Using a Texas Resale Certificate at Auctions

What is a Texas resale certificate?

It's a form you, the buyer, fill out and hand to the seller. Form 01-339 comes from the Texas Comptroller and states that you're buying the items to resell in the regular course of your business. The seller keeps it on file to show why it didn't collect tax from you.

The state doesn't issue you a certificate. You complete it yourself, in most cases using your Texas sales tax permit number. When you later sell the items, you collect sales tax from your customers and report it.

How do you use a resale certificate at an auction?

Get it to the house early. Sales tax is calculated when the invoice is created, and changing an invoice afterward is up to the house.

1. Get a Texas sales and use tax permit from the Texas Comptroller if you don't already have one.
2. Fill out Form 01-339 with your business details, permit number, the auction house's name and a description of the items you buy to resell.
3. Send it to the auction house before the sale closes, and ask how they want it and whether they accept a blanket certificate for future sales.
4. Check your invoice: qualifying lots should show no sales tax.
5. Keep copies of the certificate and every invoice and receipt.

How much does a resale certificate save at auction?

It saves the sales tax at purchase, which adds up for regular buyers. Example: you win six lots totaling $1,200 in hammer with a 15% buyer's premium, for $1,380. At 8.25%, that's $113.85 in tax you don't pay at checkout.

It isn't free money. The tax moves to the end of the chain: you collect it from your own buyers when you resell. If you're flipping Amazon return pallets or other liquidation lots, it also keeps your cost per item lower, which makes your max bid math cleaner.

What can't you buy tax-free with a resale certificate?

The certificate covers items you'll resell, and only those. As a general rule, these don't qualify, even for a business with a permit.

• Items for your home or personal use, even if you're a dealer
• Things your business uses up, such as shelving, packing supplies, display cases and the tools you work with
• Items you bought to resell but end up keeping, which generally means you owe tax on them then
• Purchases unrelated to what your business actually sells

What records should you keep as a reseller?

Keep a copy of every certificate you've given, every auction invoice and receipt, and a record of what you resold and for how much. On Auktia, invoices and receipts stay under My bids, but export or save your own copies too.

If an item you bought tax-free ends up in your home or your shop instead of being sold, note that as well, because tax is generally due on it at that point. Clear records are what let you show the certificate was used properly if your purchases are ever reviewed.

Does an auction house have to accept a resale certificate?

A house can accept a properly completed certificate in good faith, and many keep them on file for repeat buyers. A house can also ask questions, require it before the sale closes, or decline one that looks incomplete or doesn't match what you're buying.

On Auktia, the seller (auction house) sets sales tax for its auctions and handles certificates directly, so contact the seller before you bid. For how auction sales tax works overall, see sales tax at Texas auctions. This is general information, not tax advice; check with the Texas Comptroller or an accountant.