Resale certificate: buying inventory without sales tax
A resale certificate is a document a business gives a seller to show that goods are being bought for resale, so the seller does not charge sales tax on the purchase. In the US, rules are set state by state; closeout sellers commonly ask for one before releasing a load to a buyer who wants a tax-exempt sale.
Reviewed by Tyler Kober · Updated
Key takeaways
- A resale certificate lets you buy inventory for resale without paying sales tax at purchase; you collect tax when you sell.
- Each US state sets its own rules and forms; some accept multistate forms.
- Use it only for goods you will actually resell; misuse can bring tax, penalties and interest.
What is a resale certificate?
A resale certificate is a form a buyer gives a seller to show that the goods are being bought to resell, not to use. In US states with sales tax, that lets the seller skip charging sales tax on the sale, because tax will be collected later when the goods are sold to the final customer. Rules and forms are set by each state.
How resale certificates work in closeout buying
When a store, jobber or online reseller buys a load, the seller will often ask for:
- The buyer's sales tax registration (seller's permit) number.
- A completed resale certificate on the form the state accepts.
- Sometimes the buyer's business documents, as part of normal vetting.
The seller keeps the certificate on file as proof for its own tax records. If a certificate is missing or invalid, the seller may have to charge tax. Exported goods follow different rules, and the paperwork that shows export matters there.
Closeout sellers that vet buyers often request these documents at onboarding rather than on every deal. Pickup location matters: the state where you take the goods can decide which form applies, so ask the seller which form to send for the pickup state on your deal.
Example
A new bin store owner registers for sales tax in the home state, then applies to buy from closeout suppliers. One supplier's warehouse is in another state. The owner checks whether that state accepts a multistate certificate, completes the accepted form, and sends it before the first pickup so the sale can be made without sales tax.
The common confusion
A resale certificate is not a general tax exemption. It covers goods bought for resale, not equipment, shelving or supplies for the business itself. Using it for those can bring back taxes, penalties and interest. It is also not the same as a sales tax permit, which registers you to collect tax. This page is general information, not tax advice; check with your state's tax agency or an accountant.
Who usually needs one: bin stores, discount stores, jobbers and online resellers. New buyers can see where it fits in how to start a bin store and how to find legitimate closeout suppliers.
Related terms
Frequently asked questions
Do I need a resale certificate to buy closeouts?
If you want to buy without paying sales tax, the seller will usually need a valid resale certificate on file, along with your sales tax registration. Without one, the seller may have to charge sales tax where it applies. Requirements depend on the seller's state, your state and where the goods are delivered.
Is a resale certificate the same as a sales tax permit?
No. A sales tax permit, sometimes called a seller's permit, registers your business to collect sales tax in a state. A resale certificate is the form you give a supplier to claim the resale exemption on a purchase. Many states require you to have the permit before you can issue a valid resale certificate.
Can I use one state's resale certificate in another state?
Sometimes. Some states accept multistate forms, such as those from the Streamlined Sales Tax program or the Multistate Tax Commission, and some accept out-of-state registrations. Others require their own form. Check the rules for the state where the sale takes place and ask the seller which forms they accept.
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Sources
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