Suppose you are a new ecommerce business hoping to become successful by selling products to your customers. One of your main concerns is how to save money when buying the products or raw materials you need. That’s where the multijurisdiction resale certificate comes in handy.
With this certificate, you can purchase products without the additional hassle of paying sales tax, especially if your vendors are located in different states.
To learn more about how this certificate can help your business, read this article.
How is a Resale Certificate Utilized?
Resale certificates are typically used to exempt registered businesses from paying sales tax on items intended for resale. Essentially, it’s a way for businesses to avoid double taxation – paying sales tax when purchasing products and then charging sales tax when selling them to customers. One of the primary ways businesses use resale certificates is when buying inventory or raw materials for their products. For instance, imagine you run an online store selling custom clothes. With a resale certificate, you can buy the clothes and materials needed to make them without getting hit with sales tax on those items, helping you save money and maintain competitive pricing. When dealing with wholesale suppliers or distributors, providing a resale certificate is often a standard procedure. It simplifies transactions and ensures you’re not charged sales tax on items you intend to resell. This also helps establish a professional relationship with your suppliers. A resale certificate is almost interchangeably called a reseller’s permit. It is also typically provided in a “blanket” form, which applies to all items purchased from the vendor. A resale certificate is interchangeably called a reseller’s permit. It is also typically provided in a “blanket” form, which applies to all items purchased from the vendor. Different states have different rules concerning resale certificates. While some states only take a state-issued certificate, others accept a multi-state certificate, also known as the multijurisdiction resale certificate.What is a Multijurisdiction Resale Certificate?
A multijurisdiction resale certificate, also known as a uniform sales tax certificate, is a more streamlined process that allows businesses to get sales tax exemption for multiple states simultaneously. There are two options for this:- Streamlined Sales Tax (SST) Exemption Certificate
- Multistate Tax Commission (MTC) Uniform Sales and Use Tax
Which States Do Not Accept a Multijurisdiction Resale Certificate?
Although many states allow the use of an out-of-state resale certificate for sales tax exemption documentation, the following 12 states, including Washington D.C., require a sales tax permit registration before qualifying for a resale certificate:- Alabama
- California
- Florida
- Hawaii
- Illinois
- Louisiana
- Maryland
- Massachusetts
- Vermont
- Virginia
- Washington
What Should I Keep in Mind When I Use a Multi-state Resale Certificate?
Here are some of the tips you may want to remember when using the multijurisdiction resale certificate:- Use the document for its intended purposes only – Multijurisdiction resale certificates are to be used as a “blanket” resale certificate and for other similar purposes only, and not as a way to circumvent different exemption types on goods.
- Recheck if the state accepts the form – As we’ve established above, some states don’t accept the multijurisdiction resale certificate, so make sure you only use it in states that accept it.
- Read the document’s fine print diligently – Although some states accept the form, some have caveats or attached conditions. So make sure you are aware of all of this before using it.