Texas Sales Tax for Imported Goods in Bonded Warehouses
The Texas Comptroller of Public Accounts has issued a letter ruling outlining the sales and use tax implications for imported goods stored in bonded warehouses. A bonded area, typically a secured warehouse, allows imported goods to be stored, manipulated, or manufactured without paying duties for up to five years from their importation date into the U.S.
According to the ruling, transactions within the bonded area are exempt from Texas sales and use tax. Imported goods maintain their status as imports while stored in the bonded area, making sales transactions and any use of the goods within the bonded area tax-exempt.
However, once the transit of imported goods ceases and the items are removed from the bonded area for use in Texas, they become subject to Texas use tax. The U.S. customer who purchases and removes the goods from the bonded area becomes the importer of record and is responsible for paying Texas use tax at that point.
The ruling also clarifies physical-presence nexus for entities with goods in bonded warehouses. Entities that take ownership of goods in a bonded area located in Texas are considered to have a physical presence in the state and must register to collect and remit Texas sales and use tax. These entities are engaged in business in Texas because they hold title to tangible personal property, use the bonded warehouse, and derive revenue from sales of such property within the state. Therefore, they are required to obtain a Texas sales and use tax permit.
In summary, while end customers purchasing the goods are liable for Texas use tax upon removing them from the bonded area, sellers are obligated to obtain a sales and use tax permit due to their business activities in Texas.
(Letter No. 202408014L, Texas Comptroller of Public Accounts, August 29, 2024)
Texas Sales Tax for Imported Goods in Bonded Warehouses
