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Sales tax is dumb, so I don’t pay it.
Hear me out.
If you are reselling items on eBay, Amazon or anywhere else, you don’t have to pay sales tax on the items you buy. It’s not as easy as simply telling the cashier to screw off when checking out, so here’s what you need to know:
The What
Sales tax is a state-level tax that is imposed on the sale of goods and services in the US. The sales tax amount charged varies from state to state and depends on the item being sold. However, businesses can avoid paying sales tax on items that they will resell to customers by getting sales tax exemption.
The How
Here are the five easy steps to follow in order to get exempt from sales tax when buying items for resale:
Step 1: Obtain a Reseller's Permit Most states require businesses that plan to resell goods to obtain a reseller's permit. This permit allows you to make tax-exempt purchases from wholesalers and distributors. The process for obtaining a reseller's permit varies by state, but generally involves filling out an application and providing information about your business.
Step 2: Provide Your Reseller's Permit Number When making a purchase for resale, provide the seller with your reseller's permit number. This number is used to verify that you are a registered reseller and eligible for sales tax exemption. Make sure you have this number handy when shopping!
Step 3: Keep Accurate Records Keep accurate records of all purchases made for resale, including invoices, receipts, and other documentation that shows the purchase was made for resale. These records will be needed in case of an audit, so don't toss them away!
Step 4: Understand the Rules in Different States Sales tax laws vary by state, so it's important to understand the rules in each state where you do business. Some states require that you have a physical presence in the state in order to be eligible for sales tax exemption. Other states have different requirements for reseller's permits and documentation. So, do your homework!
Step 5: Be Aware of Exemptions for Certain Products Some states offer exemptions for certain types of products, such as food or medical supplies. It's important to be aware of these exemptions and follow the rules for each one. You don't want to be caught off guard!
The Nitty Gritty
The rub here lies in the fact that not all retailers accept these permits. Places like Walmart, Best Buy and eBay have no issue with them. However, Target is notorious for clamping down on reselling activity and, as such does not accept these reseller tax exemptions. Sadly, not every single retailer will accept this certificate.
The Back-Door Sales Tax Refund
Thankfully, there’s a “back door” method to ensuring you get a refund on all the sales tax you paid during the fiscal year. If you bought $100,000 worth of inventory in 2022 at a sale tax rate of 8%, the below method will put $8,000 of cold hard cash back into your pocket.
Let’s Get Into It
Overview
If you're a reseller of and you've purchased items for resale, you may be eligible for a sales tax refund from your state. To claim a sales tax refund, you'll need to complete a request for refund form and provide supporting documentation. Here's a step-by-step guide on how to claim a sales tax refund in most states (practices vary by state):
Step 1: Determine if you're eligible for a refund
Before you start the process of claiming a sales tax refund, you'll need to make sure that you're eligible. To be eligible for a sales tax refund, you must be a reseller of goods and have a valid sales tax permit issued by the state. You'll also need to have paid sales tax on the items that you're requesting a refund for, and you must be able to provide documentation to support your refund request.
Step 2: Gather your documentation
To claim a sales tax refund, you'll need to provide supporting documentation with your Form. This documentation may include invoices, receipts, purchase orders, and any other documentation that shows the details of your purchase and the sales tax paid.
Make sure that your documentation is organized and easy to understand. You should also keep a copy of your documentation for your own records.
Step 3: Complete the Request For Refund Form
I’ll use Texas as an example here. Form 00-957 is the form that you'll need to complete in order to claim a sales tax refund in Texas. This form is available on the Texas Comptroller's website, and it can be downloaded and printed.
When completing Form 00-957, you'll need to provide your business information, the details of the purchases you're requesting a refund for, and the amount of sales tax paid. Make sure to complete the form accurately and include all necessary information.
Step 4: Submit your form and documentation
Once you've completed the form and gathered your supporting documentation, you're ready to submit your claim for a sales tax refund. You can submit your form and documentation by mail or electronically through the state Comptroller's website.
