A Brief Overview on Resale Certificates 2022

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A Brief Overview on Resale Certificates 2022


When you are planning to sell products or items, then you must require certain documents that will verify your legal status. In this article, we will learn all about resale certificates that you must have for verification. Let’s start. 


A Resale Certificate


A resale certificate is a document that verifies that you are a legal retailer or buyer. Furthermore, it verifies that you are purchasing things to resell or use as component parts of products to resell.


Moreover, you must be registered to collect sales tax in at least one US state in order to use a resale certificate.


Note that resale certificates are sometimes known as ‘reseller’s permits’ or simply ‘exemption certificates’ in some cases.


In addition, your resale certificate and sales tax permits are usually the same items. However, in rare situations, a state may issue a separate ‘resale certificate’ number to a reseller.


Information You’ll Typically Need for a Reseller Certificate


Here is the list of reseller certifications that you must have: 


Identifying information about your company.


Personal information that can be used to identify you.


What kind of business do you run?


What kinds of things are you purchasing tax-free?


A signature attesting to the fact that you are making the transaction in good faith and want to resell the things.


How to Accept a Buyer’s Resale Certificate


As an internet vendor, you may come across another reseller or consumer that wants to buy from you at some point.


Therefore, make sure that it’s time to take your responsibilities as a vendor seriously and go over the purchase order thoroughly.


Furthermore, in most situations, if you neglect to charge sales tax by mistake. Then, you will be responsible for paying the sales tax you did not collect out of your own pocket.


Here are a few pointers on how to receive a resale certificate from a buyer without getting into trouble with the sales tax.


1. Ascertain that the resale certificate is filled out completely and accurately – Resale certificates will be scrutinized by auditors in the case of an audit. Make certain that each resale certificate you accept is fully completed, including the signature.


2. Verify the validity of the resale certificate. Furthermore, most states allow merchants to check the validity of a resale certificate online. Therefore, you can re-check if your customer gave you a valid resale certificate number. Also, check its expiry date as well.


3. Make a good faith effort to verify the validity of the purchase. However, in some scenarios, some purchases are most likely to get invalid. However, you can decline those resale certificates. Because you will be responsible for the sales tax, which you didn’t collect.


Fortunately, states do not require you to become a private investigator. Therefore, you can claim innocence if the consumer falsifies the document. However, you must make sure that you verified completely from your end as well.


4. Retain the resale certificate on file. While the length of time you should maintain the paperwork varies by state. However, most states require you to keep resale certificates on file for at least five years. Furthermore, they will assist you in proving why you did not collect sales tax from a certain consumer in the event of a sales tax audit.


Hope this article helps you!



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