Running a business anywhere in the US means you’ll eventually encounter the terms “Resale Exemptions” or “Resale Certificates.”
Using these documents for your transactions may seem complicated at first, especially if you come from a state without sales tax or operate in one, like New Hampshire.
In this blog, we will break down everything you need to know about Resale Exemptions or Resale Certificates.
By the end of this guide, your business will understand how to handle purchases from vendors in other states that require a resale certificate, even though New Hampshire does not have a general sales and use tax and therefore does not issue a general resale certificate.
Understanding Resale Certificates in New Hampshire: Dispelling the Confusion
New Hampshire’s Unique Tax Landscape: No Statewide Sales Tax
New Hampshire does not have a general state or local sales and use tax. Therefore, New Hampshire has no state-issued standard resale certificate or exemption certificate that exempts businesses from sales and use tax. Due to this, using resale certificates within New Hampshire is typically not needed for most businesses. However, New Hampshire-based businesses purchasing goods for resale from vendors in a taxing state may be asked for a resale certificate, which they do not have. If a New Hampshire business does not provide the required documentation, it will be subject to sales and use tax from that taxing state. To make a tax-exempt purchase, a New Hampshire business must follow the specific requirements of the taxing state’s Department of Revenue. The requirements for using resale certificates in other states vary depending on the state in which you’re purchasing. This is why New Hampshire businesses need to understand how to handle these situations and what documents to provide instead of a resale certificate.What Does a Resale Certificate Mean for New Hampshire Business?
Most New Hampshire–based businesses do not need resale certificates. The challenge arises when they purchase goods for resale from a vendor in a state that imposes sales tax. Because New Hampshire has no sales tax, it does not issue a general resale certificate or sales tax ID number. Vendors in other states often require this documentation to exempt a sale from their state’s sales tax, which creates a problem for New Hampshire businesses. If a New Hampshire business fails to provide the required paperwork, the taxing state charges sales and use tax. To make a tax-exempt purchase, the business must follow the specific resale exemption rules that the New Hampshire Department of Revenue Administration sets. This often involves presenting a different kind of document in place of a resale certificate, such as:- A completed Multistate Tax Commission (MTC) Uniform Sales & Use Tax Certificate
- The specific tax exemption form for the state you are purchasing from.
- A printout of the New Hampshire Department of Revenue Administration webpage
- Your New Hampshire business registration papers to prove you are a legitimate company.
Resale Certificate for Communication Services Reseller
While most businesses in New Hampshire do not need resale certificates, there is only one exception. That exception applies to businesses providing communication services, such as:- Internet service providers
- Cable and satellite providers
- Channel programs or services
- Mobile or prepaid telecommunication services
- If you haven’t yet, apply for a “Communication Services Tax Registration Number” through New Hampshire’s Granite Tax Connect webpage.
- Along the registration process, you’ll typically be prompted to submit the “Application for Resale” as well. Provide all the relevant details requested in the fields.
- Once approved, the NHDRA assigns you a CST Registration Number and your Resale Number.
- This is an alternative method to apply for a resale number, especially for businesses that already have a Communication Services Tax Registration Number and did not previously apply for a resale number.
- Fill out the Form DP-143 accordingly and print it, then mail it to the address provided on the form.
- When your application is approved, the NHDRA assigns your Resale Number.
Why New Hampshire Businesses Still Need to Understand Resale Exemptions
Out of 50 states in the US, only 5 do not have a statewide sales tax. As the majority of states impose sales tax, taking advantage of resale exemptions is highly valuable for most businesses. By understanding resale exemptions and how they work in out-of-state transactions, New Hampshire businesses can enjoy the following benefits:- Avoiding Sales Tax on Out-of-State Purchases: Protect profit margins when buying inventory/materials from suppliers located in sales-tax states.
- Maintaining Smooth Vendor Relationships: Ensure seamless transactions with out-of-state suppliers who may initially be confused by New Hampshire’s no-sales-tax status.
