How to Get a Resale Certificate in Texas

If you have recently launched or are planning to launch a business that will sell products or services in Texas, you may want to get a resale certificate, or several of them, before you start doing business, as this can save you a lot of time and money. 

It’s a relatively simple process, as detailed in this step-by-step guide. 

What is a Resale Certificate? 

If your business has a valid resale certificate, you can buy goods from a wholesaler without paying Texas sales tax, though you may pay a use tax. Depending on the size of your business, this can save you tens of thousands of dollars each year. 

The catch is that whenever you do use a resale certificate to purchase goods, you are legally bound to resell those items and collect sales tax when you do so. If you do not resell those items, or fail to collect sales tax, the punishment could be costly fines or potential jail time.

Keep in mind, each resale certificate, also known as a resale license, applies to a single vendor. This means you’ll need a resale certificate for each one of your vendors. 

You cannot use a resale certificate to buy items you do not intend to resell, such as a new computer for your business. This would be tax fraud, a felony offense. You are only able to buy items tax-exempt if you are going to collect sales tax on them later.

Not all wholesalers will accept resale certificates, nor do they have to. They may choose not to because of the risk of expired or false certificates, which would put the wholesaler on the hook for the sales tax.

How to Apply for a Resale Certificate in Texas

In Texas, you’ll need to obtain the resale certificate form from the Comptroller. The certificate is not filed with the state of Texas, it’s simply kept on file by the seller.

In a few states, a seller’s permit, or sales tax permit, also serves as a resale certificate that applies to all vendors. But in most states, including Texas, you’ll need a seller’s permit as well as resale certificates for each of your vendors. 

The seller’s permit identifies you with your state as a collector of sales tax. If you sell tangible personal property or goods you are required to have a sales tax permit. In some states, even a service provider like a lawyer is required to have a sales tax permit and collect state sales tax.

The resale certificate applies to items that you buy for resale, or for parts that you buy to manufacture something for sale. 

How to Fill out the Texas Resale Certificate

In Texas, the Comptroller handles the issuance of resale certificates. Start by visiting the website, then follow these simple steps:

1. On the Sales and Use Tax Forms page, scroll down to Resale and Exemption Certificates and click the 01-339 link to download the form.
2. First, enter your business contact information, including your Texas Sales and Use Tax Permit Number.

3. Next, enter your seller’s information, along with a description of the purchased items and business activity. 

4. Lastly, sign and date the form and keep a copy for your records. 

For assistance, contact the Texas Comptroller at 800-252-5555.

Does a Texas Resale Certificate Expire?

In Texas, resale certificates do not expire.

Conclusion 

Resale certificates can be a bit of a hassle, but in Texas they are an absolute necessity. So take the time to get certificates for each of your vendors to ensure full compliance with your state’s tax regulations.