Texas resale and exemption certificates let a seller document why Texas sales tax was not collected on a transaction. They are not interchangeable. A resale certificate applies when a purchaser acquires taxable items or services for resale, lease, or rental in the regular course of business. An exemption certificate applies when a specific statutory exemption covers the purchaser, item, or use.
The Texas Comptroller of Public Accounts administers Texas sales and use tax. The principal form for both claims is Form 01-339, Texas Sales and Use Tax Resale Certificate / Exemption Certification. Texas is not a home-rule state for sales-tax administration: local jurisdictions impose local taxes, but the Comptroller administers state sales-tax registration and reporting through the Texas Webfile system. For qualifying remote sellers, Texas offers a single local use tax rate as an alternative to tracking the local rate at every destination.
What is the difference between a Texas resale certificate and an exemption certificate?
A resale certificate is used by a purchaser that will resell, lease, or rent the taxable item, or use it in a qualifying way connected with a taxable sale or service. The purchaser does not pay tax to the supplier because tax is generally collected when the item or service is sold to the final customer. The purchaser must not use the certificate for items consumed by the purchaser rather than resold or transferred as contemplated by the certificate.
An exemption certificate is used when the purchase qualifies under a separate exemption. The reason may relate to the purchaser’s exempt status, the item, or the use of the item. For example, a nonprofit organization that has qualified for exemption with the Comptroller may use the exemption side of Form 01-339 for eligible purchases. The certificate must state the specific basis for exemption; a purchaser cannot turn an ordinary business purchase into an exempt purchase merely by describing the business as tax-exempt.
Both documents support the seller’s decision not to collect tax, but they support different legal positions. A resale certificate supports a resale claim. An exemption certificate supports a particular exemption claim. A sales-tax permit, taxpayer number, or business license by itself is not a substitute for the appropriate certificate.
When can you buy items for resale in Texas?
A purchaser may use a Texas resale certificate for taxable tangible personal property and taxable services intended for resale in the form or condition acquired, or intended to become an integral part of other merchandise or a taxable service. The Comptroller also identifies tangible personal property bought to lease or rent to a customer as a qualifying resale situation.
A resale certificate can also apply to a taxable service performed on tangible personal property held in resale inventory. It may cover tangible personal property bought to perform a taxable service when care, custody, and control of that property are transferred to the customer. The facts matter: property merely consumed by the service provider, used as business equipment, or retained for the provider’s own operations may not qualify as a resale purchase.
For ecommerce and cross-border sellers, keep the purchase documentation linked to the later sale, lease, rental, or taxable service. If goods are bought partly for resale and partly for business use, the certificate should not be used to avoid tax on the portion retained or consumed by the business. The exact treatment depends on the product, service, and transaction flow; confirm an uncertain position with the Texas Comptroller or have a specialist review it.
Who can use a Texas resale certificate, and do they need a permit?
A business that purchases qualifying taxable items for resale, lease, or rental may issue a Texas resale certificate. Texas guidance states that a purchaser using a resale certificate for purchases made for resale should have a sales tax permit. The certificate requires the purchaser’s Texas taxpayer number when the purchaser is registered in Texas.
The permit number alone does not establish a resale claim. The purchaser must give the supplier a properly completed resale certificate. The exact position here depends on your own facts, so it is worth confirming with the state directly or talking to us about your situation.
There are limited situations in which an out-of-state purchaser or a purchaser with another registration may provide the registration information required by the form. Because the permitted use depends on the purchaser’s status and the transaction, do not assume that an out-of-state registration automatically produces the same result as a Texas permit. Confirm the current form instructions and the buyer’s registration position before issuing the certificate.
What purchases qualify for a Texas exemption certificate?
An exemption certificate is appropriate only when the purchase qualifies under a Texas sales-tax exemption. Qualifying situations can include purchases by an organization that has received exempt status from the Texas Comptroller, as well as other item-specific, use-based, or purchaser-specific exemptions recognized by Texas law. A nonprofit’s general mission or federal tax status does not, by itself, prove that every purchase is exempt for Texas sales-tax purposes.
