If you run an Ecommerce or CPG business in Indiana, securing an Indiana 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 Indiana sales tax laws.
Understanding Resale Certificates in Indiana
What is an Indiana Resale Certificate?
In Indiana, a General Sales Tax Exemption Certificate is a document issued by the Indiana Department of Revenue (DOR) 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, first at the wholesale level and then again at the point of retail sale.
However, an Indiana 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 an Indiana Resale Certificate?
Obtaining a resale certificate in Indiana 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 purchasing inventory and materials that will be resold to customers without paying Indiana’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 Indiana 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 that businesses comply with Indiana’s sales tax laws and regulations, thereby avoiding penalties.
In Indiana, the specific form required for a resale certificate is the ST-105.
When filling out Form ST-105, a purchaser must include their Indiana taxpayer number to identify that it is registered with the Indiana DOR and authorized to make tax-exempt purchases for resale.
Resale Certificate vs. Sales Tax Permit: What’s the Difference?
In Indiana, a Sales Tax Permit is generally referred to as a Retail Merchant Certificate. This certificate authorizes your business to collect and remit sales tax on taxable sales to customers.
Meanwhile, an Indiana Sales Tax Exemption Certificate (Form ST-105) 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 Retail Merchant Certificate or other valid sales tax permit.
Who Can Use a Resale Certificate in Indiana?
Businesses that purchase goods for resale can use an Indiana Sales Tax Exemption Certificate. To do so, the business must actively sell taxable tangible products and hold a valid Indiana Retail Merchant Certificate (for in-state businesses).
Unregistered out-of-state buyers have the following options to use the Form ST-105:
- Provide your home state’s tax ID number (sales tax permit or a business license) as proof that you are a registered reseller in your state.
- Register your business in Indiana if you have a sales tax nexus in the state (this is mandatory if nexus thresholds are met).
When no valid certificate is presented during the transaction, you’re still required to pay the sales tax to the vendor. This rule applies even if the purchase qualifies for a resale exemption.
You can then request a sales tax refund directly from the Indiana DOR by filing a reimbursement request (Form GA-110L).
However, providing a valid exemption certificate upfront is the standard and most efficient way to handle tax-exempt resale purchases.
Using an Indiana Resale Certificate for Delivered Goods
Out-of-state buyers do not need an exemption certificate for interstate commerce purchases. This typically applies to drop shipping transactions (buying goods that are delivered and resold outside of Indiana).
Under Indiana’s code of regulations 45 IAC 2.2-5-53, interstate commerce transactions are not subject to the state’s sales tax.
Therefore, even if you intend to resell the goods in your home state, Indiana vendors do not require you to present an exemption certificate. Instead, you’re only subject to sales tax burdens in your home state, where you may have a nexus. However, it is important to note that some Indiana vendors may still request a valid exemption certificate for their records, even for interstate sales. It helps substantiate the tax-exempt nature of the transaction during an audit.
Either way, both buyers and suppliers must still maintain proper records in case of a sales tax audit.
How to Get a Resale Certificate in Indiana: A Step-by-Step Guide
Getting a resale certificate in Indiana 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 sell taxable goods or services and be registered with the Indiana Department of Revenue. Only businesses with a valid Indiana Retail Merchant Certificate can use a resale certificate.
2. Get an Indiana Retail Merchant Certificate: If you don’t already have one, apply for an Indiana Retail Merchant Certificate through the Indiana DOR’s website. You must obtain this certificate before you can issue or use a resale certificate.
Need help? Read our blog: How to Get a Seller’s Permit in Indiana
3. Provide a Valid Sales Tax Permit: Out-of-state buyers can still obtain the Form ST-105 and complete it by using your home state’s sales tax ID number. However, if you have a sales tax nexus in Indiana, it’s mandatory to register your business in the state
4. Gather Your Business Information: You’ll need basic business details to complete the resale certificate, including:
- Your business legal name and any trade names.
- Your business address and contact information.
- Your Federal Employer Identification Number (FEIN) or Social Security Number (SSN) if you’re a sole proprietor.
- Your Indiana tax identification number (TID) and location number (LOC)
- Your home state’s tax ID number or business license (if not registered in Indiana)
- Your business type (e.g., sole proprietorship, LLC, corporation).
5. Complete the Form ST-105: Download and fill out the Indiana General Sales Tax Exemption Certificate (Form ST-105) from the Indiana DOR’s website. You’ll present this form to your suppliers when making tax-exempt purchases.
6. Submission: No submission required in Indiana. You don’t submit the resale certificate to the state. Instead, give the completed form directly to your suppliers when buying items for resale.
7. Pay Any Applicable Fees: There’s no cost to use Form ST-105, but you’ll need a valid Indiana Retail Merchant Certificate. To see if there’s a cost for the certificate, you can check out our guide on Sales Tax Permit fees.
8. Understand Renewal Requirements: Your Indiana Sales Tax Exemption Certificate (Form ST-105) generally remains valid as long as your underlying Indiana Retail Merchant Certificate (RRMC) is active and in good standing.
- Indiana RRMCs are typically valid for 2 years and automatically renew at no cost if your business is compliant with its tax filings and payments.
- If you are an out-of-state buyer using a home state’s sales tax ID, ensure that the permit remains active.
- While the ST-105 itself generally does not expire, you should provide an updated Form ST-105 to your suppliers if there are significant changes to your business details (e.g., legal name, address, ownership) or if the nature of your tax-exempt purchases for resale changes.This ensures your suppliers have current and accurate documentation for their records.
