How to Get a New York Resale Certificate for your Business

If you run an Ecommerce or CPG business in New York, securing a New York 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 New York sales tax laws.

Understanding Resale Certificates in New York

What is a New York Resale Certificate?

In New York, a Resale Certificate is a document specifically called Form ST-120, which is provided by the New York Department of Taxation and Finance. Businesses complete and present this form to their suppliers, allowing them to:

• Purchase goods without paying sales tax, as long as they intend to resell these goods to their customers in the normal course of their operations.
• 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, a New York resale certificate is not a blanket exemption from all sales tax obligations. Businesses must still collect and remit sales tax on taxable sales to end consumers and must first obtain a New York Sales Tax Certificate of Authority to be eligible to use a resale certificate.

Why do you need a New York Resale Certificate?

Obtaining a resale certificate in New York 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 New York’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 New York 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 New York’s sales tax laws and regulations to avoid penalties.

In New York, the specific form required for a resale certificate is the Form ST-120.

When filling out the Form ST-120, you must include your New York Certificate of Authority number. This demonstrates that the NY Dept. of Taxation has registered you and authorized you to make tax-exempt purchases for resale.

Out-of-state purchasers not required to hold a New York Certificate of Authority can provide their home state’s sales tax registration number instead.

Resale Certificate vs. Sales Tax Permit: What’s the Difference?

In New York, the state commonly refers to a Sales Tax Permit as a “Certificate of Authority.” A Certificate of Authority enables your business to collect and remit sales tax on taxable sales to customers.

Meanwhile, a New York Resale Certificate (Form ST-120) allows you to purchase goods tax-free from suppliers if you intend to resell those goods. To use a resale certificate, New York-based buyers are generally required to have an active Certificate of Authority.

Who Can Use a Resale Certificate in New York?

Businesses that purchase goods for resale can use a New York Resale Certificate. To do so, New York-based businesses must actively sell taxable tangible products and hold a valid Certificate of Authority.

Aside from New York-based purchasers with a valid Certificate of Authority, other businesses can still use the Form ST-120. However, there are specific instructions they must follow depending on what their business is classified as.

In general, other qualified businesses that can use a resale certificate in New York are:

1. Out-of-State Buyers Without a Certificate of Authority: Refers to businesses without a nexus in New York. Having no nexus means your business is not required to hold a valid Certificate of Authority in New York.
   To use the Form ST-120, you have the option to provide a sales tax registration number from your home state. New York also accepts valid VAT registration numbers in case you don’t have a sales tax ID number.
   Note that once you establish a nexus in the state, registering your business in New York becomes mandatory.
2. Buyers From States Without Sales Tax (Or Not Required To Register): Applies to businesses that are located in a state or jurisdiction that does not require sellers to register for sales tax or VAT purposes, or are not otherwise required to register in their home state. This means you’re not required to register your business, giving you a unique exception when using the Form ST-120.
   Instead of providing the traditional sales tax-related documents, you only need to declare the location of your business. For the “sales tax registration number” field, you must write “not applicable” to complete the Form ST-120.
3. Temporary Vendors: Typically refers to seasonal businesses, those whose business only operates for a short period of time. Any business that makes taxable sales in New York, even if temporary or for a short period, is required to register with the state and obtain a Certificate of Authority.
   If you make taxable sales in New York for no longer than 2 consecutive quarterly sales tax periods in 12 months, you’re recognized as a temporary vendor by the state.
   In this case, you can use the Form ST-120 to make tax-exempt purchases in the state. However, you must register in New York to obtain a Temporary Certificate of Authority number.

How to Get a Resale Certificate in New York: A Step-by-Step Guide

Getting a resale certificate in New York 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 New York Dept. of Taxation and Finance. Businesses with a valid Certificate of Authority can typically use resale certificates in New York with more convenience.

