34 Tex. Admin. Code § 3.322 - Exempt Organizations
(a) General
policy. This section is administered using the following guiding principles.
(1) Because exemptions are not favored under
the laws of the State of Texas, the provisions of this section shall be
strictly interpreted.
(2) An
organization must show by clear and convincing evidence that it meets the
requirements of this section and the relevant statutes. Any unresolved question
about the qualifications of an organization will result in denial of exempt
status.
(b) Entities
that must prove exempt status. Entities or organizations that may qualify for
exempt status include:
(1) a nonprofit
charitable or eleemosynary organization that devotes all or substantially all
of its activities to the alleviation of poverty, disease, pain, and suffering
by providing food, clothing, medicine, medical treatment, shelter, or
psychological counseling directly to indigent or similarly deserving members of
society with its funds derived primarily from sources other than fees or
charges for its services. If the organization engages in any substantial
activity other than the activities described in this section, it cannot qualify
for exemption under this provision because it is not organized for purely
public charity. However, if the organization is engaged in activities, other
than those described in this section, and the additional activities are
incidental to and in support of the activities conducted by the organization
that are described in this section, the organization may be considered for this
exemption. No part of the net earnings of the organization may inure to the
benefit of any private party or individual other than as reasonable
compensation for services rendered to the organization. Some examples of
organizations that do not meet the definition of a charitable organization,
even if they are nonprofit organizations that perform services that are often
charitable in nature, are as follows: fraternal organizations, lodges,
fraternities, sororities, service clubs, veterans groups, mutual benefit or
social groups, professional groups, trade or business groups, trade
associations, medical associations, chambers of commerce, and similar
organizations. Although these organizations do not qualify for exemption as
charitable organizations, they may qualify for the exemption under Tax Code,
§
151.310(a)(2),
if they obtain an exemption from the Internal Revenue Service (IRS) under
Internal Revenue Code (IRC), §501(c). Chambers of Commerce may qualify for
exemption under paragraph (6) of this subsection;
(2) a nonprofit educational organization or
governmental entity whose activities are devoted solely to systematic
instruction, particularly in the commonly accepted arts, sciences, and
vocations, and has a regularly scheduled curriculum that uses the commonly
accepted methods of teaching, a faculty of qualified instructors, and an
enrolled student body or students in attendance at a place where the
educational activities are regularly conducted. An organization that has
activities that solely consist of presentation of discussion groups, forums,
panels, lectures, or other similar programs, may qualify for the exemption
under this provision, if the presentations provide instruction in the commonly
accepted arts, sciences, and vocations. An organization cannot qualify for
exemption under this provision if the systematic instruction or educational
classes are incidental to some other facet of the organization's activities. No
part of the net earnings of the organization may inure to the benefit of any
private party or individual other than as reasonable compensation for services
rendered to the organization. Some examples of organizations that do not meet
the requirements for exemption under this definition are professional
associations, business leagues, information resource groups, research
organizations, support groups, home schools, and organizations that merely
disseminate information by distributing printed publications. Although these
organizations do not qualify for exemption as educational organizations, they
may qualify for the exemption under Tax Code, §
151.310(a)(2),
if they obtain an exemption from the IRS under IRC, §501(c);
(3) a nonprofit religious organization that
is an organized group of people who regularly meet at a designated physical
location for the primary purpose of holding, conducting, and sponsoring
religious worship services according to the rites of their sect. The
organization must be able to provide evidence of an established congregation
that shows regular attendance of these services by an organized group of
people. An organization that supports or encourages religion as an incidental
part of its overall purpose, or one whose general purpose is to further
religious work or instill its membership with a religious understanding, cannot
qualify for exemption under this provision. No part of the net earnings of the