If you're submitting your claim by mail, make sure to include a copy of your completed Form and all supporting documentation. You should also keep a copy of your submission for your own records.
Step 5: Wait for a response
After you've submitted your claim for a sales tax refund, you'll need to wait for a response from the state Comptroller's office. The processing time for a sales tax refund can vary, so be patient and expect it to take several weeks.
If your claim is approved, you'll receive a check for the amount of your sales tax refund. If your claim is denied, you'll receive a letter explaining why your claim was denied and any steps you can take to correct the issue.
Claiming a sales tax refund from your state can be a straightforward process if you follow the steps outlined above. Remember to gather your documentation, complete the form accurately, and submit your claim in a timely manner. By doing so, you may be able to recoup some of the sales tax that you paid on items purchased for resale.
Reseller Tax Exemption Applications
Below is a list of links to apply for a Reseller Tax Exemption in whichever state you reside:
Alabama - Alabama Sales Tax Certificate of Exemption https://revenue.alabama.gov/wp-content/uploads/2019/07/STEXCRT-201907.pdf
Alaska - Alaska does not have a state sales tax.
Arizona - Arizona Transaction Privilege Tax Exemption Certificate https://azdor.gov/forms/tpt-2
Arkansas - Arkansas Sales and Use Tax Resale Certificate https://www.dfa.arkansas.gov/images/uploads/exciseTaxOffice/SalesUseTax/ST391.pdf
California - California Resale Certificate https://www.cdtfa.ca.gov/formspubs/cdtfa230.pdf
Colorado - Colorado Sales Tax Exemption Certificate https://www.colorado.gov/pacific/sites/default/files/DR0563.pdf
Connecticut - Connecticut Resale Certificate https://portal.ct.gov/-/media/DRS/Forms/2018/ResaleCertificate/ResaleCertificatepdf.pdf
Delaware - Delaware does not have a state sales tax.
Florida - Florida Annual Resale Certificate for Sales Tax https://floridarevenue.com/Forms_library/current/gt800005.pdf
Georgia - Georgia Sales and Use Tax Certificate of Exemption https://dor.georgia.gov/document/sales-tax-certificate-exemption/download
Hawaii - Hawaii General Excise / Use Tax Exemption Certificate https://files.hawaii.gov/tax/forms/2018/g70a_rev_2018_fillable.pdf
Idaho - Idaho Resale Certificate https://tax.idaho.gov/forms/EFO00122_09-15-2021.pdf
Illinois - Illinois Certificate of Resale https://www2.illinois.gov/rev/forms/sales/Documents/st-556.pdf
Indiana - Indiana Sales Tax Exemption Certificate https://www.in.gov/dor/4339.htm
Iowa - Iowa Sales Tax Exemption Certificate https://tax.iowa.gov/sites/default/files/2021-05/31-014_2.pdf
Kansas - Kansas Resale Exemption Certificate https://www.ksrevenue.org/pdf/st28e.pdf
Kentucky - Kentucky Resale Certificate https://revenue.ky.gov/Forms/Documents/51A105.pdf
Louisiana - Louisiana Resale Certificate https://www.revenue.louisiana.gov/forms/OfficeForms/R-1064.pdf
Maine - Maine Sales Tax Exemption Certificate https://www.maine.gov/revenue/sites/maine.gov.revenue/files/inline-files/ST%2012%20Exemption%20Certificate.pdf
Maryland - Maryland Sales and Use Tax Exemption Certificate https://www.marylandtaxes.gov/forms/current_forms/resale_certificate.pdf
Massachusetts - Massachusetts Sales Tax Resale Certificate https://www.mass.gov/doc/st-4-sales-tax-resale-certificate/download
Michigan - Michigan Sales and Use Tax Certificate of Exemption https://www.michigan.gov/documents/treasury/3372_216612_7.pdf
Minnesota - Minnesota Sales and Use Tax Exemption Certificate https://www.revenue.state.mn.us/sites/default/files/2021-04/st3.pdf
Mississippi - Mississippi Sales Tax Resale Certificate https://www.dor.ms.gov/Portals/0/Forms/71-5302%20Rev%2002-17%20fillable.pdf
Missouri - Missouri Sales and Use Tax Exemption Certificate https://dor.mo.gov/forms/149.pdf
Montana - Montana does not have a state sales tax.
