How to mark a customer as Tax Exempt (for resellers and non-profits)

We are not required by law to exempt customers from sales tax for resellers or non-profits. In general, we do not want to exempt customers from sales tax. The exceptions to this rule include:

  • Resellers who have a history of spending more than $500/week with us
  • Long-term, established customers
  • Trusted non-profits.

In all of these cases, the customer is required to provide either a valid reseller’s certificate or non-profit exemption notice from the state of Texas. We DO NOT accept reseller certificates or non-profit certificates from other states. We also DO NOT participate in the “manifiesto” program. Manifiestos is a program by which Mexican buyers can get a refund on their sales tax when taking purchases back over the border. We are not required to participate in this program and at this time we do not. If a customer asks about this, please just say we do not do manifiestos or sales tax refunds.

Verifying Tax Exempt Status for Resellers

If the customer is asking for tax exempt status because they are a reseller, they must meet the following criteria:

  • A history of spending more than $500/week with us
  • Long-term, established customers
  • Approval by a manager

For Resellers

If the customer meets these criteria, you MUST do the following steps before marking them as tax exempt:

  1. Request a copy of the customer’s TEXAS reseller’s certificate
  2. Search the Texas Taxpayer Database to verify that the reseller certificate is active and valid
    • Go to: https://mycpa.cpa.state.tx.us/staxpayersearch/
    • Enter the either the Taxpayer ID or the FEI Number (The Taxpayer ID should be listed on the reseller’s certificate, the customer can provide the FEI number)
    • Verify that the customer has an active
    • See the video below for additional information
    • If there is an active tax certificate, take a screenshot
  3. Once you have verified that the customer has a valid taxpayer ID AND they meet our required criteria, you can go into auctioneer software and remove the sales tax:
    • Open the Users panel in Auctioneer Software
    • Search and find the customer’s account and open it
    • About half way down the page on the right you will see a drop down for “Sales Tax” > Select “Tax Exempt – Reseller”
    • ALSO (very important) Check the “Tax Exempt” box at the top of the user screen (this is the ONLY way we can search for customers who have been marked as tax exempt.
    • There is also a field called “Sales Tax ID (Reseller)” – enter the Customers Tax ID into that field for easy reference when we do our twice per year audit of sales tax certificates.
    • Click save
    • Now upload the screenshot of the active certificate to the user’s profile and click save
  4. Notify the customer that the tax exempt status has been added
  5. Scan or take a photo of the customer’s tax documents and upload them to the customer account in Auctioneer Software
  6. Recheck twice per year
    • Twice a year we should recheck the customer’s tax ID status, if at any time the customer’s ID is no longer active, we should follow the instructions above at #3 to go into Auctioneer Software and remove the tax except status under sales tax. If that drop down is left blank, it will default to our normal tax rate of 8.25.
    • Take a screenshot of the active OR inactive certificate every year and upload it to the customer’s profile in Auctioneer Software

For Non-Profits

If a customer is requesting tax exempt status because they are a non-profit, please do the following:

  • Request a copy of the non-profit tax exempt documentation
  • Let the customer know that tax-exempt status is subject to management review and approval and that you will submit it to management.
  • Email the documentation and request for approval. Include the following information:
    • The non-profit documents provided by the customer
    • The customer’s name, bidder ID, and contact information
  • Make a note to follow up with management in one week if you haven’t received a response
  • Once you receive approval, you can follow step 3 above to verify
  • Note to management: There is no easy way to check for non-profit status. When in doubt, say no. We are under no obligation to accept non profit or reseller certificates. They can always submit for a tax refund from the state directly.

Instructions for Auditing Sales Tax Status Twice Per Year:

  1. Log into Auctioneer Software > Users
  2. Download all users (clear filter and then export “current filter”)
  3. Open the file exported file and filter the “Tax Exempt” for only customers who are marked as Yes for Tax Exempt status
  4. One by one, go through the following steps:
    • Open the Users panel in Auctioneer Software
    • Search and find the customer’s account and open it
    • Find the customers Sales Tax ID number in the “Sales Tax ID (Reseller)” field of that page.
    • Go to: https://mycpa.cpa.state.tx.us/staxpayersearch/
    • Enter the either the Taxpayer ID or the FEI Number (The Taxpayer ID should be listed on the reseller’s certificate, the customer can provide the FEI number)
    • Verify that the customer has an active
    • See the video below for additional information
    • Take a screenshot
    • Upload the new screenshot to auctioneer software
    • If the Tax ID is Inactive, go into Auctioneer Software and remove the tax exempt status from the customer (uncheck the box at the top and remove “Tax Exempt” from the “Sales Tax” field. Then have someone email the customer asking for a new tax certificate
    • If the Tax ID shows as Active, just upload the screenshot to Auctioneer Software. No other action is necessary.