If you run an Ecommerce or CPG business in Idaho, securing an Idaho Resale Certificate is a smart move to protect your margins and streamline operations.
This certificate allows you to purchase inventory and raw materials tax-free, helping you lower upfront costs, stay competitive in pricing, and remain compliant with Idaho sales tax laws.
Understanding Resale Certificates in Idaho
What is an Idaho Resale Certificate?
In Idaho, a Sales Tax Resale or Exemption Certificate is a document issued by the Idaho State Tax Commission that allows businesses to:
- Purchase goods without paying sales tax, provided these goods are intended for resale to their customers in the normal course of their business.
- Make tax-exempt purchases of inventory and materials that will become part of the products they sell by presenting a valid resale certificate to their suppliers.
The purpose is to prevent double taxation, once at the wholesale level and again at the point of retail sale.
However, an Idaho resale certificate is not a blanket exemption from all sales tax obligations. Businesses are still required to collect and remit sales tax on taxable sales to end consumers.
Why do you need a Resale Certificate in Idaho?
Obtaining a resale certificate in Idaho offers several significant advantages for businesses that purchase goods for resale.
Here are some key benefits:
- Avoid Paying Sales Tax on Inventory: The most direct benefit is that you can purchase inventory and materials for resale without paying Idaho‘s sales tax upfront.
- Maintain Competitive Pricing: By not paying sales tax on the cost of goods, businesses have more flexibility in setting competitive prices for products in the Idaho market. This can be a crucial advantage, especially in price-sensitive industries.
- Legal Compliance: Possessing and using a valid resale certificate for eligible purchases ensures businesses comply with Idaho’s sales tax laws and regulations to avoid penalties.
In Idaho, the specific form required for a resale certificate is the Sales Tax Resale or Exemption Certificate (Form ST-101).
When filling out Form ST-101, a purchaser must include their federal Employer Identification Number (EIN) or a driver’s license number and the state of issue to identify that it is registered with the Idaho State Tax Commission and authorized to make tax-exempt purchases for resale.
Resale Certificate vs. Sales Tax Permit: What’s the Difference?
An Idaho Sales Tax Permit authorizes your business to collect and remit sales tax on taxable sales to customers. An Idaho Resale Certificate (Form ST-101), on the other hand, allows you to purchase goods tax-free from suppliers if those goods are intended for resale. To use a resale certificate, you must have an active sales tax permit.
Who Can Use a Resale Certificate in Idaho?
Businesses that purchase goods for resale can use an Idaho Resale Certificate. To do so, the business must actively sell taxable tangible products and hold a valid Idaho Sales Tax Permit.
As detailed in Idaho Administrative Procedures Act (IDAPA) 35.01.02.128, the resale exemption may be claimed by the following types of buyers when purchasing goods for resale:
- Idaho Retailers and Wholesalers: Any retailer or wholesaler actively conducting business in Idaho who possesses a current and valid Idaho seller’s permit number.
- Wholesalers Without Retail Sales: A wholesaler whose business operations are exclusively wholesale (i.e., they make no retail sales) and are therefore not legally required to hold an Idaho seller’s permit number.
- Limited Out-of-State Retailers: An out-of-state retailer who conducts a very limited number of sales in Idaho specifically, no more than two sales within any twelve months, and is consequently not required to hold an Idaho seller’s permit number.
How to Get a Resale Certificate in Idaho: A Step-by-Step Guide
Getting a resale certificate in Idaho is simple, but you’ll need to meet a few key requirements first. Here’s how to do it:
1. Make Sure You’re Eligible: Your business must purchase goods for resale to customers. Most businesses needing a resale certificate will also sell taxable tangible products and be registered with the Idaho State Tax Commission by holding a valid Idaho Sales Tax Permit.
However, some businesses, like certain wholesalers or limited out-of-state retailers, may be eligible to use a resale certificate even without an Idaho Sales Tax Permit.
2. Get an Idaho Sales Tax Permit: If your business will be making retail sales in Idaho, you must first apply for an Idaho Sales Tax Permit through the Idaho Business Registration System website. This permit number is generally required on your resale certificate (Form ST-101) when you are an Idaho-registered retailer.
Note: If you are a wholesaler making no retail sales, or a limited out-of-state retailer as described in our eligibility section, you may not need an Idaho Sales Tax Permit to use a resale certificate.
Need help? Read our blog: How to Get a Seller’s Permit in Idaho
3. Gather Your Business Information: You’ll need basic business details to complete the resale certificate, including:
- Your business’s legal name and address
- Seller’s business name and address
- General character of the tangible personal property sold by the buyer
- Your Idaho sales tax permit number (if already obtained)
- Your federal EIN or driver’s license number and state of issue.
- Your signature and date of issue
4. Complete the Form ST-101: Download and fill out the Idaho Sales Tax Resale or Exemption Certificate (Form ST-101) from the Idaho State Tax Commission website. You’ll present this form to your suppliers when making tax-exempt purchases.
5. Submission: No submission required in Idaho. You don’t submit the resale certificate to the state. Instead, give the completed form directly to your suppliers when buying items for resale.
6. Pay Any Applicable Fees: There’s no cost to use Form ST-101, but you’ll need a valid Idaho Sales Tax Permit. To see if there’s a cost for the permit, check out our guide on Sales Tax Permit fees.
7. Understand Renewal Requirements: An Idaho resale certificate (Form ST-101) doesn’t have a set expiration date, but it remains valid only as long as the details on it are accurate and you still qualify for the exemption.
Your Idaho Sales Tax Permit typically stays active until it’s canceled by either you or the state. However, if you’re a registered retailer, you must keep up with all sales tax filings and payments to stay in good standing.
