A taxable item that is purchased for resale is exempt from sales or use tax if the resale is properly documented. If you sell a taxable item to a customer, you must collect sales tax unless you accept a properly completed resale certificate. The resale certificate is proof that the taxable item was purchased for resale. The certificate must include certain specific information.
See Rule 3.285. The resale tax certificate can be downloaded from the Tax Forms Online page.
The customer's sales tax permit number or a copy of the customer's permit is not a substitute for a resale certificate. Keeping a record of a purchaser's taxpayer number without a properly completed resale certificate does not relieve a seller of the responsibility for collecting sales tax.
2. What can I buy tax free by issuing a resale certificate under my taxpayer number?
You can use a resale certificate to purchase the following items tax-free:
merchandise or a taxable service that you intend to resell in the form or condition in which you acquired it from your vendor or that you intend to resell as an integral part of other merchandise or taxable service;
tangible personal property that you buy to lease or rent to your customer
a taxable service performed on tangible personal property in your resale inventory; and
tangible personal property that you buy to use in performing a taxable service when you transfer the care, custody and control of the tangible personal property to your customer.
If you use the merchandise that you purchased tax-free by issuing a resale certificate, then you owe tax on the merchandise. You must pay the sales tax either on the fair market rental value for the period of use of the merchandise or on your purchase price of the item.
3. What are my responsibilities as a buyer using a resale certificate?
You should not use a resale certificate if there is any question whether you will resell the property. If you are purchasing a combination of items and some are for resale while others are not for resale, you must clearly indicate to the vendor which items will be resold and on which the vendor should not collect tax.
Please refer to Rule 3.285 for additional information.
4. Do I need to submit a resale certificate each time I make a purchase?
If a customer purchases exclusively for resale, a seller can accept a blanket resale certificate. The certificate should state that all purchases will be resold in the regular course of business.
5. What are my responsibilities as a seller accepting a resale certificate?
You must make sure that the resale certificate is properly completed.
As a seller, you should always note the general character of the purchaser's business. If the nature of the business is such that the property purchased would not normally be resold, you should question the use of the certificate. For example, a resale certificate describing the business as a service station should not be accepted for the purchase of a sofa or similar item not regularly sold by service stations.
You should not accept the certificate if you know or have reason to believe the property is being purchased for other than resale.
You must retain the resale certificates (for 4 years) that you accept from others to substantiate claims that a sale was for resale and therefore not subject to tax.
6. Can I find out if a seller's permit number is current?
Yes. If another seller has given you a resale certificate, you can verify the seller's permit using the Comptroller's online Sales Tax Permit Search.
7. Can I issue a resale certificate if I buy items that will be resold in Mexico or another country?
You can issue a resale certificate if you intend to resell the taxable items in the United States or in Mexico, but not for any other countries.
8. Are there any penalties for the illegal use of a resale certificate?
If the tax evaded by the invalid certificate is less than $20, the offense is a Class C misdemeanor.
If the tax evaded by the invalid certificate is $20 or more but less than $200, the offense is a Class B misdemeanor.
If the tax evaded by the invalid certificate is $200 or more but less than $750, the offense is a Class A misdemeanor.
If the tax evaded by the invalid certificate is $750 or more but less than $20,000, the offense is a felony of the third degree.
If the tax evaded by the invalid certificate is $20,000 or more, the offense is a felony of the second degree.