- 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
When using resale certificates, New Hampshire businesses might be asked if their business is registered or have a sales tax permit. Since New Hampshire has no sales tax, buyers may need clarity on what these terms or prerequisites specifically refer to. Here are the key differences between resale certificates, business registration, as well as sales tax permits.- Resale Certificates – These are legal documents used by qualified businesses to claim resale exemptions when purchasing taxable goods for resale. In many taxing states, the respective state departments generally issue this document to registered businesses with valid sales tax IDs. It’s standard practice for most states to require sales tax IDs from businesses when completing and using a resale certificate. New Hampshire businesses will not have a general sales tax ID for this purpose. These IDs are usually obtained after registering your business for a sales tax account in a taxing state.
- Business Registrations – Following the statement above, “registering your business” generally includes applying for a sales tax ID or sales tax permit.Since New Hampshire has no general sales tax, businesses only need to register for legal authority purposes and other state taxes such as the Business Profits Tax, Business Enterprise Tax, or the Meals and Rentals Tax. This is a critical distinction, as it means New Hampshire businesses will not have the same documentation as businesses in a state with sales tax.
Other Business Registrations in New Hampshire
Aside from sales tax IDs in taxing states, here are other permits and licenses that New Hampshire businesses might need to legally operate within the state:- Local business permits
- Tobacco tax operator’s license
- Liquor vendor license
- Meals & rooms (rentals) license
- Communications Services Retailer tax license
Using Resale Certificates For Unregistered New Businesses
To make a tax-exempt purchase from an out-of-state vendor, a New Hampshire business must follow the tax rules of the vendor’s state. Because New Hampshire has no general sales tax, it does not issue sales tax IDs or resale certificates. Some states accept the Multistate Tax Commission (MTC) Uniform Sales & Use Tax Certificate from non-sales-tax states, while others require different supporting documents. In certain states, you must register with their tax department and obtain a valid sales tax permit before claiming a resale exemption. Often, this registration is only required if your business has sales tax nexus in that state. If you do not have nexus, you may still provide other business documentation, such as an MTC certificate, to support your claim. Before registering for a sales tax permit solely to use resale certificates, evaluate whether your business has sales tax nexus in that state. A sales tax nexus exists when your business has a significant presence there, based on thresholds set by the state. Even without a physical location, New Hampshire businesses can create nexus by selling to customers in taxing states. Once you establish nexus and register for a sales tax permit, using resale certificates in that state becomes more straightforward. This allows you to claim exemptions more easily when purchasing goods for resale. Learn more here: Economic Nexus: Everything You Need to KnowHow to Handle Resale Exemptions as a New Hampshire Business
For Purchases from Out-of-State Vendors
Out-of-state businesses buying goods for resale in New Hampshire usually do not need to present a resale certificate. In contrast, New Hampshire businesses must provide valid documentation when claiming sales tax exemptions on taxable resale purchases from out-of-state vendors.
Vendors require proper paperwork to justify not collecting sales tax and to protect themselves from potential tax liabilities.
Since New Hampshire does not issue sales tax IDs or resale certificates, businesses must be ready to present alternative documents to support their exemption claim.
What Documentation to Provide
New Hampshire businesses without nexus in a taxing state don’t need a sales tax permit but must give vendors valid documentation to claim an out-of-state sales tax exemption. The most commonly accepted option is the Multistate Tax Commission (MTC) Uniform Sales & Use Tax Certificate, designed for businesses in states without a sales tax. In addition to the MTC certificate, vendors may also accept or require:- A copy of your New Hampshire business registration papers to prove you are a legitimate business.
- A statement from the New Hampshire Department of Revenue Administration confirming that the state does not have a general sales tax.
What to Do if an Out-of-State Vendor Insists on a Sales Tax Permit
Encountering strict vendors that won’t recognize your exemption claim as properly completed without providing a sales tax permit is expected. That’s why you must also prepare to handle such situations. When out-of-state vendors insist that you provide a sales tax permit, here are your potential options:- Sales Tax Refund – Pay the sales tax upfront, then apply for a refund if the state allows it. Refund procedures vary by state and may involve filling out forms or contacting the tax department.
- Utilize State Rules – Some states accept the MTC Uniform Sales & Use Tax Certificate without a sales tax ID. You can use your FEIN and note your New Hampshire status to support your exemption claim.
