Texas Register, Volume 42, Number 43, Pages 5913-6056, October 27, 2017 Page: 6,027
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izes existing comptroller policy that a purchaser may not issue a
resale certificate to purchase items for resale outside the United
States or Mexico. Such sales do not fall within the definition of
a sale for resale provided in subsection (b). Purchasers are di-
rected to 3.323 of this title. Other minor changes to the wording
of subsection (d) are made for readability and are not intended
to change the meaning of the subsection.
Subsection (e) is amended by changing the heading from "Im-
proper use of items purchased for resale" to "Taxable use of
items purchased for resale; items removed from tax-free inven-
tory." The information currently provided in this subsection is re-
organized, additional headings are added, and the words "tangi-
ble personal property" and "tangible personal property or a tax-
able service" have been replaced, when appropriate, with the
defined term "taxable item." Information regarding property used
outside the state is moved to new paragraph (4). Paragraphs (2)
through (4) of the current subsection are relettered as paragraph
(1)(A), (B), and (C). Paragraphs (5) and (6) are renumbered ac-
cordingly. Other minor changes to the wording are intended to
make the subsection easier to read, and are not intended to alter
the meaning of the subsection.
New subsection (e)(4) addresses items that are used outside
of Texas. New subsection (e)(5) memorializes comptroller pol-
icy, which is not reflected in the current section, that tax is not
due on tangible personal property that is totally destroyed or per-
manently disposed of in a manner other than for use or sale in
the normal course of business. See Comptroller's Decision No.
28,901 (1993) and STAR Accession No. 9606L1417A08 (June
10, 1996).
Subsection (f), concerning the improper use of a resale certifi-
cate, is amended by adding "criminal offenses" to the heading
and replacing language relating to the specific criminal penalties
with a reference to 3.305 of this title (relating to Criminal Of-
fenses and Penalties).
Subsection (g), concerning the content of a resale certificate, is
amended to delete the use of the term "permanent" in connection
with a permit number issued by the comptroller, as the term is
no longer used. Subsection (g)(2) is further amended to delete
a reference to 11 digit Texas tax permit numbers beginning with
the number 2, as such numbers no longer exist.
Subsection (h), concerning the proper form of a resale certifi-
cate, is amended to reflect that the comptroller will no longer
adopt by reference the Texas Sales and Use Tax Resale Certifi-
cate or a Border States Uniform Sale for Resale Certificate; to
update instructions for taxpayers to obtain a copy of a Texas re-
sale certificate; and to advise taxpayers that a seller may accept
the Uniform Sales and Use Tax Certificate-Multijurisdiction as a
resale certificate, but may not accept the Streamlined Sales and
Use Tax Agreement Certificate of Exemption.
The amendments are adopted under Tax Code, 111.002
(Comptroller's Rules, Compliance, Forfeiture), which provides
the comptroller with the authority to prescribe, adopt, and
enforce rules relating to the administration and enforcement of
the provisions of Tax Code, Title 2.
The amendments implement Tax Code, 151.006, ("Sale for
Resale"), 151.010 (Taxable Item), 151.011 ("Use" and "Stor-
age"), 151.025 (Records Required to be Kept), 151.054 (Gross
Receipts Presumed Subject to Tax), 151.058 (Property Used to
Provide Taxable Services and Sales Price of Taxable Services),
151.104 (Sale for Storage, Use, or Consumption Presumed),
151.151 (Resale Certificate), 151.152 (Resale Certificate:Form), 151.154 (Resale Certificate: Liability of Purchaser), and
151.302 (Sales for Resale).
3.285. Resale Certificate; Sales for Resale.
(a) Definitions. The following words and terms, when used
in this section, shall have the following meanings, unless the context
clearly indicates otherwise.
(1) Equipment--Any apparatus, device, or simple machine
used to perform a service.
(2) Federal government--The government of the United
States of America and its unincorporated agencies and instrumen-
talities, including all parts of the executive, legislative, and judicial
branches and all independent boards, commissions, and agencies of the
United States government unless otherwise designated in this section.
(3) Integral part--An essential element without which the
whole would not be complete. One taxable item is an integral part of
a second item if the taxable item is necessary, as opposed to desirable,
for the completion of the second item, and if the second item could not
be provided as a whole without the taxable item.
(4) Internet hosting service--The provision to an unrelated
user of access over the Internet to computer services using property
that is owned or leased and managed by the service provider and on
which the unrelated user may store or process the user's own data or
use software that is owned, licensed, or leased by the unrelated user or
service provider. The term does not include telecommunications ser-
vices as defined in 3.344 of this title (relating to Telecommunications
Services).
(5) Machinery--All power-operated machines.
(6) Mexico--Within the geographical limits of the United
Mexican States.
(7) Purchaser--A person who is in the business of selling,
leasing, or renting taxable items.
(8) Seller--Every retailer, wholesaler, distributor, manufac-
turer, or any other person who sells, leases, rents, or transfers ownership
of tangible personal property or performs taxable services in this state
for consideration. Specific types of sellers, such as direct sales orga-
nizations, pawnbrokers, and auctioneers, are further defined in 3.286
of this title (relating to Seller's and Purchaser's Responsibilities, includ-
ing Nexus, Permits, Returns and Reporting Periods, and Collection and
Exemption Rules).
(9) Taxable item--Tangible personal property and taxable
services. Except as otherwise provided by Tax Code, Chapter 151, the
sale or use of a taxable item in an electronic form instead of on physical
media does not alter the item's tax status.
(10) Tax-free inventory--A stock of tangible personal prop-
erty purchased tax-free for resale, whether from out-of-state or by issu-
ing a properly completed resale certificate, by a purchaser who, at the
time of purchase:
(A) holds a valid Texas sales and use tax permit;
(B) makes sales of taxable items in the regular course
of business; and
(C) does not know whether the tangible personal prop-
erty will be resold in the normal course of business or used in the per-
formance of a service.
(11) United States--Within the geographical limits of the
United States of America or within the territories and possessions of
the United States of America.ADOPTED RULES October 27, 2017 42 TexReg 6027
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Texas. Secretary of State. Texas Register, Volume 42, Number 43, Pages 5913-6056, October 27, 2017, periodical, October 27, 2017; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth897027/m1/115/?q=%22%22~1: accessed July 16, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.