Nebraska - Nebraska Resale or Exempt Sale Certificate https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/tax-forms/11_13/13-03.pdf
Nevada - Nevada Exemption Certificate https://tax.nv.gov/uploadedFiles/taxnvgov/Content/Forms/Exemption-Certificate.pdf
New Hampshire - New Hampshire does not have a state sales tax.
New Jersey - New Jersey Sales Tax Exemption Certificate https://www.state.nj.us/treasury/taxation/pdf/other_forms/sales/st3.pdf
New Mexico - New Mexico nontaxable transaction certificate https://www.tax.newmexico.gov/wp-content/uploads/2020/01/A-RCS-12-03.1-01-20.pdf
New York - New York State Resale Certificate https://www.tax.ny.gov/pdf/current_forms/st/st120.pdf
North Carolina - North Carolina Streamlined Sales Tax Agreement Certificate of Exemption https://www.ncdor.gov/documents/form-e595e-streamlined-sales-and-use-tax-exemption-certificate
North Dakota - North Dakota Sales and Use Tax Resale Certificate https://www.nd.gov/tax/data/upfiles/forms/ResaleCertSFN60317.pdf
Ohio - Ohio Sales and Use Tax Blanket Exemption Certificate https://tax.ohio.gov/static/forms/sales_and_use/ST_STEC_B_FI.pdf
Oklahoma - Oklahoma Sales Tax Resale Certificate https://www.ok.gov/tax/documents/STO-754A%20Sales%20Tax%20Resale%20Certificate%2001-2019.pdf
Oregon - Oregon does not have a state sales tax.
Pennsylvania - Pennsylvania Exemption Certificate https://www.revenue.pa.gov/FormsandPublications/FormsforIndividuals/SalesandUseTax/Documents/rev-1220.pdf
Rhode Island - Rhode Island Sales Tax Resale Certificate https://www.tax.ri.gov/forms/2017/Sales/ST-4.pdf
South Carolina - South Carolina Retail License Application and Resale Certificate https://dor.sc.gov/forms-site/Forms/ST-8A%20Retail%20License%20Application%20and%20Resale%20Certificate
South Dakota - South Dakota Sales and Use Tax Exemption Certificate https://dor.sd.gov/Taxes/Business_Taxes/Forms/Sales_Tax_Exemption_Certificate.aspx
Tennessee - Tennessee Sales and Use Tax Certificate of Resale https://www.tn.gov/content/dam/tn/revenue/documents/forms/sales/salesresalecertificate.pdf
Texas - Texas Sales and Use Tax Resale Certificate https://comptroller.texas.gov/forms/01-339.pdf
Utah - Utah State Tax Commission Exemption Certificate https://tax.utah.gov/forms/current/tc-721.pdf
Vermont - Vermont Sales Tax Exemption Certificate https://tax.vermont.gov/sites/tax/files/documents/ST%20Certificate%20of%20Exemption%20-%20Form%20S-3.pdf
Virginia - Virginia Sales and Use Tax Certificate of Exemption https://www.tax.virginia.gov/sites/default/files/taxforms/exemption-certificates/any/ST-10-any.pdf
Washington - Washington Reseller Permit Application https://dor.wa.gov/sites/default/files/legacy/Docs/forms/ExcsTx/LicenseApplications/ResellerPermitApplication.pdf
West Virginia - Sales and Use Tax
https://tax.wv.gov/Business/SalesAndUseTax/Pages/SalesAndUseTax.aspx
Wisconsin - Wisconsin Sales and Use Tax Exemption Certificate https://www.revenue.wi.gov/DORForms/s-211f.pdf
Wyoming - Wyoming Sales Tax Exemption Certificate https://smartpay.gsa.gov/sites/default/files/Wyoming%20Sales%20Tax%20Exemption%20Form_0.pdf