A resale certificate lets your business buy products without paying sales tax—as long as those items will be sold to customers. Also known as a reseller permit or certificate of resale, a resale certificate makes it possible for businesses to avoid being taxed twice on the same goods. Sales taxes comprised over 31% of state tax revenue nationwide in 2022, so getting resale certificate compliance right is important for applicable businesses.

Each US state has its own process, form, and rules about when and how you can use a resale certificate. If you sell across state lines, you need to know how those rules interact and how to stay compliant while keeping operations efficient.

Below, we’ll explain what a resale certificate is, how to get one, and how resale certificates fit into the sales tax system.

What’s in this article?

• What is a resale certificate?
  
• Who needs a resale certificate for their business?
  
• How do you get a resale certificate?
  
• What’s the difference between a resale certificate and an exemption certificate?
  
• Can you use a resale certificate in multiple states?
  
• What are multistate or uniform resale certificates?
  
• Are sellers required to accept resale certificates?
  
• How can you verify whether a resale certificate is valid?
  
• How Stripe Tax can help
  

What is a resale certificate?

A resale certificate lets a business buy goods for resale without paying sales tax. When you use one, you’re shifting the tax responsibility from yourself to your customer.

Each state runs its own sales tax program, so resale certificates are issued and managed at the state level. You typically get one by registering for a sales tax permit with your state’s department of revenue. Your resale certificate will include your business name and address, your state tax ID number, and a statement that the items are for resale, not personal use.

Who needs a resale certificate for their business?

Any business that buys goods to sell them needs a resale certificate.

That often includes:

• Retailers and ecommerce sellers: When you buy inventory from distributors or wholesalers, you use a resale certificate so you’re not charged sales tax upfront. You’ll collect it from your ecommerce customers when those goods are sold.

• Wholesalers and distributors: If you’re buying in bulk to resell to other businesses, you present a resale certificate to your suppliers so you’re not taxed on inventory purchases.

• Manufacturers: If you purchase components or raw materials that become part of a product you sell, a resale certificate covers those transactions.

• Service providers that resell goods: Even if you mainly sell services, you might still qualify. For example, an IT consultant who resells hardware to clients can use a resale certificate for those purchases.

If your business collects sales tax and buys anything you resell, you would likely benefit from a resale certificate. You don’t need one if you never resell goods or if you operate entirely in a state with no sales tax, such as Oregon or New Hampshire.

How do you get a resale certificate?

How you get reseller certification varies by state, but there are similarities across state processes.

Here’s what that typically looks like:

• Register for a sales tax permit: Apply through your state’s department of revenue (or equivalent agency) to get a sales tax or seller’s permit. You’ll need to provide your business details, such as your Employer Identification Number (EIN), entity type, and expected sales, and you might need to pay a fee or deposit. Once approved, you’ll receive a state sales tax ID number.

• Get the resale certificate form: Many states provide a downloadable resale certificate form or include one when you register. Depending on where you are, it might be called a “reseller permit,” “certificate of resale,” or “sales and use tax exemption certificate.”

• Fill it out completely: Include your business name and address, your sales tax ID number, the seller’s information, a brief description of what you’re buying for resale, and a signed statement affirming that the goods are for resale only. Make sure every required field is filled in before you submit. An incomplete form can be rejected or invalid in an audit.

• Provide it to your suppliers: Once approved, you can give your certificate to suppliers any time you make qualifying purchases. Many will keep it on file so you don’t have to submit it for every order.

• Renew or update it when required: Some states require periodic renewal or reissue resale certificates annually. In other states, resale certificates don’t expire, but you must update your certificate if your business information changes.

Handled properly, your resale certificate keeps your inventory tax-free.

What’s the difference between a resale certificate and an exemption certificate?

A resale certificate is one type of sales tax exemption certificate, but not all exemption certificates are resale certificates. The difference comes down to why the purchase is tax-free.

• Resale certificates: These are used when a business buys goods that will be sold to customers later. The purchasing business provides their sales tax permit number and certifies that the purchase is strictly for resale. The tax will be collected from the end customer when the item is sold.