organization may inure to the benefit of any private party or individual other
than as reasonable compensation for services rendered to the organization. Some
examples of organizations that do not meet the requirements for exemption under
this definition are conventions or associations of churches, evangelistic
associations, churches with membership consisting of family members only,
missionary organizations, and groups that organize for the purpose of holding
prayer meetings, Bible study, or revivals. Although these organizations do not
qualify for exemption as religious organizations, they may qualify for the
exemption under Tax Code, §
151.310(a)(2),
if they obtain an exemption from the IRS under IRC, §501(c);
(4) a youth athletic organization that is a
nonprofit corporation or association that exclusively provides athletic
competition among persons under 19 years of age;
(5) a nonprofit organization that applies for
and obtains a determination letter or a group exemption ruling letter from the
IRS that states that the organization qualifies for exemption from federal
income tax under IRC, §501(c)(3), (4), (8), (10), or (19);
(6) a nonprofit chamber of commerce that
represents at least one Texas city, county, or geographic locality. For the
purpose of this section, a chamber of commerce is a perpetual organization
devoted exclusively to promoting the general economic interest of all
commercial enterprises in the city, county, or areas it represents. The term
does not include chamber-like organizations such as trade associations or
business leagues that serve a single line or closely related lines of business
within a single industry;
(7) a
nonprofit convention and tourist promotional agency organized or sponsored by
at least one Texas city or county;
(8) an electric cooperative formed under the
Electric Cooperative Corporation Act (Utilities Code, Chapter 161) and
nonprofit electric cooperatives located outside the state;
(9) a telephone cooperative formed under the
Telephone Cooperative Act (Utilities Code, Chapter 162) and nonprofit telephone
cooperatives located outside the state;
(10) a local organizing committee, as defined
in Texas Civil Statutes, Article 5190.14, §1(7), that is exempt from
federal income tax under IRC, §501(c). The local organizing committee must
be authorized by an endorsing municipality, an endorsing county, or more than
one endorsing municipality or county acting collectively to pursue an
application and submit a bid on the municipality's or county's behalf to a site
selection organization for selection as the host site of one or more games or
events, as defined in Texas Civil Statutes, Article 5190.14, §§5A,
5B, or 5C;
(11) any company,
department, or association organized for the purpose of answering fire alarms
and extinguishing fires or for the purpose of answering fire alarms,
extinguishing fires, and providing emergency medical services, the members of
which receive nominal or no compensation for their services; and
(12) nonprofit corporations formed under
Local Government Code, Chapter 501 (Development Corporation Act of 1979) or
Health and Safety Code, Chapter 221 (Health Facilities Development Act of 1981)
when they purchase items for their exclusive use and benefit. The exemption
does not apply to items purchased by the corporation to be lent, sold, leased,
or rented.
(c) Entities
that are always exempt. Certain entities and organizations are exempt under the
law and are not required to request and prove exempt status, except to send
information as requested by the comptroller to verify its exempt status under
this subsection.
(1) The United States, its
unincorporated agencies and instrumentalities. The United States includes all
parts of the executive, legislative, and judicial branches and all independent
boards, commissions, and agencies of the United States government.
Instrumentalities and agencies of the United States include:
(A) various military entities under the
supervision of a base commander;
(B) organizations that contract with the
United States and whose contracts explicitly and unequivocally state that they
are agents of the United States;
(C) organizations wholly owned by the United
States or wholly owned by an organization that is itself wholly owned by the
United States;
(D) organizations
specifically named as agents of the United States or exempted as
instrumentalities of the United States by federal statutes; and
(E) organizations having substantially all of
the following characteristics:
(i) they are
funded by the United States;
(ii)
they carry out a specific program of the United States;
(iii) they are managed or controlled by
officers of the United States;
(iv)
their officers are appointed by the United States;
(v) they perform commitments of the United
States under an international treaty; and
(vi) they are not organized for private
profit;
(2)
any incorporated agency or instrumentality of the United States wholly owned by
the United States or by a corporation wholly owned by the United States.