An authorized agent may make an eligible purchase in the name of a qualified exempt organization. The certificate should identify the organization and explain the specific reason the purchase is exempt. If an organization buys taxable items for resale and has a Texas sales-tax permit, it may use a resale certificate for that resale purchase; if it qualifies for another exemption, it may use the exemption certificate instead. The two claims should not be mixed.
Some purchases that appear business-related remain taxable because they are used by the purchaser rather than resold or because no applicable exemption covers them. If the reason is unclear, do not rely on a generic statement such as “for business use.” Check the Comptroller’s current exemption requirements or ask us to review the facts before tax is omitted.
How to complete a Texas resale certificate
Use the resale side of the current Form 01-339. Enter the purchaser’s legal name and address, the seller’s name and address, the purchaser’s Texas sales-tax permit or other required registration information, a description of the items or services being purchased, and a description of the goods or services the purchaser generally sells, leases, or rents. The purchaser must sign and date the certificate.
The description should be specific enough to connect the purchase with the purchaser’s regular business. “Merchandise” may be less useful than a description such as inventory products, leased equipment, or taxable services, when that is what the purchaser actually sells. The certificate should be provided to the seller at the time of purchase. A blanket resale certificate may be accepted where the purchaser buys exclusively for resale from that seller; the Comptroller’s guidance states that it remains effective until revoked in writing by the purchaser.
Do not use the certificate for personal purchases, business assets, or consumables that will not be resold or transferred in a qualifying transaction. If the facts change, stop using the certificate for the affected purchases and correct the tax treatment. Keep a copy of every certificate issued and the records showing what was purchased and how it was handled.
How to complete a Texas exemption certificate
Use the exemption side of the current Form 01-339. Identify the purchaser, seller, and item being bought, then state the specific reason the purchase is exempt. The form also includes the purchaser’s certification that the claimed exemption is valid and that the purchaser may become liable for tax if the exemption requirements are not met.
An exempt organization should use its legal name and ensure that its Texas exempt status covers the purchase. An authorized agent should identify the organization for which the purchase is made rather than claiming an exemption personally. A description such as “nonprofit purchase” is not enough if the organization’s status, the item, or the use must be established more precisely.
Give the completed certificate to the seller instead of paying the tax when the purchase qualifies. The certificate does not make a nonqualifying purchase exempt. If the seller reasonably needs more information to evaluate the claim, provide it or pay the tax and investigate whether a refund procedure is available. The Comptroller identifies Form 00-985 as an assignment-of-right-to-refund form in certain situations involving an exempt organization and a seller that does not accept its certificate.
When should a Texas seller accept or reject a certificate?
A seller may accept a certificate when it is complete, timely, signed where required, identifies the purchaser and seller, describes the purchase, and states a plausible resale or exemption basis. The seller should consider whether the purchaser’s business and the items being bought are consistent with the claimed treatment. A certificate is evidence for the seller’s records, not permission to ignore an obvious mismatch.
A seller can refuse a certificate that is incomplete, unsigned, altered, expired or otherwise unreliable, unsupported by the purchaser’s stated business, or used for items that are plainly being consumed by the purchaser. A seller also does not have to accept an exemption certificate merely because the purchaser presents one. If the seller rejects it, the seller should collect tax unless another documented basis applies.
The Comptroller states that a customer’s permit copy or taxpayer number alone is not a resale certificate. For an exempt sale, retain the completed certificate and any additional documentation needed to show why tax was not collected. When the facts are borderline, a practical approach is to pause the transaction, ask for a corrected certificate, or obtain a written review rather than accepting an unsupported claim.
What happens if a certificate is invalid or missing?
If a taxable sale is made without a valid certificate or another valid exemption basis, the seller may be responsible for the tax that should have been collected, along with applicable reporting consequences. The purchaser may also become liable when it used a certificate for a purchase that did not qualify. A certificate does not protect a party that knowingly or negligently uses it for the wrong purpose.
