Securing a Texas Resale Certificate is a smart move to protect your margins and streamline operations if you run an Ecommerce or CPG business in Texas,
This certificate allows you to purchase inventory and raw materials tax-free, helping you lower upfront costs, stay competitive in pricing, and remain compliant with Texas sales tax laws.
Understanding Resale Certificates in Texas
What is a Texas Resale Certificate?
In Texas, a Sales and Use Tax Resale Certificate or Exemption Certification is a document issued by the Texas Comptroller’s Office that allows businesses to:
- Purchase goods without paying sales tax, provided these goods are intended for resale to their customers in the normal course of their business.
- Make tax-exempt purchases of inventory and materials that will become part of the products they sell by presenting a valid resale certificate to their suppliers.
The purpose is to prevent double taxation—once at the wholesale level and again at the point of retail sale. However, a resale certificate is not a blanket exemption from all sales tax obligations. Businesses are still required to collect and remit sales tax on taxable sales to end consumers.
Why do you need a Resale Certificate in Texas?
Obtaining a resale certificate in Texas offers several significant advantages for businesses that purchase goods for resale.
Here are some key benefits:
- Avoid Paying Sales Tax on Inventory: The most direct benefit is purchasing inventory and materials that will be resold to customers without paying Texas’s sales tax upfront.
- Maintain Competitive Pricing: By not paying sales tax on the cost of goods, businesses have more flexibility in setting competitive prices for products in the Texas market. This can be a crucial advantage, especially in price-sensitive industries.
- Legal Compliance: Possessing and using a valid resale certificate for eligible purchases ensures businesses comply with Texas’s sales tax laws and regulations to avoid penalties.
In Texas, the specific form required for a resale certificate is the Texas Sales and Use Tax Resale Certificate (Form 01-339).
When filling out Form 01-0339, a purchaser must include their Texas taxpayer number to identify that it is registered with the Texas Comptroller and authorized to make tax-exempt purchases for resale.
Resale Certificate vs. Sales Tax Permit: What’s the Difference?
A Texas Sales Tax Permit authorizes your business to collect and remit sales tax on taxable sales to customers. A resale certificate in Texas (Form 01-339), on the other hand, allows you to purchase goods tax-free from suppliers if those goods are intended for resale. To use a resale certificate, you must have an active sales tax permit.
Who Can Use a Resale Certificate in Texas?
Businesses that purchase goods for resale can use a Resale Certificate. To do so, the business must actively sell taxable tangible products and hold a valid Texas Sales Tax Permit.
How to Get a Resale Certificate in Texas: A Step-by-Step Guide
1. Make Sure You’re Eligible: Your business must sell taxable goods or services and be registered with the Texas Comptroller. Only businesses with a valid Texas Sales Tax Permit can use a resale certificate.
2. Get a Texas Sales Tax Permit: If you don’t already have one, apply for a Texas Sales Tax Permit through the Comptroller’s website. This permit is required before you can issue or use a resale certificate.
Need help? Read our blog: How to Get a Seller’s Permit in Texas
3. Gather Your Business Information: You’ll need basic business details to complete the resale certificate, including:
- Your business legal name and any trade names.
- Your business address and contact information.
- Your Federal Employer Identification Number (FEIN) or Social Security Number (SSN) if you’re a sole proprietor.
- Your Texas sales tax permit number (if already obtained)
- Your business type (e.g., sole proprietorship, LLC, corporation).
4. Complete Form 01-339: Download and fill out the Texas Sales and Use Tax Resale Certificate (Form 01-339) from the Texas Comptroller’s website. You’ll present this form to your suppliers when making tax-exempt purchases.
5. Submission: No submission required in Texas. You don’t submit the resale certificate to the state. Instead, give the completed form directly to your suppliers when buying items for resale.
6. Pay Any Applicable Fees: There’s no cost to use Form 01-339, but you’ll need a valid Texas Sales Tax Permit. To see if there’s a cost for the permit, check out our guide on Sales Tax Permit fees.
7. Understand Renewal Requirements: Your resale certificate remains valid only while your Sales Tax Permit is active. To maintain your ability to make tax-exempt purchases for resale, you must renew your Texas Sales Tax Permit as the state requires.
How to Use a Resale Certificate in Texas
To properly utilize your resale certificate in Texas when making tax-exempt purchases for resale, you’ll need to present a valid copy of your Texas Sales and Use Tax Resale Certificate to your supplier at the time of purchase.
