Montana does not impose a general statewide sales and use tax. As a result, there is no traditional state-issued sales tax resale certificate for in-state purchases.
The primary goal of this guide is to clarify how resale exemptions are handled for Montana businesses, particularly when interacting with out-of-state vendors. We’ll cut through the confusion to help you navigate your purchases effectively.
Understanding Resale Certificates in West Virginia
What Does a Resale Certificate Mean for Montana Businesses?
The concept of a “resale certificate” for Montana businesses primarily applies to purchases made from out-of-state vendors who do operate in sales-tax states. These out-of-state vendors need documentation from the Montana buyer to justify not collecting their own state’s sales tax on the transaction.
To address this, Montana provides the Montana Business Registry Resale Certificate. Its purpose is clear: it explains that Montana does not impose a general sales, use, or transaction tax. A Montana buyer who purchases goods outside the state for resale may use this certificate to show that they are registered to do business in Montana.
Some tourist destinations in Montana may impose local resort area taxes, but these are different from the general sales tax and usually don’t involve resale certificates for goods.
Why Montana Businesses Still Need to Understand Resale Exemptions?
Even without a statewide sales tax, understanding resale exemptions is crucial for Montana businesses for several reasons:
- Avoiding Sales Tax on Out-of-State Purchases: Protect profit margins when buying inventory/materials from suppliers located in states with sales tax.
- Maintaining Smooth Vendor Relationships: Ensure seamless transactions with out-of-state suppliers who may initially be confused by Montana’s no-sales-tax status or require specific documentation.
- Legal Compliance (Interstate): Prevent potential use tax liabilities that could arise if an out-of-state purchase isn’t properly documented as tax-exempt by the seller.
- Streamlining Operations: Reduce administrative burden and confusion when dealing with varied vendor requirements.
Resale Certificate vs. Business Registration: The Key Distinction
Since Montana doesn’t have a sales tax, businesses generally don’t need a “sales tax permit” for state purposes. The
Montana Business Registry Resale Certificate leverages your existing Montana business registration as a form of identification.
It states that the buyer is a legitimate business registered in Montana, which does not impose a sales tax, so the purchase for resale should not be subject to the seller’s state sales tax.
How to Handle Resale Exemptions as a Montana Business
For Purchases from Out-of-State Vendors
Utilizing the Montana Business Registry Resale Certificate
Getting a resale certificate in Montana 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 tangible personal property for resale in the ordinary course of business and be registered with the Montana Department of Revenue.
2. Gather Your Business Information: To properly complete the form, you must accurately provide the following information:
- Your legal and business name, address, and contact number
- Your Montana Business Registration Number
- A verification of whether your business’ only physical location is in Montana
- Type of tangible personal property your business is selling
- Description of property to be purchased for resale
- Your authorized signature, title, and date of issue.
3. Complete the Resale Certificate: The Montana Business Registry Resale Certificate is the primary document for Montana businesses seeking resale exemptions from out-of-state vendors. The official form (Form RESALE) is available for download from the
Montana Department of Revenue website.
4. Submission: This certificate is a self-certification document that is presented directly to the out-of-state seller at the time of purchase and is not filed with the Montana Department of Revenue. The seller is responsible for verifying the self-certification provided by the buyer.
What to Do if an Out-of-State Vendor Insists on a Sales Tax Permit
This can be a common point of confusion for out-of-state vendors unfamiliar with Montana’s tax landscape.
- Educate the vendor: Politely explain that Montana does not have a general statewide sales tax and, therefore, Montana businesses do not have state-issued sales tax permits. Present the Montana Business Registry Resale Certificate as the official documentation provided by the state to address this specific situation. You can even direct them to the certificate’s clear explanation of Montana’s no-sales-tax status.
- Rare option: Voluntarily registering for a sales tax permit in the vendor’s state: If you make frequent, large purchases from a specific state, and the vendor insists, you could voluntarily register for a sales tax permit in that state. However, this comes with the added compliance burden of filing returns in that state, even if you only use the permit for your purchases. This is generally not recommended unless necessary.
- Briefly mention paying the tax and seeking a refund: As a last resort, you could pay the sales tax and then attempt to seek a refund from the vendor or the respective state’s department of revenue. This is often a more cumbersome and time-consuming process.
For Purchases Within Montana
No resale certificate is needed for in-state purchases as there is no statewide sales tax to exempt. When buying from another Montana business for resale, you simply purchase the goods without sales tax being applied.