The following businesses are also eligible to get a resale certificate in New York, provided they meet the required qualifications:

• Unregistered businesses without a Certificate of Authority: Must provide another state’s sales tax registration number if registered to collect sales tax in other states. However, if you have a nexus in New York, you must register your business in the state.
• Buyers who are not required to register their business: If your home state has no sales tax, you have a valid reason not to have a sales tax registration number. This also applies if you have no nexus in any state that requires sales tax registration for your type of business, meaning you have no sales tax obligations.
  With this, you’re permitted to use the Form ST-120 as long as you follow the instructions indicated on the form.
• Temporary Vendors: Businesses that operate on a seasonal basis or for a temporary period are required to register and obtain a Certificate of Authority to make taxable sales in New York. If eligible, they may be issued a Temporary Certificate of Authority.
  In this case, they can also use the Form ST-120. But in exchange, they must have a valid Temporary Certificate of Authority number to freely use the resale certificate in New York.

2. Get a New York Certificate of Authority: If you don’t already have one, apply for a New York Certificate of Authority through the NY Business Express. You need this permit to complete the Form ST-120 if you have a nexus in New York.

Need help? Read our blog: How to Get a Seller’s Permit in New York

3. 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 New York Certificate of Authority number (if already obtained)
• Your home state’s sales tax registration number or VAT registration number (for out-of-state buyers)
• Your business type (e.g., sole proprietorship, LLC, corporation).
• You must also include the date when you prepared the resale certificate.

4. Complete the Form ST-120: Download and fill out the New York Resale Certificate (Form ST-120) from the NY Dept. of Taxation’s website. You’ll present this form to your suppliers when making tax-exempt purchases.

5. Submission: No submission required in New York. 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-120. However, you will need a valid Certificate of Authority once you have a nexus in New York. If you need one, know that registering for a New York Certificate of Authority is free.

7. Understand Renewal Requirements: The New York resale certificate itself has no specified expiration date. However, a New York blanket resale certificate’s validity may depend on 2 essential factors:

• Your Certificate of Authority – an inactive or revoked certificate means your resale certificate becomes invalid. For buyers with a Certificate of Authority, your license may require renewal periodically, or you may receive a notice of renewal from the NY Dept. of Finance. Failure to renew when required can result in penalties and revocation.
  Temporary Certificate of Authority – As the name implies, these certificates are only valid for at least 2 tax quarters. Once your temporary certificate expires, your blanket resale certificate Form ST-120 also becomes unusable.
• Your business or transaction details – if there are significant changes to your business details, you must update your resale certificate. These changes typically refer to a shift in the business’s structure or a change in the nature of the transaction.

Updating your resale certificate based on these variable aspects is crucial to keep your New York suppliers up to date. By updating your records accordingly, you and your supplier can stay compliant with New York’s sales tax regulations and prevent audits.

How to Use a New York Resale Certificate

To properly utilize your resale certificate in New York when making tax-exempt purchases for resale, you’ll need to present a valid copy of your New York Resale Certificate to your supplier at the time of purchase.

Using the Form ST-120 for New York-based buyers with a Certificate of Authority (COA) is a straightforward process. You only need to provide your COA number on the form and select the goods you intend to purchase for resale.

But aside from New York-based buyers, other businesses can also use the Form ST-120 in New York under specific conditions. Here’s how:

