THE RESALE
CERTIFICATE.

Reference

What it is, how to get one, and why the seller is the one who has to produce it at audit.

HOW TAX WORKS ON GRAJ →

Guide

HOW TO GET
A RESALE CERTIFICATE.

A resale certificate is the document a US buyer gives a seller to buy goods for resale without paying sales tax. It is issued by the state, tied to a sales tax permit, and it is the reason a wholesale order can be untaxed at all. The part almost everyone gets backwards: the exemption belongs to the document, and at audit it is the seller who has to produce it.

What to know

What it is, and what it is not

It is a statement, on the state's form or one it accepts, that you are buying to resell and will collect tax when you do. It is not proof that you are a business, and being a business does not exempt you. A seller who takes "we are a retailer, trust us" instead of the certificate owes the tax themselves.

Issued per state, usually against your sales tax permit number
Some states accept a multistate form; several do not
It covers goods for resale, not supplies you consume

How to get one

Register for a sales tax permit in the state where you sell. The permit number is what goes on the certificate. Most states let you register online in a day; a few take weeks. Then fill in the state's resale certificate form, or the multistate form where the state accepts it, and give it to each supplier once.

Register for a sales tax permit in your state
Complete the state's resale certificate form with the permit number
Give it to each supplier; they keep it on file, not you

What the seller has to do with it

Keep it, check it is complete and current, and be able to produce it years later. States audit the seller, and an exemption with no certificate behind it becomes tax the seller pays out of margin for a sale to a buyer who is long gone. On GRAJ a buyer holds the certificate on file once and every brand they buy from can see it is there.

The seller keeps the certificate and produces it at audit
An expired or incomplete certificate is no certificate
A buyer on GRAJ files it once and every seller sees it

Outside the United States

The resale certificate is an American mechanism. Canada uses input tax credits, so the buyer pays GST and claims it back and there is no certificate. The EU zero-rates cross-border business sales under the reverse charge, against a validated VAT number. A US seller applying the resale logic abroad is the most common cross-border tax mistake in wholesale.

Canada: no certificate; the buyer pays and reclaims
EU: reverse charge against a validated VAT number
Mexico: the invoice itself, the CFDI, carries the tax treatment

Where to go next

RESALE CERTIFICATES.

A US wholesale sale to a reseller is exempt from sales tax when the buyer holds a valid certificate for the state the goods land in.

Read it

GLOSSARY

Every term on GRAJ, defined in plain words.

Open

BUY IT FOR A STORE

What this role does on GRAJ, and how to start doing it.

Open

GUIDE: BUY IT FOR A STORE

The guide for this role, step by step.