Every jurisdiction has sales and use tax exemptions available to certain taxpayers. Common examples of tax exempt customers. include governmental agencies, educational, religious, and charitable organizations. When making sales to exempt organizations, it is important that you obtain all appropriate documentation required to substantiate the tax-free nature of the sale. I talk about it more in the video.
- When making sales to tax exempt customers, proof must be obtained that the customer is exempt from sales and use tax.
- Substantiation requirements vary from jurisdiction to jurisdiction, but in Texas, a properly completed Texas sales and use tax exemption certificate is required in most cases.
- In Texas, a exemption certificate is not required if the purchaser is a 151.309 exempt entity, which is a governmental entity. A purchase order, invoice or contract is sufficient.
- All fields of the form must be completed and the certificate must be signed and dated.
More Tips in The Sales Tax Sisters Academy
Our mission to provide a resource so business owners, accountants and bookkeepers can understand sales & use tax compliance. We know that sales and use tax laws are not the easiest to understand. Our focus is on empowering you with a framework and general understanding, so you know what questions to ask and where to go to get the information you need to stay on the right side of sales and use tax compliance.