Texas has issued a letter ruling providing guidance on the sales and use tax treatment of imported goods stored in a bonded area. Generally speaking, a bonded area is a secured area (typically a warehouse) where imported goods can be stored, manipulated, or undergo manufacturing operations without payment of duty for up to 5 years from the date of importation to the United States.
Per the letter ruling, transactions that occur within the bonded area are not subject to Texas sales and use tax. Imported property retains its character as an import while it is in the bonded area. Therefore, the sales transactions and any use of the goods that occur while the goods are in the bonded area are exempt from Texas sales and use tax.
Once transit of an import ceases in Texas, it becomes subject to Texas use tax. Texas use tax is due when the items are removed from the bonded area for use. The U.S. customer purchasing the goods is the importer of record that removes the goods from the bonded area. The U.S. customer purchasing the goods therefore is liable for Texas use tax after the items are removed from the bonded area.
The letter ruling also addresses physical presence nexus related to goods stored in a bonded area. Per the letter ruling, the entities that take title to the goods in the bonded area of the warehouse in Texas have physical presence in Texas, and therefore must register to collect and remit Texas sales and use tax. The entities that sell the goods after they have been received in the bonded area take title to tangible personal property. The bonded warehouse and the goods are located within the territorial limits of Texas. The entities are making use of the warehouse in Texas and deriving receipts from sales of tangible personal property in Texas. As a result, they are engaged in business in Texas and required to obtain a sales and use tax permit.
This provides an important distinction. While the end customer who ultimately purchases the goods is responsible for Texas use tax on the purchase, the seller of the goods is required to obtain a Texas sales and use tax permit since they are engaged in business in the state. (Letter No. 202408014L, Texas Comptroller of Public Accounts, August 29, 2024)