"Wholly owned" means total or 100% ownership;
(3) federal credit unions organized under
12
United States Code, §
1768;
(4) the State of Texas, its unincorporated
agencies and instrumentalities; and
(5) any county, city, special district or
other political subdivision of the State of Texas, and any college or
university created or authorized by the State of Texas.
(d) Qualification requirements. To qualify
for exempt status under subsection (b) of this section, an organization must
satisfy all of the following requirements.
(1) An organization must be organized or
formed solely to conduct one or more exempt activities. The comptroller will
consider all documents necessary to prove the purpose for which an organization
is formed.
(2) An organization must
devote its operations exclusively to one or more exempt activities.
(3) An organization must dedicate its assets
in perpetuity to one or more exempt activities.
(4) No profit or gain may pass directly or
indirectly to any private shareholder or individual. All salaries or other
benefits furnished officers and employees must be commensurate with the
services actually rendered.
(e) How to obtain exempt status.
(1) Application. To apply for and obtain
notification of exemption from the comptroller, an organization must complete
and submit to the comptroller the appropriate application or its equivalent.
Applicants should refer to the Guidelines to Texas Tax Exemptions (publication
96-1045) for assistance in completing the proper application for any exemption
sought.
(2) Documentation required.
In addition to a properly completed application, an organization must submit
with the application all documents requested by the application and comptroller
publication 96-1045, Guidelines to Texas Tax Exemptions, all governing
documents as indicated by subparagraph (A) of this paragraph, and all IRS
documents indicated by subparagraph (B) of this paragraph.
(A) Governing documents. A copy of each of
the organization's governing documents must be submitted with the application
as indicated in clauses (i) - (iii) of this subparagraph.
(i) An unincorporated organization requesting
an exemption must include copies of its formation documents, such as bylaws,
constitution, articles of association, certificate of formation, or applicable
trust agreement, and any related amendments. If the exemption being sought
requires that the organization be a nonprofit, the governing documents must
state that the organization is a nonprofit.
(ii) A non-Texas corporation requesting an
exemption must include file-stamped copies of its formation documents and
certificate of existence from the home state of incorporation, and any related
amendments.
(iii) A non-Texas
limited liability company requesting an exemption must include file-stamped
copies of its formation documents and certificate of existence from the home
state of formation, and any related amendments.
(iv) Exception. An organization applying for
exemption based on its federal exempt status under IRC, §501(c)(3), (4),
(8), (10), or (19), is not required to submit file-stamped copies of its
governing documents and certificate of existence unless it is a corporation or
limited liability company chartered outside the state of Texas.
(B) IRS documents. If an
organization is applying for exemption based on its federal exempt status under
IRC, §501(c)(3), (4), (8), (10), or (19), the organization must provide
copies of all pages of its IRS determination letter or group exemption ruling
letter and include any caveat or addendum that applies. If the original
determination letter or group exemption ruling letter is more than four years
old, the organization must also include a copy of a recent letter from the IRS
to confirm the exemption is still valid. A nonprofit organization that claims
exemption under a parent's exemption must provide a copy of the parent
organization's IRS group exemption ruling letter and a letter from the parent
organization that states the applicant nonprofit organization is a subordinate
covered by the parent organization's group exemption.
(3) The comptroller may require an
organization to furnish additional information to further clarify the
organization's overall purpose and activities to establish the claimed
exemption. For example, the comptroller may request a written statement that
details the nature of the activities conducted, or to be conducted, financial
information, and documentation that shows all services the organization
performs.
(4) After a review of the
material, the comptroller will inform an organization in writing if it
qualifies for exemption.
(5) The
comptroller or an authorized representative of the comptroller may audit the
records of an organization at any time during regular business hours to verify
the validity of the organization's exempt status.
(f) Revocations, withdrawals, or loss of
exemptions.
