A resale certificate is a document that allows retailers to purchase goods for resale without having to pay local sales tax for those items. To get around paying sales tax on items they plan to resell, ecommerce merchants should acquire a resale certificate.

What states do not accept out of state resale certificates?

Here are the states/areas that don’t accept out-of-state resale certificates:

  • Alabama.
  • California.
  • Florida.
  • Hawaii.
  • Illinois.
  • Louisiana.
  • Maryland.
  • Massachusetts.

Does tax exempt status across state lines?

A general rule of thumb is that purchases by the Federal government are exempt in every state, but documentation requirements vary. In order for a not-for-profit to be exempt the organization must apply for, and be granted, exempt sales and use tax status in the state(s) in which they conduct business.

Can a vendor accept an out of State resale certificate?

This may be a separate filing if your state does not have an income tax. It’s also important to note that ten US states will not allow vendors to accept resale certificates that were issued out of state.

What happens if I refuse a resale certificate?

If you do not refuse the resale certificate, you can find yourself on the hook to pay the sales tax you did not collect. The good news is that states don’t require you to become a private detective, so if the customer falsifies the document, you can claim innocence as long as you made a good faith effort to verify the certificate.

How to check if a resale certificate is valid?

Verify that the resale certificate is legitimate – Most states allow vendors to verify a resale certificate online. This allows you to double check that your customer provided you with a valid resale certificate number and that the certificate is not expired.

Is the sales tax license the same as a resale certificate?

Your resale certificate is generally the same thing as your sales tax permit (sometimes called sales tax license.) However, in some cases, a state may issue a reseller a separate “resale certificate” number.