If there are any changes to your business details or exemption status, you should give your suppliers an updated Form ST-101.
How to Use a Resale Certificate in Idaho
To properly utilize your resale certificate in Idaho when making tax-exempt purchases for resale, you’ll need to present a valid copy of your Idaho Sales and Use Tax Resale Certificate to your supplier at the time of purchase.
Idaho generally does accept resale certificates issued by other states. However, there might be specific conditions:
- Good Faith Acceptance: Vendors in Idaho will typically accept an out-of-state resale certificate in good faith, provided it contains all the necessary information (buyer’s name, address, seller’s permit number from the issuing state, reason for exemption, etc.)
- Reciprocity: The acceptance might be based on reciprocal agreements with the state that issued the certificate. While Idaho is not a member of the Streamlined Sales Tax Agreement (SSTA), it does accept the Multistate Tax Commission (MTC) Uniform Sales & Use Tax Certificate Multijurisdiction, which facilitates acceptance of a uniform certificate.
If you are an out-of-state business purchasing from a vendor in Idaho, you can use the Uniform Sales and Use Tax Certificate – Multijurisdiction Form.
For more information regarding sales tax exemption laws in Idaho, you may visit the state website.
Multi-Jurisdictional Resale Certificates
A multi-jurisdictional resale certificate is a standardized form that simplifies tax-exempt purchases for businesses operating across state lines.
Unlike single-state resale certificates, multi-jurisdictional ones are designed to be accepted by multiple states as proof of tax-exempt resale purchases.
However, it’s crucial to understand that not all states accept these multi-state forms, and acceptance can come with specific conditions.
Businesses in or selling to Idaho vendors may encounter two main types of multi-jurisdictional resale certificates:
- Uniform Sales & Use Tax Resale Certificate – Multijurisdiction Form: This form is widely recognized and accepted by many states, though not all participate in honoring it. Idaho accepts this form instead of Form ST-101 when out-of-state businesses registered in Idaho sell goods for resale. However, buyers may only use this form when buying tangible goods for resale, not for other exemptions or statutory deductions. Its validity as a resale certificate is contingent upon compliance with Idaho Code Section 63-3622(c). You can find this form on the Multistate Tax Commission (MTC) website.
- Streamlined Sales Tax (SST) Certificate of Exemption: The state of Idaho is not a Member State of Streamlined Sales Tax of the Streamlined Sales Tax Governing Board website. As such, it does not accept the SST Certificate of Exemption for qualifying resale purchases.
Businesses need to verify whether Idaho accepts these multi-jurisdictional certificates and if there are any specific requirements or limitations on their use within the state. This is to avoid any audit issues.
Responsibilities When Using or Accepting a Resale Certificate in Idaho
Buyer Responsibilities
If you use an Idaho resale certificate, you must ensure you use it only for purchases of goods or services you intend to resell. Using it for personal or operational items (like office supplies or equipment) is illegal and may lead to penalties.
- Idaho-based buyers: Provide a fully completed Form ST-101 to your suppliers for qualifying purchases. If the buyer properly provides a certificate and usually buys exempt items, they must still pay tax on taxable purchases.
- Out-of-state buyers: While Idaho prefers its own resale certificate form, many Idaho vendors will accept a valid resale certificate from your home state if it includes your business name, address, sales tax number (or equivalent), and a clear resale statement. You can complete the Uniform Sales and Use Tax Certificate – Multijurisdiction Form instead of Form ST-101.
Seller Responsibilities
Idaho sellers must verify and keep proper documentation when accepting resale certificates for tax-exempt sales. You must:
- Accept the certificate in good faith
- Ensure it includes all required information: buyer’s name, address, sales tax permit number (or equivalent), reason for exemption, and signature.
- Reject the certificate if the items aren’t for resale (e.g., personal or business use)
Keep records for at least 4 years: Your properly completed resale certificate serves as your official proof for not collecting sales tax. You must retain it in your records for at least four years. If the business does not file returns, it is advisable to keep these records for seven years.
Frequently Asked Questions About the Idaho Resale Certificate
Are There Penalties for Misusing a Resale Certificate in this State?
Yes. Improper use of a resale certificate, such as using it for personal or non-resale purchases, can result in serious penalties:
- Monetary Penalties: Idaho imposes a 5% penalty or $200, whichever is greater, for intentional or repeated misuse of a resale certificate. This penalty is in addition to the sales tax owed.
- Legal Ramifications: Anyone who knowingly misuses a resale certificate to avoid paying tax may face criminal misdemeanor charges in Idaho. Penalties may include a fine up to $1,000, imprisonment up to one year, or both, depending on the offense.
Does an Idaho Resale Certificate Expire?
The Idaho Resale Certificate (Form ST-101) does not have a specified expiration date. Once the state or the buyer issues it, the certificate remains valid until they explicitly revoke it in writing.
However, it is only valid while your Idaho Sales Tax Permit remains active. If the state revokes or deactivates your permit, your resale certificate becomes invalid.
How Do I Verify an Idaho Resale Certificate?
If you’re a seller in Idaho, here’s how to validate a buyer’s resale certificate:
- Request a completed Form ST-101 from the buyer. Review it to ensure all required information appears to be for resale, consistent with good faith.
- Check the validity of the seller’s permit through the Idaho Taxpayer Access Point (TAP)
- Select the permit type and enter the permit number you are searching for, then click Submit.
How TaxHero Can Help
Managing sales tax compliance and resale certificates in Idaho doesn’t have to be complicated. TaxHero simplifies the process, from keeping your Idaho Sales Tax Permit active to ensuring you use resale certificates correctly.
Save time. Avoid penalties. Stay compliant.
Schedule a Demo to see how TaxHero can streamline your Idaho resale certificate process today!