(1) Except as provided in
paragraph (2) of this subsection, if at any time the comptroller has reason to
believe that an exempt organization no longer qualifies for exemption, a
comptroller's representative will notify the organization that its exempt
status is under review. A comptroller's representative may request additional
information that is necessary to ascertain the continued validity of the
organization's exempt status. An organization must immediately notify the
comptroller in writing of a revocation, withdrawal, or loss of exemption when
the organization no longer qualifies for exemption. If the comptroller
determines that an organization is no longer entitled to its exemption, then
the comptroller will notify the organization. The date of the notification
letter is the effective date of the revocation. All subsequent purchases by the
organization are subject to tax.
(2) For nonprofit organizations that are
granted an exemption under Tax Code, §
151.310(a)(2),
the revocation, withdrawal, or loss of the federal income tax exemption
automatically terminates the sales tax exemption, effective on the date on
which the IRS serves formal written notice of the revocation on the nonprofit
organization or the date on which the IRS notifies the comptroller, whichever
is earlier. All subsequent purchases by the organization are subject to tax.
(A) The effective date of a revocation for a
nonprofit organization that was granted an exemption as a recognized
subordinate is the date on which the organization ceased to be recognized as a
subordinate under the federal group exemption. All subsequent purchases by the
organization are subject to tax.
(B) The organization must notify the
comptroller in writing of the revocation, withdrawal, or loss of exemption
immediately upon receiving notice from the IRS of such revocation, withdrawal,
or loss.
(C) Under a federal/state
exchange agreement, the IRS may notify the comptroller when an organization no
longer qualifies for federal exemption.
(3) An organization that loses its exempt
status must immediately notify its suppliers that its purchases are subject to
tax. Failure to so notify a supplier is a violation of the sales tax
law.
(4) After revocation, the
organization may re-apply for exempt status under other provisions of this
section.
(g) Purchases
by an exempt organization; refund claims; and credits. See §
3.287 of this title (relating to
Exemption Certificates).
(1) The purchase,
lease, or rental of a taxable item that relates to the purpose of an exempt
organization listed in subsection (b)(1), (2), (3), (5), (10), (11) or (12) of
this section is exempt from tax when the organization or an authorized agent of
the organization pays for the item and provides the vendor with an exemption
certificate in the form prescribed by the comptroller.
(2) The purchase, lease, or rental of a
taxable item to an exempt organization listed in subsections (c) and (b)(4),
(6), (7), (8), or (9) of this section is exempt from tax when the organization
or an authorized agent pays for the taxable item and provides the vendor with
an exemption certificate in the form prescribed by the comptroller.
(3) A purchase voucher issued by any one of
the entities identified in subsection (c) of this section is sufficient proof
of the entity's exempt status.
(4)
An exemption certificate must be given to a vendor when an authorized agent
makes a cash purchase of merchandise for an exempt organization.
(5) An employee of an exempt organization
cannot claim an exemption from tax when the employee purchases taxable items of
a personal nature even though the employee receives an allowance or
reimbursement from the organization.
(6) A person who travels on official business
for an exempt organization must pay sales tax on taxable purchases whether
reimbursed on a per diem basis or reimbursed for actual expenses
incurred.
(7) Bingo equipment as
defined by Occupations Code, §
2001.002, including
machinery or devices used to select or hold letters or numbers, electronic or
mechanical cardminding devices, pull-tab dispensers, bingo cards, balls, and
other devices commonly used in the direct operation of a bingo game, are exempt
from sales and use taxes when purchased, leased, or rented by an organization
exempt under IRC, §501(c)(3), (4), (8), (10), or (19), and exclusively
used to conduct bingo games authorized under Occupations Code, Chapter 2001.
Commonly available component parts of bingo equipment such as batteries, light
bulbs, and fuses do not qualify for this exemption.
(8) Refund claims and credits by
organizations exempted under Tax Code, §
151.310.
