If you run an Ecommerce or CPG business in North Carolina, securing a North Carolina 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 North Carolina sales tax laws.
Understanding Resale Certificates in North Carolina
What is a North Carolina Resale Certificate?
In North Carolina, a Sales and Use Tax Certificate of Exemption (Form E-595E) is a document issued by the North Carolina Department of Revenue NCDOR 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, a 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 North Carolina Resale Certificate?
Obtaining a resale certificate in North Carolina 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 North Carolina’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 North Carolina 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 North Carolina’s sales tax laws and regulations to avoid penalties.
In North Carolina, the specific form required for a resale certificate is the Form E-595E.
When filling out Form E-595E, a purchaser must include their North Carolina taxpayer number to identify that it is registered with the NCDOR and authorized to make tax-exempt purchases for resale.
Resale Certificate vs. Sales Tax Permit: What’s the Difference?
A North Carolina Sales Tax Permit authorizes your business to collect and remit sales tax on taxable sales to customers. A North Carolina Resale Certificate (Form E-595E), 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 North Carolina?
Businesses that purchase goods for resale can use a North Carolina Resale Certificate. To do so, the business must actively sell taxable tangible products and hold a valid North Carolina Sales Tax Permit.
In case you’re not registered in North Carolina, you may provide the following alternatives:
- Your home state’s seller’s permit number or
- A North Carolina exemption certificate number.
For future transactions, it’s best to register your business in North Carolina to stay tax-compliant.
How to Get a Resale Certificate in North Carolina: A Step-by-Step Guide
1. Make Sure You’re Eligible: Your business must sell taxable goods or services and be registered with the North Carolina Department of Revenue. If you are an out-of-state buyer, then you must be a registered business in your home state. Only businesses with a valid Sales Tax Permit or an exemption number can use a resale certificate.
2. Apply for a North Carolina Exemption Certificate Number: This option is for commercial fishermen, loggers, or wildlife managers without a seller’s permit number. You may apply via the NCDOR state website.
3. Get a North Carolina Sales Tax Permit: If you don’t already have one, apply for a North Carolina Sales Tax Permit through the NCDOR website. This step is necessary if you don’t have any other valid sales tax permits.
Need help? Read our blog: How to Get a Seller’s Permit in North Carolina
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 North Carolina sales tax permit number (if already obtained)
- Your home state sales and use tax registration number (if not registered in North Carolina)
- Your exemption certificate number (if you don’t have any active seller’s permit account)
- Your business type (e.g., sole proprietorship, LLC, corporation).
5. Complete Form E-595E: Download and fill out the North Carolina Sales and Use Tax Certificate of Exemption (Form E-595E) from the NCDOR’s website. You’ll present this form to your suppliers when making tax-exempt purchases.
6. Submission: No submission required in North Carolina. 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 E-595E, but you’ll need a valid North Carolina Sales Tax Permit. To see if there’s a cost for the permit, check out our guide on Sales Tax Permit fees.
8. Understand Renewal Requirements: As long as your NC Sales and Use Tax Permit remains active, then your Form E-595E won’t expire. While the permit itself generally doesn’t require periodic renewal, you must update the NCDOR and your certificates if business details (e.g., name, address, ownership, sales type) or the transaction nature have changed. This ensures that all records remain accurate.
How to Use a Resale Certificate in North Carolina
To properly utilize your resale certificate in North Carolina when making tax-exempt purchases for resale, you’ll need to present a valid copy of your North Carolina Sales and Use Tax Certificate of Exemption to your supplier at the time of purchase.
North Carolina generally does accept resale certificates issued by other states. However, there might be specific conditions:
- Good Faith Acceptance: Vendors in North Carolina 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.
An out-of-state business purchasing from a vendor in North Carolina and planning to use its home state’s resale certificate must provide it at the time of purchase. It’s always a good idea to confirm the vendor’s policy on accepting out-of-state certificates beforehand.
For more information regarding sales tax exemption laws in North Carolina, you may read the state’s official regulations.
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 aims to be recognized and accepted by multiple states as valid proof that the goods being purchased are intended for resale and are 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 North Carolina 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). North Carolina vendors typically accept the form. However, you must provide all the required information, including your seller’s permit number. 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: North Carolina is a member of the Streamlined Sales Tax Governing Board. In fact, the Form E-595E itself is an SST Certificate. To learn more about North Carolina’s membership in SST, visit the NCDOR’s website.
Under NCDOR’s official list of usable forms, these multi-jurisdictional certificates are confirmed to be valid.
Still, it’s best to ask your suppliers beforehand which form they would prefer to accept. This is to avoid any audit issues and for the sake of a smooth transaction.
Responsibilities When Using or Accepting a North Carolina Resale Certificate
Buyer Responsibilities
You are responsible for ensuring that you use a North Carolina resale certificate 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.
- North Carolina-based buyers: Provide a fully completed Form E-595E to your suppliers for qualifying purchases. Prepare your sales and use tax registration number or exemption number as required by the NCDOR.
- Out-of-state buyers: Ensure all necessary information is filled out accordingly, which includes your business name, address, sales tax number (or equivalent), and a clear resale statement. If you don’t have a sales tax permit, then you must apply for an exemption number instead.
Always keep a copy of your resale certificate as proof of your transactions. This is good practice to help you in case of future audits, which may happen once in a while.
Seller Responsibilities
As a seller in North Carolina, accepting a resale certificate comes with a variety of responsibilities. Such as verifying and retaining proper documentation for tax-exempt sales. On the other hand, you must also:
- Accept the certificate in good faith
- Or validate the certificate via NCDOR’s online registry (only for registered North Carolina buyers with a taxpayer account number)
- 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 of the transaction: A properly completed resale certificate is your official proof of why sales tax wasn’t collected. You must retain it in your records indefinitely in any event of a sales tax audit by the NCDOR.
Frequently Asked Questions About the North Carolina Resale Certificate
Are There Penalties for Misusing a North Carolina Resale Certificate?
Yes. Misusing a North Carolina resale certificate leads to a $250 penalty. Learn more via the NCDOR Penalties and Interests page.
Does a North Carolina Resale Certificate Expire?
The resale certificate (Form E-595E) has no expiration date. However, it is only valid while your Sales Tax Permit remains active. In conclusion, you must keep your Sales Tax Permit active to stay tax-compliant.
How Do I Verify a North Carolina Resale Certificate?
If you’re a seller in North Carolina, here’s how to validate a buyer’s resale certificate:
- Request a completed Form E-595E from the buyer.
- Locate the North Carolina Taxpayer ID number on the form. If they’re not registered in North Carolina, then you must check their home state’s sales tax permit number instead.
- Use the NCDOR Online Registry to confirm the permit is active. However, for out-of-state buyers, you might have to use their home state’s website for verification instead.
How TaxHero Can Help
You don’t have to complicate managing sales tax compliance and resale certificates in North Carolina. TaxHero simplifies the process—from keeping your North Carolina 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 resale certificate in North Carolina process today!