If the problem is discovered before filing, correct the customer record and collect the tax where possible. If the sale has already been reported, review the appropriate Texas correction process and preserve the explanation. Do not backdate or manufacture a certificate. Ask the purchaser to complete the current form accurately and retain the original transaction trail.
Texas guidance says resale certificates accepted by sellers should be retained in the seller’s books and records for four years. Keep the certificate with invoices, order details, shipping records, customer communications, exemption-status evidence, and any credit or tax-adjustment documentation. If a certificate’s validity depends on a fact you cannot verify, the safest course is to confirm the position with the Comptroller or have us check it.
Common Texas resale and exemption certificate situations
An ecommerce retailer buying products from a wholesaler for resale can generally provide a properly completed resale certificate rather than paying Texas tax to the wholesaler. When the retailer sells the products to the final customer, it must apply the normal Texas sales-tax rules to that sale. The certificate should not cover packaging, equipment, office supplies, or other items retained by the retailer unless a separate exemption applies.
A business that buys equipment to lease to customers may have a resale situation for the equipment, while a business buying equipment for its own warehouse or office generally has a different tax analysis. A service provider may qualify for resale treatment for property transferred to the customer in a taxable service, but property consumed without transfer may not qualify. Mixed-use purchases need to be separated or reviewed carefully.
A qualified nonprofit can use an exemption certificate for eligible purchases made in its exempt capacity. A nonprofit that sells taxable merchandise may need a sales-tax permit and may use a resale certificate for inventory bought for resale. A remote seller shipping into Texas must separately evaluate its Texas registration and collection obligations; certificates address the customer’s purchase status and do not eliminate the seller’s broader nexus or reporting responsibilities.
Texas forms, Webfile, and remote-seller local tax administration
Form 01-339 is the central Texas form for resale certificates and exemption certifications. The Comptroller also provides Form 01-339-S, the Spanish-language version. A Texas sales-tax permit application is handled through the Comptroller’s registration process, and registered businesses use the Texas Webfile system for applicable online filings and payments. Certificate forms are generally given to the seller and retained in business records rather than submitted with every sales-tax return.
Not sure how this applies to your business? We handle US sales tax registration, filing and remittance for ecommerce sellers as a fully managed service, for one fee. Book a free consultation and we will review your own position with you.
Texas remote sellers with Texas revenue at or above the state’s applicable registration threshold must evaluate permit and use-tax obligations. The Comptroller’s current remote-seller guidance identifies a safe-harbor threshold based on total Texas revenue in the preceding twelve calendar months and explains that the calculation includes taxable and nontaxable sales, sales for resale, sales to exempt entities, and certain separately stated charges. Because the threshold and administrative guidance should be checked for the current period, confirm the current Comptroller position before relying on it.
Texas offers qualifying remote sellers an alternative to calculating local use tax by destination: the single local use tax rate. The Comptroller currently publishes that rate and requires an election using Form 01-799 for sellers that choose the alternative. This option is for remote sellers and is not a general replacement for local-jurisdiction analysis by every Texas seller. It simplifies the local-rate mechanism, but it does not change whether a sale is taxable or whether a resale or exemption certificate is valid.
Texas certificate type, qualifying situation, required support, and common misuse
| Situation | Certificate or treatment | What supports the claim | Common error to avoid |
|---|---|---|---|
| Inventory bought for resale | Form 01-339 resale certificate | Purchaser’s required registration information, seller and purchaser details, item description, business description, signature, and date | Using the certificate for property retained, consumed, or used as business equipment |
| Tangible property bought to lease or rent | Form 01-339 resale certificate | Documentation showing the property will be leased or rented in the regular course of business | Treating a purchase for the purchaser’s own use as a resale purchase |
| Taxable service involving property transferred to the customer | Form 01-339 resale certificate where the statutory resale conditions are met | Description of the service and property flow showing qualifying transfer or resale | Assuming every service input qualifies merely because the customer is billed |
| Purchase by a qualified exempt organization | Form 01-339 exemption certification | Organization’s Texas exempt status, purchaser identity, item, and specific exemption reason | Relying only on federal nonprofit status or a generic nonprofit statement |
| Customer presents only a permit copy or taxpayer number | Not sufficient by itself | A properly completed resale certificate or another valid exemption document | Treating registration evidence as the certificate |
| Remote seller local tax collection | Destination local use tax or, if eligible and elected, single local use tax rate | Current Comptroller guidance and, for the alternative, the required Form 01-799 election | Assuming the alternative applies to all sellers or removes certificate obligations |
Frequently asked questions
What is the difference between a resale certificate and an exemption certificate?