(A) Qualifying organizations. The following
organizations are covered by the provisions of Tax Code, §
151.310 and are subject to
the provisions of this paragraph:
(i)
organizations created for religious, educational, or charitable
purposes;
(ii) organizations
qualifying for an exemption from federal income taxes under IRC,
§501(c)(3), (4), (8), (10), or (19);
(iii) nonprofit organizations engaged
exclusively in providing athletic competition among persons under 19 years
old;
(iv) volunteer fire
departments; and
(v) chambers of
commerce or convention and tourist promotional agencies representing at least
one Texas city or county.
(B) Exemption effective dates.
(i) Organizations identified in subparagraph
(A) of this paragraph are not considered exempted from sales and use taxes
before the earlier of:
(I) the date the
organization applied for exemption with the comptroller as evidenced by the
postmark date on the organization's qualifying application for exemption as
required under subsection (e) of this section; or
(II) the date of assessment of the
organization's tax liability by the comptroller as a result of an
audit.
(ii) With the
exception of entities that qualify for exemption under subsection (c) of this
section, organizations' exemption effective dates can be verified by using the
comptroller's Texas Tax-Exempt Entity Search located on the agency's Web
site.
(C) Refund claims
by organizations with exemption effective dates prior to September 1, 2009.
Organizations identified in subparagraph (A) of this paragraph with an
exemption effective date prior to September 1, 2009 may request a refund or
credit for sales and use taxes paid in error, retroactive to the effective date
of the organization's exemption or the four-year statute of limitations,
whichever date is more recent.
(D)
Refund claims by organizations with exemption effective dates on or after
September 1, 2009. Organizations identified in subparagraph (A) of this
paragraph with an exemption effective date on or after September 1, 2009 are
not eligible to request a refund or credit for sales or use tax paid between
September 1, 2009 and the exemption effective date. If the comptroller has
determined the organization with an exemption effective date on or after
September 1, 2009, has met the requirements for exemption from the sales tax
under Tax Code, §
151.310 for a period prior
to September 1, 2009, the organization may request a refund or credit for sales
and use taxes paid in error on purchases made between the earliest date the
comptroller determined the organization met the requirements for the exemption
or the four-year statute of limitations, whichever is more recent, and August
31, 2009.
(h) Sales by an exempt organization.
(1) An exempt organization that sells taxable
items must obtain a sales tax permit and is responsible for collection and
remittance of tax on all sales of taxable items that the organization makes,
unless otherwise provided by this subsection or unless such sales are otherwise
exempt from the tax. See §
3.293 of this title (relating to
Food; Food Products; Meals; Food Service), §
3.299 of this title (relating to
Newspapers, Magazines, Publishers, Exempt Writings), and §
3.298 of this title (relating to
Amusement Services).
(2) A
religious, educational, charitable, or eleemosynary organization, or an
organization exempt under IRC, §501(c)(3), (4), (8), (10), or (19), and
each of its bona fide chapters, may have two one-day tax-free sales or auctions
each calendar year. During a tax-free sale or auction lasting only one day, the
organization is not required to collect sales tax on the sales price of taxable
items sold for $5,000 or less. Additionally, a taxable item may be sold
tax-free during a one-day tax-free sale or auction regardless of price if the
item is manufactured by the organization or is donated to the organization and
is not sold to the donor.
(A) One day is a
consecutive 24-hour period. If a designated tax-free sale or auction exceeds a
consecutive 24-hour period, the organization or chapter may not hold another
tax-free sale or auction during that calendar year. An organization or chapter
may hold the two tax-free sales or auctions consecutively, but the two tax-free
sales or auctions by that organization or chapter cannot exceed a maximum of 48
consecutive hours in a calendar year.
(B) The organization may employ an auctioneer
to conduct the sale or auction and pay the auctioneer a reasonable fee not to
exceed 20% of the gross receipts.
(C) If two or more exempt organizations or
chapters jointly hold a tax-free sale or auction, each is considered to have
held a tax-free sale or auction during that calendar year. Each exempt
organization that participates in a joint tax-free sale or auction may hold one
additional tax-free sale or auction during that calendar year.