Multi-Jurisdictional Resale Certificates: Tools for Out-of-State Purchases
Beyond Montana’s specific resale certificate, other multi-jurisdictional forms can sometimes be used.
The Uniform Sales & Use Tax Resale Certificate – Multijurisdiction Form
This form, developed by the Multistate Tax Commission (MTC), is a widely accepted option for multi-state purchases. Montana is one of the member-states that has enacted the Multistate Tax Compact into their state law.
When filling out this form, a Montana business would typically use its Federal Employer Identification Number (FEIN) or its Montana Business Registration Number. Crucially, in the “Reason for exemption” section, you would clearly state that “Montana does not have a general sales tax.”
Important Note: Not all states accept this form, and some may have specific footnotes or requirements. Always check the Multistate Tax Commission (MTC) website for the list of participating states and any specific state footnotes on the certificate itself to ensure its acceptance by your vendor’s state.
Streamlined Sales Tax (SST) Certificate of Exemption
The Streamlined Sales Tax (SST) Agreement is a cooperative effort by states to simplify sales and use tax collection and administration for all sellers and commerce types.
Montana is not a member of the Streamlined Sales Tax Governing Board. While an out-of-state vendor in an SST-member state might accept an SST Certificate of Exemption, a Montana business wouldn’t typically use this as its primary or intended exemption method, given Montana’s non-member status and lack of a general sales tax.
Responsibilities When Claiming Resale Exemptions
Buyer Responsibilities for Montana Businesses
- Intend to Resell: Use the Montana Business Registry Resale Certificate only for goods genuinely intended for resale, never for personal or operational items. Misuse can lead to penalties.
- Provide accurate and complete documentation to out-of-state vendors: Fill out all required fields correctly on the Montana Business Registry Resale Certificate.
- Understand potential use tax obligations: The Montana Business Registry Resale Certificate states that if you later use exempted goods for non-resale purposes, you may owe use tax to the state where you originally made the purchase.
Seller Responsibilities for Montana Businesses (When Selling to Out-of-State Buyers)
Since Montana has no sales tax, Montana sellers generally do not collect sales tax from any buyers, regardless of their resale status or location. Your transactions, whether with in-state or out-of-state buyers, are not subject to Montana sales tax.
If an out-of-state buyer requests a resale certificate from a Montana seller, the seller should explain that Montana does not impose a general sales tax. As a result, the Montana business does not hold a sales tax permit or a traditional resale certificate. The buyer must also report the purchase and any applicable use tax to their home state’s tax authority.
Frequently Asked Questions About the Montana Resale Exemptions
Are There Penalties for Misusing Montana Exemption Documentation?
Yes. Improper use of the exemption certificate, such as using it for personal or non-resale purchases, can result in serious penalties.
For instance, if you purchase items tax-exempt for resale but then use them for personal or operational purposes, you could face use tax assessments, interest, and penalties. This is explicitly highlighted by the use tax warning on the Montana Business Registry Resale Certificate.
Does the Montana Business Registry Resale Certificate Expire?
The certificate itself does not have a specific expiration date. Instead, its validity is directly tied to your business’s active and continuous registration with the Montana Department of Revenue.
As long as your business registration is current and in good standing, and you are filing any required annual reports with the Montana Secretary of State, the certificate remains valid.
How Do I Verify a Montana Business’s Exemption Claim (As an Out-of-State Seller)?
If you’re a seller located in a state with a sales tax and a Montana buyer presents a Montana Business Registry Resale Certificate, you are responsible for verifying its validity. Here’s how to do it:
- Request a completed Montana Business Registry Resale Certificate (Form RESALE) from the buyer. Review it to ensure all required information is present and the purchase appears to be consistent with good faith. The Montana Business Registry Resale Certificate is a self-certification document. The buyer is certifying that their business is registered and that the purchase is for resale. Your primary verification step is to ensure the form is filled out completely and in good faith.
- To confirm the business’s existence and active status, you can use the Montana Secretary of State’s Business Search Tool. This online tool also allows you to look up registered businesses in Montana, confirming their active status. Enter the business name or filing number and select Search.
How TaxHero Can Help
Managing sales tax compliance and resale certificates in Montana doesn’t have to be complicated. TaxHero simplifies the process by keeping you well-informed and ensuring you use resale certificates correctly outside of Montana.
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