How to Use an Indiana Resale Certificate
To properly utilize your resale certificate in Indiana when making tax-exempt purchases for resale, you’ll need to present a valid copy of your Indiana General Sales Tax Exemption Certificate to your supplier at the time of purchase.
Indiana generally accepts resale certificates from businesses registered in other states.
When completing the Indiana Form ST-105, out-of-state purchasers can provide their home state’s sales tax ID number or business license as proof of their registration as a reseller.
- Good Faith Acceptance: Vendors in Indiana accept a properly completed ST-105 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.)
If you are an out-of-state business purchasing from a vendor in Indiana and plan to use your home state’s resale certificate, ensure you complete the Indiana Form ST-105 with your out-of-state ID.
While Indiana’s form accommodates out-of-state registrations, individual Indiana vendors may still decline an exemption if they have concerns about the validity of the certificate or their ability to properly document the exempt transaction for audit purposes.
Although it’s always advisable to confirm your supplier’s policies on accepting out-of-state resale certificates before making any purchase.
For more information regarding sales tax exemption laws in Indiana, you may read the Indiana Administrative Code.
Multi-Jurisdictional Resale Certificates
A standardized multi-jurisdictional resale certificate simplifies tax-exempt purchases for businesses that operate and make purchases for resale across state lines.
Unlike a standard resale certificate issued by a single state, a multi-jurisdictional certificate seeks recognition and acceptance by multiple states as valid proof that the buyer intends to purchase the goods for resale and is therefore exempt from sales tax at the time of purchase.
However, it’s crucial to understand that not all states accept these multi-state forms, and acceptance can come with specific conditions.
There are two primary types of multi-jurisdictional resale certificates that a business operating in or selling to vendors in Indiana might encounter:
- Uniform Sales & Use Tax Resale Certificate – Multijurisdiction Form: This is a widely recognized form accepted by a significant number of states (though not all). The states that accept this form do not include Indiana. For purchases in Indiana, the state typically requires its own Form ST-105.You can check which states officially accept this form by visiting the Multistate Tax Commission (MTC) website.
- Streamlined Sales Tax (SST) Certificate of Exemption: Also known as Streamlined Sales Tax (SST) Certificate of Exemption. Indiana is a member of the Streamlined Sales Tax Governing Board. Therefore, Indiana vendors recognize and accept SST exemption certificates as a valid exemption certificate. However, it’s still within the seller’s discretion to determine which form they prefer if multiple valid options are presented.Learn more about Indiana’s SST membership by visiting its dedicated SST webpage. You can also view and download the form here.
Keep in mind that Indiana vendors still have the option to decline other exemption certificates. Typically, vendors prefer the Indiana ST-105 or a valid SST exemption certificate. This is to avoid being subject to a greater burden of proof under Indiana’s code 45 IAC 2.2-8-12.
For a seamless transaction and to prevent potential audit issues, inquire about your supplier’s preferences beforehand.
Responsibilities When Using or Accepting an Indiana Resale Certificate
Buyer Responsibilities
Using an Indiana resale certificate means you’re responsible for ensuring 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.
- Indiana-based buyers: Provide a fully completed Indiana Sales Tax Exemption Certificate (Form ST-105) to your suppliers for qualifying purchases.
- Out-of-state buyers: If your business has a sales tax nexus within Indiana, you are generally required to register with the Indiana DOR. This registration grants you an Indiana Retail Merchant Certificate. This certificate is required to complete the Form ST-105.For businesses that do not have an Indiana nexus and are purchasing goods in Indiana solely for resale outside of Indiana, provide your home state’s sales tax ID number instead. Indiana allows licenses from other states when completing the Form ST-105.
Beware that the Indiana DOR may request additional documents to verify out-of-state sales tax ID numbers.
Seller Responsibilities
As a seller in Indiana, accepting a resale certificate comes with the responsibility of verifying and retaining proper documentation for tax-exempt sales. Here are your duties under Indiana’s Code § 6-2.5-8-8:
- 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 3 years: A properly completed resale certificate is your official proof of why sales tax wasn’t collected. You must retain it in your records for at least three years (plus the current calendar year) in case of a sales tax audit by the Indiana DOR.
Frequently Asked Questions About the Indiana Resale Certificate
Are There Penalties for Misusing an Indiana Resale Certificate?
Yes. Misusing an Indiana exemption certificate leads to a Class B Misdemeanor charge under Indiana’s administrative code 45 IAC 2.2-9-1. This offense applies to anyone guilty of committing intentional tax evasion using an Indiana exemption certificate or unlawfully issuing one.
A person charged with this penalty will face imprisonment for a fixed period, not exceeding 180 days. They may receive additional fines, with the total amount not exceeding $1,000.
Does an Indiana Resale Certificate Expire?
The exemption certificate (Form ST-105) has no expiration date. However, it is only valid while your Indiana Retail Merchant Certificate remains active. The Indiana DOR may revoke a Registered Retail Merchant Certificate (RRMC) when the taxpayer neglects their duty of remitting sales tax. Indiana’s administrative code 45 IAC 2.2-8-11 states this rule.
How Do I Verify a Resale Certificate in Indiana?
The primary way to verify an Indiana exemption certificate is by contacting the Indiana Department of Revenue (DOR). Indiana does not currently offer an online public lookup tool for these certificates.
You may reach out to the authorities by calling the Indiana DOR’s Sales Tax line at 317-233-4015. (The general inquiry line is 317-232-2240.)
How TaxHero Can Help
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