(D) An organization described by subsection
(b)(11) of this section and which is granted an exemption may hold 10 tax-free
sales or auctions during a calendar year.
(i)
Each tax-free sale or auction may continue for not more than 72
hours.
(ii) The storage, use, or
consumption of a taxable item that is acquired from a qualified organization at
a tax-free sale or auction and that is exempted from the sales tax under this
paragraph is exempted from the use tax until the item is resold or subsequently
transferred.
(iii) If an
organization described by subsection (b)(11) of this section and which is
granted an exemption jointly holds a tax-free sale or auction with one or more
other exempt organizations, the tax-free sale or auction is considered to be
one of the organization's 10 tax-free sales or auctions during that calendar
year.
(3)
Fundraisers. Exempt entities engaged in fundraising activities in conjunction
with for-profit entities are not the sellers of any taxable items and do not
need to be permitted to collect and remit tax on such sales. See §
3.286 of this title (relating to
Seller's and Purchaser's Responsibilities).
(4) The sale of a taxable item is exempt from
sales and use tax if:
(A) the seller or
retailer is a county fair association or another nonprofit organization that is
exempt from federal income taxation under Internal Revenue Code of 1986,
§501(a), by being listed as an exempt organization in §501(c)(3) of
that code;
(B) the sale takes place
at a county fair operated by a county fair association on property owned by the
county; and
(C) the purchaser is a
person attending or participating in the fair.
(5) For the purposes of this subsection, the
following words and terms shall have the following meanings.
(A) County Fair Association--An organization
that is exempt from federal income taxation under Section 501(a), Internal
Revenue Code of 1986, by being listed as an exempt organization in Section
501(c)(3) of that code and that organizes a county fair that is primarily for
the exhibition of local horticultural or agricultural products or livestock. A
county fair association does not include an association that holds a license
issued after January 1, 2001, under Subtitle A-1, Title 13, Occupations Code
(Texas Racing Act); or an association that organizes events other than a county
fair, including an exhibition of arts and crafts or a state fair.
(B) Livestock--Includes poultry, cattle,
sheep, swine, horses, mules, donkeys, and goats. Livestock does not include
domesticated animals such as dogs, cats, guinea pigs, hamsters, or other
similar animals.
(6)
Sales by agencies and instrumentalities of the federal government are subject
to tax, and the agencies and instrumentalities must collect and remit tax
unless the collection of tax is specifically prohibited by federal law. If the
collection is prohibited by specific federal law, the purchaser of the taxable
item shall be liable for reporting and paying the tax directly to the
state.
(7) Sales of governmental
publications, records, or documents.
(A) When
a governmental body is required to furnish a copy of any document under the
Open Records Act, the transaction is not considered the sale of a taxable item.
Sales tax is not due on any fee charged by the governmental body for furnishing
one or more copies, regardless of whether the copies are certified or the fee
is established by statute, ordinance, public official, or state
agency.
(B) Sales tax is not due on
the fee charged by a governmental body for furnishing a copy or copies of a
document not open to public inspection to a person who is authorized to obtain
a copy or copies of such document. For example, sales tax is not due on the fee
charged by a college for furnishing a student's academic transcript to the
student or on the fee charged by the Department of State Health Services for
furnishing a person a copy of the person's birth certificate.
(C) Unless such sales are otherwise exempt,
sales tax is due on sales of regular publications, records, or general
information by a governmental body, even though such publications, records, or
information may be open or available to the public by statute. For example,
textbooks sold by a state university and magazine subscriptions sold by a state
agency are taxable. See §
3.299 of this title.
(D) Sales tax collected by state agencies
must be remitted in accordance with comptroller accounting
requirements.
