I am spinning up a little side operation and was unaware until recently that equipment and many supplies used in the manufacturing of products are sales tax exempt. This is different from a purchase for resale (which requires a Sales and Use Tax Resale Certificate and number). An explanation is available here → https://comptroller.texas.gov/taxes/publications/94-124.php
The exemption form does not require registering with the Comptroller and does not require a tax certificate number. Form is here, 2nd page: https://comptroller.texas.gov/forms/01-339.pdf
The exemption applies to a number of categories of product, the most significant to me being the equipment category. That means I can purchase powered woodworking tools, laser, etc. tax-exempt as long as they are to be used for manufacturing. Hand tools are notably not included in the allowed items. Raw materials that will be transformed into salable product are also exempt. A certain amount of divergent (taxable) use is also allowed before taxes are due, though I don’t anticipate any in my case.
It might be that everyone already knows this and I’m late to the party but I suspect I’m not the only one. I always figured things used internally by a company couldn’t be bought tax-free and that’s true when it comes to the resale exemption. The manufacturing exemption was welcome news.
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Most vendors won’t waive the sales tax without a re-sales or tax exempt document since they are supposed to collect sales tax.
There is a document. I linked it above. The difference for the manufacturing exemption is that there is no “certificate number” required and the form calls that out. That is, you don’t need a resale tax ID to get the manufacturing exemption.
Try to explain that to a cashier with a line behind you. You don’t need the ID number for purchases for DMS either but most places won’t sell something without tax unless they have it on file (Harbor Freight, Fry’s, etc.).
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Guys. I am not proposing trying to go through the line and present a cashier with the exemption form. What I am saying is that there is a form similar to the resale form that can be filed with the company just as the resale ID is. It just happens to not require a tax ID or registration with the comptroller .
If it’s tax exempt and we paid tax on it, does that form allow for tax paid to be recovered when we turn in our tax forms?
There is a mechanism for recovering taxes paid on exempt items. It’s not part of that form though. That form is similar to a resale exemption form.
See here https://comptroller.texas.gov/taxes/sales/refunds/
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I’m willing to bet that this doesn’t apply to DMS. We are the end-user on our machines, which aren’t used for manufacturing items on which sales tax is paid. If there is a manufacturing exemption (sorry - I’m too lazy to read tax lingo tonight), then the presumption is that the machine will strictly be used to create items upon which someone, somewhere, will eventually pay sales tax.
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Not for profits do not pay sales tax on equipment or services.
What Matt is talking about is entirely different
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Hi Beth, I’m actually asking about equipment I bought and use offsite. You and @shoottx are right about DMS equipment…
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