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We are a TX online business and we only charge tax on TX sales. We received an order from CA - that was to be shipped to TX. Can a CA seller's permit exempt this sale?

Full Question: We are an online business with a location in Texas only, therefore, we only charge tax to our TX customers. We recently received an order from a company located in California. This California company is having their purchase shipped to a TX location so we will be charging tax since the items will be shipped within TX. They have submitted a California seller's permit to exempt the tax. Is this allowed to exempt the tax? Is there any form or license other than a Texas Tax Exempt form that will exempt them from tax on this order?

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Answer:

Diane Yetter photoThis is referred to as a drop shipment transaction. The state of Texas will honor alternative documentation if you are selling for resale to someone who has directed you to drop ship the goods to their customer in Texas. You should request a Texas resale certificate but instead of inserting their Texas resale number since they don't have one, they should insert their California sales tax registration number and indicate in the description/reason for exemption that this is a drop shipment and they are not required to be registered in Texas. Diane Yetter

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