Texas generally does accept resale certificates issued by other states. However, there might be specific conditions:
- Good Faith Acceptance: Vendors in Texas will typically accept an out-of-state resale certificate in good faith, provided it contains all the necessary information (buyer’s name, address, seller’s permit number from the issuing state, reason for exemption, etc.)
- Reciprocity: The acceptance might be based on reciprocal agreements with the state that issued the certificate.
If you are an out-of-state business purchasing from a vendor in Texas and plan to use your home state’s resale certificate, be prepared to provide it at the time of purchase. It’s always a good idea to confirm the vendor’s policy on accepting out-of-state certificates beforehand.
Multi-Jurisdictional Resale Certificates
A multi-jurisdictional resale certificate is a standardized form designed to simplify tax-exempt purchases for businesses that operate and make purchases for resale across state lines.
Unlike a standard resale certificate issued by a single state, a multi-jurisdictional certificate aims to be recognized and accepted by multiple states as valid proof that the goods being purchased are intended for resale and are therefore exempt from sales tax at the time of purchase.
However, it’s crucial to understand that not all states accept these multi-state forms, and acceptance can come with specific conditions.
There are two primary types of multi-jurisdictional resale certificates that a business operating in or selling to vendors in Texas might encounter:
- Uniform Sales & Use Tax Resale Certificate – Multijurisdiction Form: This is a widely recognized form accepted by a significant number of states (though not all). Texas may accept the form, but only if it includes your Texas Sales Tax Permit number and is properly completed.. Out-of-state purchasers should include their home state’s registration number. You can find this form on the Multistate Tax Commission (MTC) website.
- Streamlined Sales Tax (SST) Certificate of Exemption: Texas is not a member of the Streamlined Sales Tax Governing Board. Therefore, while a Texas vendor might accept an SST Certificate of Exemption, they are primarily looking for a resale certificate in Texas (Form 01-339) or the Uniform Sales & Use Tax Resale Certificate. You can find more information about the SST and its member states on the Texas Comptroller’s Office.
Businesses need to verify whether Texas accepts these multi-jurisdictional certificates and if there are any specific requirements or limitations on their use within the state. This is to avoid any audit issues.
Responsibilities When Using or Accepting a Resale Certificate in Texas
Buyer Responsibilities
If you’re using a resale certificate, you’re responsible for ensuring it’s used only for purchases of goods or services you intend to resell. Using it for personal or operational items (like office supplies or equipment) is illegal and may lead to penalties.
- Texas-based buyers: Provide a fully completed Form 01-339 to your suppliers for qualifying purchases.
- Out-of-state buyers: While Texas prefers its own resale certificate form, many Texas vendors will accept a valid resale certificate from your home state—if it includes your business name, address, sales tax number (or equivalent), and a clear resale statement.
Seller Responsibilities
As a seller in Texas, accepting a resale certificate comes with the responsibility of verifying and retaining proper documentation for tax-exempt sales. You must:
- Accept the certificate in good faith
- Ensure it includes all required information: buyer’s name, address, sales tax permit number (or equivalent), reason for exemption, and signature
- Reject the certificate if the items aren’t for resale (e.g., personal or business use)
Keep records for at least 4 years: A properly completed resale certificate is your official proof of why sales tax wasn’t collected. You must retain it in your records for at least four years in case of a sales tax audit by the Texas Comptroller.
Frequently Asked Questions About the Texas Resale Certificate
Are There Penalties for Misusing a Resale Certificate in this State?
Yes. Improper use of a resale certificate, such as using it for personal or non-resale purchases, can result in serious penalties. Fines vary based on the violation and can range from under $20 to over $20,000. Always use Form 01-339 correctly and only for qualified resale purchases to avoid issues. Learn more on the Texas Comptroller FAQs.
Does a Texas Resale Certificate Expire?
The resale certificate (Form 01-339) has no expiration date. However, it is only valid while your Texas Sales Tax Permit remains active. If your permit is revoked or inactive, your resale certificate becomes invalid.
How Do I Verify a Resale Certificate in Texas?
If you’re a seller in Texas, here’s how to validate a buyer’s resale certificate:
- Request a completed Form 01-339 from the buyer.
- Locate their 11-digit Texas Sales Tax Permit Number on the form.
- Use the Texas Comptroller’s Sales Taxpayer Search to confirm the permit is active.
How TaxHero Can Help
Managing sales tax compliance and resale certificates in Texas doesn’t have to be complicated. TaxHero simplifies the process—from keeping your Texas Sales Tax Permit active to ensuring you use resale certificates correctly.
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Schedule a Demo to see how TaxHero can streamline your resale certificate in Texas process today!