandise to resell asks for it.

      You can get a credit for the sales taxes you already paid for resold items, but you will have to file electronically (see item j on the Texas Sales and Use Tax Return instructions – https://comptroller.texas.gov/forms/01-922.pdf. A report will need to be filed each month, even if you made no sales. You have the option of filing online or paper form 01-114 (long form) https://comptroller.texas.gov/forms/01-922.pdf or 01-117 (short form) https://comptroller.texas.gov/forms/01-117.pdf.

      Hope this helps!
      Greg

    1. Hi Laura – It typically won’t be. The vendor will ask for it when you are getting set up to purchase at wholesale. In Texas, this form doesn’t expire, but the vendor may routinely ask for an updated form every year to ensure the information is up to date.

      Hope that clears things up. If not, let me know!
      Greg

  2. If I am in Texas and have a sales and use tax permit number- am I only able to buy wholesale from vendors in Texas? How can I buy wholesale from suppliers in other States?

    1. Hi Jessica – You can buy from vendors anywhere and not pay sales tax. They will just need your Texas resale certificate information.

      Please let me know if you have any other questions!

      Greg

  3. Looking forward to buy wholesale in Texas. The form above is needed correct. Whom do I mail it to to get the permit number?

    1. Hi Joesph – The only people you will send the form to is a vendor when they request it. It is the wholesaler’s responsibility to request the form and keep it on file in case they are ever audited.

      Hope that helps!
      Greg

  4. Thank you for the informations. I have my sales and use tax certificate but resale. Can we file/apply 01-339 online via webfile or we have to mail form to comptroller office?

    1. The only option is to download the pdf, but it doesn’t get sent to the Compttroller’s Office. The resale certificate will only go to your vendor.

      Thanks for the question!
      Greg

  5. Hello I have a question. I live in Texas and I want to open my online business and sell digital products only. Would i need a permit?

    1. Maybe – A seller’s permit is required for digital goods in Texas if the items would be taxable if delivered in physical form, such as books, movies, audiobooks, etc. Clear, right 🙂

      Here is some more information from the state of Texas regarding taxable services. This is the full tax law, and very hard to read, so if you aren’t sure, you may want to talk with a CPA to verify the goods you are selling – https://statutes.capitol.texas.gov/Docs/TX/htm/TX.151.htm

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