- Voluntary Registration – Register for a sales tax ID in a taxing state if you plan frequent resale transactions there, even without nexus. In case you need help registering for a sales tax permit, you may read our guide or let TaxHero assist you.
- Educate the Vendor – Inform vendors unfamiliar with New Hampshire’s no-sales-tax policy using the official resources like the HRDA’s Resource Center page.
For Purchases Within New Hampshire
Out-of-state businesses planning to make purchases for resale in New Hampshire may want to come prepared with a resale certificate. But since the state has no statewide sales tax, resale certificates are unnecessary. You won’t need a “sales tax exemption” in a state where sales tax does not apply. Therefore, businesses from outside New Hampshire do not need any resale certificates. As a state without a sales tax, most buyers can make sales tax-free purchases on most goods. Out-of-state businesses only need a “resale certificate” if they plan to purchase and resell communication services in New Hampshire. Refer to the section “Resale Certificate for Communication Services Reseller” for more details. That aside, you must also know that other tax types in New Hampshire may apply to your transactions, such as:- Tobacco Tax
- Meals and Rentals Tax
- Communication Services Tax
- Business Profits Tax (BPT), or
- Business Enterprise Tax (BET)
Multi-Jurisdictional Resale Certificates: Tools for Out-of-State Purchases
New Hampshire businesses purchasing goods for resale in other states can utilize multijurisdictional forms. A multi-jurisdictional resale certificate standardizes the process and simplifies tax-exempt purchases for businesses that operate and buy goods 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 goods being purchased are for resale and exempt from sales tax at the time of purchase. However, it’s crucial to understand that not all states accept these certificates. Below are the 2 commonly used multi-jurisdictional resale certificate forms New Hampshire businesses can use:Uniform Sales & Use Tax Resale Certificate – Multijurisdiction Form
This is a widely recognized form accepted by a significant number of states (though not all). As a state without a sales tax, New Hampshire is naturally not part of the listed states on this form. As indicated on the form, the rules and instructions for each state may vary. Some states may allow you to submit this form to their vendors even without a sales tax registration number. The form itself notes that requirements vary by state. In some cases, you can submit it to a vendor without having a sales tax registration number. You’ll need to describe your business and specify the tangible goods being purchased. In the sales tax ID field, write “Not Applicable” or “Not Required” to indicate that New Hampshire does not issue such numbers. You must also include your Federal Employer Identification Number (FEIN) and other relevant business details. Whether the form is accepted depends on the specific state’s rules. Some states allow “Not Required” or “Not Applicable” entries, making the resale exemption process easier. Still, acceptance is not guaranteed, and certain states may reject your resale certificate even if the form is complete. You can find this form on the Multistate Tax Commission (MTC) website.Streamlined Sales Tax (SST) Certificate of Exemption
The Streamlined Sales Tax Governing Board website is an organization aiming to simplify the sales tax process for businesses across states. Currently, there are 24 full member states in the organization. Similar to the MTC form, New Hampshire is naturally not a member of the SSTGB. However, the SSTGB’s efforts to streamline sales tax also provide benefits to New Hampshire businesses. Under specific circumstances, even businesses without a sales tax ID in other states can still use the Streamlined Sales Tax (SST) Certificate of Exemption. This form is highly accommodating for various types of businesses, including New Hampshire businesses and foreign buyers. However, your usage of the SST Certificate of Exemption still depends on the state you’re engaged with. Based on the form’s official instructions, here’s what you might need to do:- If you don’t have a state sales tax ID, you may enter your Federal Employer Identification Number (FEIN) instead, as allowed by SST guidelines.
- Choose “Resale” as the exemption reason
- Prepare to provide additional documents if asked, such as your business ID or business license.
- Register for a sales tax ID if your business has a nexus in a state that collects sales tax (this is required).
Responsibilities When Claiming Resale Exemptions
Buyer Responsibilities for New Hampshire Businesses
New Hampshire businesses purchasing goods for resale in taxing states must fulfill specific responsibilities as the buyer. Depending on the state, these obligations may vary. Below are the common duties you must comply with as a buyer when claiming sales tax exemption on resale transactions:- State-specific Forms: Some states require their exemption certificate and won’t accept a multi-jurisdictional form. Always check the specific form each state requires.
