Baylor University
Tax & Compliance Department
Financial Services

Texas Sales Tax Issues - Purchases

Tax Exemption Status

The State of Texas charges sales tax on all purchases made by individuals or entities within the state. A non-profit organization having tax-exempt status under the IRS designation of 501(c)(3) or (4) will be given sales tax exemption by the State of Texas. Baylor University has been designated as a 501(c)(3) federal tax-exempt tax organization by the Internal Revenue Service, and has received Texas sales tax exemption from the Texas Comptroller.


Exempt Purchases

Due to its tax exemption status, Baylor University does not have to pay sales and use tax when it buys, leases, or rents taxable items that are necessary to Baylor's exempt functions. An authorized agent or employee of Baylor University can purchase items tax-free for Baylor University if he/she gives the vendor a completed exemption certificate. If an item is purchased tax-free for Baylor University, the item cannot be used for a private party's or individual's benefit afterwards. The University has begun allowing individual departments to complete the Sales Tax Exemption Certificates, with the understanding that whoever signs the document will be responsible for explanations if the University is questioned under a Texas State audit.

Please see the link entitled Texas Sales Tax Exempt Certificates above under the Sales Tax drop-down menu for details on how to complete and use a sales tax exemption certificate. (Top)


Non-Exempt Purchases

A few special rules exist: 

  • If an individual is purchasing an item to donate to the University, he/she can give an exemption certificate to the vendor; however, the individual cannot use the item before donating it.
  • An employee of the University cannot claim a tax exemption if he/she is buying items of a personal nature, even if the University will later reimburse that individual for those items. Such items include meals, toiletries, and clothing.
  • If an employee travels for the University on business, the employee must pay sales tax on all taxable sales even if the University will later reimburse him/her.
  • Baylor University's sales tax exemption does not apply to the purchase, rental or use of motor vehicles. (Top)