• Out-of-State Buyers Without a Certificate of Authority: If your business has no nexus in New York, you’re not required to hold a Certificate of Authority. To use the Form ST-120 without a COA, provide a sales tax registration number from your home state instead.
  New York’s Form ST-120 accepts VAT registration numbers as well (if you have no sales tax registration number).
  You must note that under the policies of TSB-M-19(4)S: Registering your business in New York is mandatory once nexus (meeting the state’s sales threshold) is established. Otherwise, you’ll risk facing penalties for non-compliance with the New York Dept. of Taxation.
• Buyers From States Without Sales Tax (Or Not Required To Register): You must indicate the location of your business in the form. Additionally, you’re instructed to write “not applicable” on the line requesting a registration number.
  In this case, you must certify that the goods you’ll purchase are only intended for resale. Indicate in the form by checking the appropriate box whether you will resell the goods within or outside of the state.
• Temporary Vendors: Any business making taxable sales in New York, even if temporary or for a short period, is generally required to register for a Certificate of Authority. If eligible, they may be issued a Temporary Certificate of Authority, which is for businesses making taxable sales for no more than 2 consecutive quarterly sales tax periods in any 12-month period.
  To use the Form ST-120 as a temporary vendor, you must comply with New York sales tax registration requirements.
  • As a temporary vendor, you must register for a Temporary Certificate of Authority. Write your Temporary Certificate of Authority number in the designated field on the resale certificate.
  • Indicate your temporary certificate’s expiration date on the Form ST-120. You may only use a resale certificate as long as your temporary certificate is active.
  • Temporary vendors are encouraged to obtain a Regular Certificate of Authority if they plan to resume business in New York. Since temporary certificates are only valid for 2 tax quarters, registering repeatedly can be inconvenient for businesses.
  • Vendors participating in shows or entertainment vendors do not qualify as Temporary Vendors. They must register for a permanent Certificate of Authority instead.

Using Out-of-State Resale Certificates in New York

For out-of-state buyers planning to use their home state’s resale certificate in New York, here’s what you need to know.

New York generally prefers its state-issued resale certificate (Form ST-120). That’s because the Form ST-120 itself is already accommodating for out-of-state buyers.

Simply put, the Form ST-120 accepts out-of-state sales tax registration numbers. This ideally eliminates the need to use out-of-state resale certificates. Therefore, vendors may expect out-of-state purchasers to use New York’s specific resale certificate form instead.

Regardless, you can still attempt to provide your home state’s resale certificate to your New York suppliers. However, you must understand that New York vendors have the right to refuse your certificate depending on their discretion.

For New York vendors to potentially accept your out-of-state resale certificate, the following condition must be met:

• Good Faith Acceptance: Vendors in New York may 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.)
• Meet Compliance Requirements: If you wish to use out-of-state resale certificates in New York, their details must at least align with Form ST-120. For instance, if you have a Certificate of Authority number, you must provide that in your out-of-state resale certificate form.
  If you’re a temporary vendor, provide your Temporary Certificate of Authority’s number instead. Simply put, you must follow the same conditions set for using the Form ST-120. The same expectation applies if you intend to use multijurisdictional certificates.

Even if you meet the conditions above, bear in mind that NY vendors may still decline your out-of-state resale certificate. This is to avoid being subject to a greater burden of proof, as stated in the NY Publication 750.

To ensure a seamless transaction, confirm the vendor’s policy on accepting out-of-state certificates beforehand.  This practice also helps prevent potential audit issues.

For more information regarding sales tax exemption laws in New York, read the state’s Tax Bulletin Sales & Use Tax 240.

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 New York 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). New York is not listed among the states that generally accept this form.
  Regardless, you may still attempt to use this certificate in your resale transactions. However, you must ensure it aligns with New York’s standards for using resale certificates.
  For example, you must include your New York Certificate of Authorization number (if available) on the form. Out-of-state purchasers should include their home state’s registration number. You can find this form on the Multistate Tax Commission (MTC) website.
• Streamlined Sales Tax (SST) Certificate of Exemption: New York is not a member of the Streamlined Sales Tax Governing Board. Therefore, while a New York vendor might accept an SST Certificate of Exemption, they are primarily looking for a New York Resale Certificate (Form ST-120).
  You can find more information about the SST and its member states on the Streamlined Sales Tax Governing Board website.

For a seamless transaction, inquire about your New York supplier’s policies on accepting various types of resale certificates beforehand. This practice also helps prevent potential audit issues.

Responsibilities When Using or Accepting a New York Resale Certificate

Buyer Responsibilities

Using a New York 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.