(i) Organizations that do not qualify for
exempt status. Examples of organizations that cannot qualify for exempt status
include professional groups, certain mutual benefit or social groups, and
political, trade, business, bar, or medical associations. However, certain
sales by certain organizations may be exempt. For information on exempt sales
by senior citizens' organizations, student organizations affiliated with a
college or university, or nonprofit animal shelters, see §
3.316 of this title (relating to
Occasional Sales; Transfers Without Change in Ownership ; Sales by Senior
Citizens' Organizations; Sales by University and College Student Organizations;
and Sales by Nonprofit Animal Shelters).
(j) Diplomatic tax exemptions.
(1) Sales tax exemptions provided to foreign
diplomatic and consular personnel in the United States are governed by
international and federal law as administered by the United States Department
of State's Office of Foreign Missions.
(2) Types of exemption cards.
(A) Mission tax exemption cards. Mission tax
exemption cards can only be used for official purchases by a foreign consulate
or embassy. All purchases must be made in the name of the mission and paid for
by a mission check or credit card, not by cash or personal check. The person
whose name and photo appear on the card is responsible for ensuring the
accuracy of the exemption, but does not need to be present when purchases are
made in the name of the mission.
(B) Personal tax exemption cards. Only the
person whose photo appears on the front side of the card is permitted to use it
to purchase the exempted items that are identified on the card. Personal tax
exemption cards are not transferable and may not be used by others.
(3) Procedures for retailers.
(A) Diplomatic tax exemption cards must be
presented to the seller at the time of sale for the exemption to apply. If the
exemption is not claimed at the time of sale, the comptroller will not refund
tax paid on an item which qualifies for a diplomatic tax exemption. The card
must be signed.
(B) To document the
sale of an item subject to a diplomatic tax exemption, a retailer should retain
a copy of the sales invoice or contract that bears the identification number
appearing on the diplomatic tax exemption card or should make a photocopy of
the front and back of the card.
(C)
Certain diplomatic exemption cards are limited to what and how much may be
purchased tax free or may require a minimum purchase before the exemption can
be claimed. This information is contained on the diplomatic exemption card
itself. Retailers who make sales to persons with cards that require purchases
to exceed a certain dollar limit should include only those taxable items that
are purchased in the same transaction to determine if the appropriate level has
been reached. Purchases made in separate transactions may not be added together
to reach minimum exemption levels. Neither type of card identified in paragraph
(2) of this subsection can be used to obtain the tax-free sale of
utilities.
(k) The Alabama-Coushatta, Kickapoo, and
Tigua Native American tribes.
(1) The
purchase, lease, or rental of a taxable item to a tribal council or a business
owned by a tribal council of these Native American tribes is exempt from sales
tax. An exemption certificate or purchase order from the tribal council is
sufficient proof of the exempt sale.
(2) Sales made by a tribal council or a
business owned by a tribal council of these Native American tribes within the
boundaries of the reservation are exempt from sales tax if:
(A) the taxable item being sold is made by a
member of the tribe; and
(B) the
taxable item is a cultural artifact of the tribe.
(3) Sales made off the reservation or sales
made on the reservation of items that are not cultural artifacts are
taxable.
(l) Bordering
states and governmental units of states that border Texas.
(1) The State of Arkansas, State of
Louisiana, State of New Mexico, and State of Oklahoma, or a governmental unit
of any of those bordering states may qualify for exemption on the purchase,
lease, or rental of taxable items, but only to the extent that the bordering
state or governmental unit of the bordering state exempts or does not impose a
tax on similar sales of items to the State of Texas or a political subdivision
of the State of Texas.
(2) A
bordering state or a governmental unit of a bordering state may enter into a
reciprocal agreement with the comptroller for the exemption of taxable items
purchased, leased, or rented to the State of Texas or a political subdivision
of the State of Texas.
(3) The
purchase, lease, or rental of a taxable item to a bordering state or a
governmental unit of a bordering state is exempt from sales tax to the extent
allowed under the terms of the reciprocal agreement. An exemption certificate
from a qualifying bordering state or a governmental unit of a bordering state
is sufficient proof of the exempt sale.
Notes
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