A significant decision by the Texas Court of Appeals clarified the size and scope of the Texas sales tax resale exemption. In Combs v. H
A significant decision by the Texas Court of Appeals clarified the size and scope of the Texas sales tax resale exemption. In Combs v. Health Care Services. Corp., the taxpayer purchased tangible personal property and services for use in administering employee benefit programs for the federal government. After paying sales tax on the purchases, Health Care filed refund claims on the theory that the purchases qualified for the sale-for-resale exemption.
Health Care claimed that its purchases made pursuant to its federal government contract qualified for the resale exemption. While title to the purchased property automatically passed to the government, Health Care retained possession of the property. In finding that the purchases qualified for the resale exemption, the court reached the following important conclusions:
Taxpayers making sales to Texas exempt entities should consider the implications of this case as it relates to their operations and consider filing refund claims as appropriate.
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