• New York-based buyers: Provide a fully completed New York Resale Certificate to your suppliers for qualifying purchases. New York-based buyers with a sufficient nexus in the state must have a valid Certificate of Authority.
• Out-of-state buyers: As detailed in the “How to Use a Resale Certificate in New York”, buyers must follow specific instructions to use the Form ST-120. To summarize, here are the common responsibilities depending on your business type.
  • Unregistered Out-of-State Buyers: You must have no nexus in New York to have a valid reason not to hold a Certificate of Authority. In exchange, you must provide your home state’s sales tax registration number instead.
  • No Nexus In Any State: If you come from a state without sales tax or you have no sales tax obligation (are not required to register for sales tax) in any state, you must write “not applicable” in the Form ST-120 that requests a sales tax registration number. Disclosing your business’s location is also part of your responsibility as an unregistered business.
• Temporary Vendors: Your duty is to register for a Temporary Certificate of Authority if you plan to make taxable sales in New York for a limited period of time. You must provide your temporary certificate’s number to complete the Form ST-120.
• Additional Rules: Buyers should also be aware that the Form ST-120 has additional specific guidelines regarding its usage.
  • Contractors cannot use the Form ST-120 to purchase construction materials or other goods meant for construction projects. Instead, they must use the Form ST-120.1.
  • Prepaid sales tax on cigarettes cannot be exempted using the Form ST-120.
  • You cannot use the Form ST-120 to purchase tax-exempt motor fuel or diesel motor fuel.
  • You must provide a valid and completed Form ST-120 within 90 days of the transaction. Failing to provide a properly completed Form ST-120 subjects the transaction to sales tax.
  • You must properly mark the checkbox in the resale certificate if its intended use is for a blanket certificate. An unmarked Form ST-120 will not be a valid blanket resale certificate.

Refund Application: For buyers whose resale certificate was declined by a vendor, you can apply for a refund using the Form AU-11. Find more details about requesting sales tax refunds in New York via the TB-ST-350.

Both buyers and sellers must know that the improper use of the Form ST-120 results in serious penalties.

Seller Responsibilities

As a seller in New York, accepting a resale certificate comes with the responsibility of verifying and retaining proper documentation for tax-exempt sales. You must:

• Accept the certificate in good faith
• Obtain a completed resale certificate within 90 days after the transaction
• 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) or if the purchaser is a contractor purchasing materials for construction projects
• Decline the certificate if the purchased goods do not qualify for a resale sales tax exemption (prepaid sales tax on cigarettes, motor fuel, or diesel motor fuels)

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 in case of a sales tax audit by the New York Dept. of Taxation.

Frequently Asked Questions About the New York Resale Certificate

Are There Penalties for Misusing a New York Resale Certificate?

Yes. Intentionally misusing the Form ST-120 results in serious penalties, such as:

• A penalty equivalent to 100% of the due tax
• A $50 fine for each issued fraudulent resale certificate 
• Revocation of your Certificate of Authority (for vendors with nexus in New York)
• Face a criminal felony prosecution (which may lead to additional fines and possibly a jail sentence)

Learn more about sales tax penalties in New York via the TB-ST-805.

Does a New York Resale Certificate Expire?

The resale certificate (Form ST-120) has no specified expiration date. However, its validity mainly relies on your Certificate of Authority. An inactive sales tax registration number or Certificate of Authority generally invalidates the Form ST-120. You must also update blanket certificates accordingly to keep the resale certificate valid.

How Do I Verify a Resale Certificate in New York?

If you’re a seller in New York, here’s how to validate a buyer’s resale certificate:

1. Request a completed Form ST-120 from the buyer.
2. Go to www8.tax.ny.gov/STVL/stvlStart to access the “Registered Sales Tax Vendor Look Up” tool.
3. Pass the security checkpoint and enter the tax identification number or Certificate of Authority number. This only applies to registered New York businesses.
4. Out-of-state sales tax ID numbers may only be verified using the buyer’s respective state’s verification process.

How TaxHero Can Help

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