(a) If a purchaser who gives a resale certificate makes any use of the taxable item other than retention, demonstration, or display while holding it for sale, lease, or rental in the regular course of business or for transfer as an integral part of a taxable service in the regular course of business, the purchaser shall be liable for payment of the sales tax on the value of the taxable item for any period during which the taxable item is used other than for retention, demonstration, or display.
(b) The value of an item of tangible personal property is the fair market rental value of the tangible personal property, which is the amount that a purchaser would pay on the open market to rent or lease the tangible personal property for his use. The value of a taxable service is the fair market value of the taxable service, which is the amount that a purchaser would pay on the open market to obtain the service for the use of the purchaser.

Terms Used In Texas Tax Code 151.154

  • Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
  • Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
  • Market value: means the price at which a property would transfer for cash or its equivalent under prevailing market conditions if:
    (A) exposed for sale in the open market with a reasonable time for the seller to find a purchaser;
    (B) both the seller and the purchaser know of all the uses and purposes to which the property is adapted and for which it is capable of being used and of the enforceable restrictions on its use; and
    (C) both the seller and purchaser seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other. See Texas Tax Code 1.04
  • Person: includes corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity. See Texas Government Code 311.005
  • Personal property: All property that is not real property.
  • Personal property: means property that is not real property. See Texas Tax Code 1.04
  • Property: means real and personal property. See Texas Government Code 311.005
  • Tangible personal property: means personal property that can be seen, weighed, measured, felt, or otherwise perceived by the senses, but does not include a document or other perceptible object that constitutes evidence of a valuable interest, claim, or right and has negligible or no intrinsic value. See Texas Tax Code 1.04

(c) If an item of tangible personal property has no fair market rental value or if a taxable service has no fair market value, the original purchase price shall be the measure of the tax.
(d) At any time, the person making the divergent use may cease paying tax on the fair market rental value or fair market value and may pay sales tax on the original purchase price without credit for taxes previously paid.
(e) A purchaser of a taxable item who gives a resale certificate is not liable for the tax imposed by this chapter if he donates the item to an organization exempted under § 151.309 or 151.310(a)(1) or (2) of this code; except that any use by the purchaser of the taxable item other than retention, demonstration, or display shall be subject to taxes imposed by this section.
(f) A purchaser who issues a resale certificate for the purchase of a taxable item is liable for payment of the sales tax on the purchase price of the taxable item if the purchaser uses the item as a part of the excludable consideration on the purchase of another taxable item.

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