12 states that won’t accept your out-of-state resale certificate
Certain states do not accept out-of-state resale certificates. Your resale certificate, based on your sales tax permit in your home state, serves as proof to a seller that you are purchasing products for resale at retail. You can often find a template online by searching for “your state + resale certificate” to use for this purpose. Vendors who accept resale certificates verify your certificate number and then sell items to you tax-free for resale. Sales tax is intended for retail sales, so products bought for resale are typically not taxed.
For example, if Frankie lives in Nevada but wants to shop in California, she may encounter that California is among the 12 states that do not accept out-of-state resale certificates. Therefore, Frankie’s Nevada resale certificate is not valid in California. Her options would be to either register for a California sales tax permit to obtain a California resale certificate, or pay sales tax in California and seek a refund later. Details on both options are discussed below.
Which states do not accept out-of-state resale certificates?
- Alabama
- California
- Florida
- Hawaii
- Illinois
- Louisiana
- Maryland
- Massachusetts
- Vermont
- Virginia
- Washington
- Washington D.C.
In these 12 states with stricter policies on accepting resale certificates, it’s important to note that some vendors may choose not to sell to resellers and therefore not accept resale certificates.
If you intend to make a purchase for resale in one of these states, what steps should you take?
How do you avoid paying sales tax on items you plan to resale?
You can do one of two things:
1.) Register for a sales tax permit in that state – This allows you to provide a valid resale certificate and avoid paying sales tax on items. However, be aware that this option may increase your administrative workload. Once you have an active sales tax permit in a state, you are obligated to collect sales tax from all your buyers in that state. This includes setting up sales tax collection on all your selling platforms, collecting sales tax, and filing and remitting sales tax to the state regularly.
2.) Attempt to recover the sales tax you paid later – Explore our article on different methods to recover sales tax paid on items intended for resale. Visit here for helpful tips.
Another option is simply to avoid shopping in that store or state altogether. However, I understand that sometimes those deals are too good to pass up.
Do you have any other questions?
If you’re unsure about the rules surrounding out-of-state resale certificates or need guidance on how to proceed in states that don’t accept them, we’re here to help! It’s important to follow the correct steps to avoid paying sales tax on resale purchases, and we can assist you with understanding your options.
For further insights, explore the Startxpress Help Center and Blog. If you have questions or need support, reach out anytime at support@startxpress.io!
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