• Exemption certificates: These are documents that let businesses purchase goods without paying sales tax when the transaction qualifies for an exemption. Resale certificates are one type of exemption certificate, used when the purchasing business will resell the items. Others apply based on the customer, such as a nonprofit, school, or government agency, or how the item will be used, such as in manufacturing or agriculture. Some purchasing businesses might not have a sales tax permit number and instead provide documentation proving their exempt status.

In all cases, these certificates relieve the seller from collecting sales tax but for different reasons.

Can you use a resale certificate in multiple states?

Resale certificates are issued and governed at the state level, so they typically apply only in the state where they’re issued. Some states will accept a resale certificate from another state if the goods are being shipped directly out of state for resale (this usually applies in interstate transactions). Other states don’t accept out-of-state resale certificates. The rules differ widely, so check the destination state’s requirements before relying on an out-of-state certificate.

What are multistate or uniform resale certificates?

If your business operates in several states, you might be able to use one or two standardized forms across state lines. These certificates reduce paperwork but don’t create blanket tax immunity, so you still need to follow each state’s registration and filing rules.

Check your eligibility for:

• Multistate Tax Commission (MTC) Uniform Resale Certificate: Accepted by 36 states, this form lets you list your business details and sales tax registration numbers for each participating state. The form standardizes compliance for businesses that buy inventory in different jurisdictions but doesn’t replace the need to register in those states.

• Streamlined Sales Tax (SST) Exemption Certificate: Used by 24 states, this form covers resale and other exemption types and is accepted among member states for cross-border transactions.

Are sellers required to accept resale certificates?

Sellers aren’t legally required to accept a resale certificate, and many will do so only if it looks valid and complete. That’s because the seller—not the customer—is responsible if a tax auditor decides the exemption wasn’t legitimate. A seller can legally refuse a resale certificate and charge sales tax instead, especially if the purchase seems unrelated to the customer’s business or the certificate is incomplete.

Many states protect sellers who accept certificates “in good faith,” which means the document appears accurate, the customer is registered, and the purchase makes sense for resale. In practice, legitimate resale certificates will be accepted without issue, but sellers have every right to be cautious because they bear the compliance risk.

How can you verify whether a resale certificate is valid?

Whether you’re a seller checking a customer’s certificate or a business making sure yours is current, verification protects all parties from tax problems.

Here’s what to look for:

• Check the sales tax ID number: Many states let you confirm a business’s sales tax permit or resale number through an online lookup. If the number isn’t active, the certificate isn’t valid.

• Make sure the form is complete: Every required field—such as names, addresses, permit number, description of goods, signature, and date—must be filled in. Missing details can invalidate the document.

• Confirm the purchase makes sense: The goods being purchased should match the customer’s type of business.

• Watch expiration or renewal dates: Some states issue annual certificates, while others require periodic updates.

A few quick checks can prevent expensive corrections.

How Stripe Tax can help

Stripe Tax reduces the complexity of tax compliance so you can focus on growing your business. Stripe Tax helps you monitor your obligations and alerts you when you exceed a sales tax registration threshold based on your Stripe transactions. In addition, it automatically calculates and collects sales tax, value-added tax (VAT), and goods and services tax (GST) on both physical and digital goods and services—in all US states and in more than 100 countries.

Start collecting taxes globally by adding a single line of code to your existing integration, clicking a button in the Dashboard, or using our powerful application programming interface (API).

Stripe Tax can help you:

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration or add tax collection with the click of a button in the Stripe Dashboard.
  
• Register to pay tax: Let Stripe manage your global tax registrations and benefit from a simplified process that prefills application details—saving you time and simplifying compliance with local regulations.
  
• Automatically collect tax: Stripe Tax calculates and collects the right amount of tax owed, no matter what or where you sell. It supports hundreds of products and services and is up-to-date on tax rules and rate changes.
  
• Simplify filing: Stripe Tax seamlessly integrates with filing partners, so your global filings are accurate and timely. Let our partners manage your filings so you can focus on growing your business.
  

Learn more about Stripe Tax, or get started today.