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How To Get A Texas Resale Certificate

By: Startup 101
Last Updated: November 15, 2024

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A Texas Resale Certificate allows businesses to purchase inventory without paying sales tax. This certificate is sometimes called a Sales Tax Exemption Certificate or a Texas Sales and Use Tax Resale Certificate. Regardless of the name, it helps business owners avoid tying up cash when buying inventory to sell.

Learn more about a resale certificate, how to get one, and more.

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 retailer then sends the collected sales tax 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, using 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 predetermined 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 for inventory that will be resold and not 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. 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 that the property is for resale and sign and date the certificate. 

If tangible personal property purchases are exclusively made for resale, only one certificate is needed. 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 current.

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?

Vendors can decline resale certificates, even if they’re valid and properly completed. While most accept resale certificates as standard practice, there’s no legal requirement for them to do so.

If a vendor refuses to accept your resale certificate, you can still complete the purchase by paying the sales tax. The tax paid in this situation isn’t lost – you can file a claim with the state to receive a refund or credit for the sales tax paid on items purchased for resale.

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 make the seller 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.

These are two of several registrations your business may need. To learn more, check out our guide to Texas business licenses.

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