- Complete the Form: Follow the state’s detailed instructions carefully when completing exemption forms to avoid missing important steps.
- Provide Accurate Information: Since vendors rely on your claim in good faith, you are responsible for ensuring all business information on the form is correct.
- Sales Tax Liabilities: Understand the sales and use tax obligations in the states where you do business to avoid non-compliance penalties.
- Verify the Exemption: Check each state’s rules before claiming an exemption, as qualifying goods or services can vary from state to state.
- Beware of Penalties: Claiming an exemption for resale but using the goods personally can result in penalties defined by the state.
- Report Use Tax: If you consume goods originally bought for resale, you must report and pay use tax in states that require it.
- Register Your Business (If Nexus is Established): If you have nexus in a state, you must register for a sales tax ID and obtain the necessary permits before making exempt purchases.
Seller Responsibilities for New Hampshire Businesses (When Selling to Out-of-State Buyers)
Since New Hampshire has no sales tax, sellers generally don’t need to collect or remit sales tax from any buyers. This rule applies regardless of your resale status or location, as long as the sale occurs in New Hampshire. Therefore, as a New Hampshire business, your only responsibilities when selling to out-of-state buyers are:- Explain the State’s No-Sales-Tax Practice: Not all buyers are aware that there are states without sales tax. When buyers claim resale exemptions on their purchase, educating them about New Hampshire’s no-sales tax nature is your duty.
- Inform About Other Taxes: Out-of-state buyers may expect a 100% tax-free transaction when buying goods in New Hampshire. Despite having no sales tax, other taxes may still apply to qualified taxable transactions (e.g., meals and rental taxes).
- Resale Numbers: If you’re selling communication services and your buyer is planning to resell your services within New Hampshire, tell them about the need for a “Resale Number” to qualify for a Communication Services Tax (CST) exemption.
- Pay Attention to your Nexus: If you’re a remote seller selling taxable goods in other states, you must be wary of your nexus status. When nexus is established in a taxing state, registering your business is generally mandatory. Even if you come from a state without sales tax, having a sufficient economic presence can override your home state’s taxing rule.
Frequently Asked Questions About the New Hampshire Resale Exemptions
Are There Penalties for Misusing Exemption Documentation?
In New Hampshire, there are no penalties for misusing exemption documents. The state itself does not issue any exemption certificates. However, misusing exemption documents in other taxing states generally does result in a variety of penalties. Depending on the state and the committed offense, businesses may face one or more of the following penalties:- Pay the due tax with potentially added charges
- Pay a set amount of additional fines with extra interest rates
- Tax audits or assessments resulting in fines or imprisonment (if applicable)
- Revocation of sales tax licenses, business permits, or other government-issued documentation
Does a New Hampshire Exemption Documentation Expire?
New Hampshire does not issue any exemption documents. The only exception is the Resale Number for the Communication Services Tax, which businesses use to claim an exemption from that specific tax. Therefore, no such exemption document “expires” in New Hampshire. Meanwhile, the validity of standard exemption documents in other states varies depending on each state’s designated rules. Some states, like Florida, have certificates that expire annually or after a set number of years. However, other states issue exemption documents that do not have a specified expiration date, as long as the information remains accurate. It is important for a business to be aware of the rules of each state where they claim an exemption. Some states may require a certificate to be renewed periodically, while others may require you to have an updated certificate on file if any of your business information changes.How Do I Verify a New Hampshire Business’s Exemption Claim (As an Out-of-State Seller)?
To verify a New Hampshire business’s exemption, you must start by confirming the business’s validity. Follow these steps to verify a business’s registration in New Hampshire:- Go to https://quickstart.sos.nh.gov/online/BusinessInquire
- Complete the information fields, then click “Search.”
- Examine the results to verify the business’s legitimacy before approving the exemption claim. If your state accepts the buyer’s provided business documentation, then you can approve the exemption claim.