A resale certificate applies when the purchaser acquires qualifying taxable items or services for resale, lease, or rental. An exemption certificate applies when a specific Texas exemption covers the purchaser, item, or use. A permit number or business license does not replace either certificate.
Who can use a Texas resale certificate?
A purchaser that buys qualifying taxable property or services for resale, lease, or rental in the regular course of business can use a resale certificate. Texas guidance generally expects a purchaser using a resale certificate to have the required sales-tax registration, and the certificate must contain the information required by the current form.
What purchases qualify for a Texas exemption certificate?
Only purchases covered by a specific Texas exemption qualify. Examples can include eligible purchases by an organization that has received exemption status from the Comptroller, but the exact result depends on the purchaser, item, and use. A purchase is not exempt simply because it is for business or made by a nonprofit.
Do you need a Texas sales tax permit to issue a resale certificate?
Texas guidance states that purchasers using resale certificates for resale purchases should have a sales-tax permit and that the certificate requires the purchaser’s required Texas taxpayer information. A permit copy alone is not enough; the purchaser must provide a properly completed resale certificate.
How do you fill out a Texas resale certificate?
Complete the resale side of current Form 01-339 with the purchaser and seller details, required registration information, item description, description of the purchaser’s regular business, signature, and date. Give it to the seller at the time of purchase and use it only for qualifying resale, lease, or rental purchases.
How do you fill out a Texas exemption certificate?
Complete the exemption side of Form 01-339, identify the purchaser and seller, describe the item, and state the specific reason the purchase is exempt. The purchaser should ensure that its status and the particular purchase satisfy Texas requirements before signing.
When can a seller refuse a certificate?
A seller can refuse a certificate that is incomplete, unsupported, inconsistent with the purchaser’s business or the item, or otherwise unreliable. Texas sellers do not have to accept every exemption certificate. If the certificate is rejected, the seller should collect tax unless another valid basis applies.
What records should be kept to support exempt sales?
Keep the completed certificate, invoices, order and shipping records, customer communications, exemption-status evidence where relevant, and records of corrections or refunds. The Texas Comptroller states that accepted resale certificates should be retained in the seller’s books and records for four years.
How we handle this for you
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See our sales tax compliance services, check where you have obligations with the nexus calculator, or talk to us about Texas.
Official sources
- https://comptroller.texas.gov/taxes/sales/faq/resale.php
- https://comptroller.texas.gov/taxes/sales/forms/
- https://comptroller.texas.gov/taxes/publications/94-171.php
- https://comptroller.texas.gov/taxes/sales/remote-sellers-marketplace-faq.php
- https://comptroller.texas.gov/taxes/publications/94-105.php
- https://comptroller.texas.gov/taxes/publications/96-122.php
Reviewed by Paul le Roux, CA(SA). Sales Tax Compliance USA handles US sales tax registration, filing and remittance for cross-border and domestic ecommerce sellers as a fully managed service.
This page is general information for educational purposes and does not constitute legal or tax advice. Sales tax rules change and depend on your specific facts. Consult a qualified tax professional about your own position.
Related guides
Other Texas guides: Amazon FBA · Audit defence · Back sales tax · Deregistration · Economic nexus · Filing
Resale certificates in nearby states: Louisiana
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