If you run an Ecommerce or CPG business in Pennsylvania, securing a Pennsylvania 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 Pennsylvania sales tax laws.
Understanding Resale Certificates in Pennsylvania
What is a Pennsylvania Resale Certificate?
In Pennsylvania, an Exemption Certificate (REV-1220) is a document issued by the Pennsylvania Department of Revenue 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 Pennsylvania Resale Certificate?
Obtaining a resale certificate in Pennsylvania 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 Pennsylvania’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 Pennsylvania 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 Pennsylvania’s sales tax laws and regulations to avoid penalties.
In Pennsylvania, the specific form required for a resale certificate is the REV-1220.
When filling out the REV-1220, a purchaser must include their Pennsylvania taxpayer number to identify that it is registered with the Department of Revenue and authorized to make tax-exempt purchases for resale.
Resale Certificate vs. Sales Tax Permit: What’s the Difference?
A Pennsylvania Sales Tax Permit authorizes your business to collect and remit sales tax on taxable sales to customers. A Pennsylvania Resale Certificate (REV-1220), 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 Pennsylvania?
Businesses that purchase goods for resale can use a Pennsylvania Resale Certificate. To do so, the business must actively sell taxable tangible products and hold a valid Pennsylvania Sales Tax Permit.
Note that your Pennsylvania Sales Tax Permit number also acts as your Sales Tax Exemption Number. This number is required when filling out the REV-1220.
How to Get a Resale Certificate in Pennsylvania: A Step-by-Step Guide
1. Make Sure You’re Eligible: Your business must sell taxable goods or services and be registered with the PA Department of Revenue. Only businesses with a valid Pennsylvania Sales Tax Permit can use a resale certificate.
2. Get a Pennsylvania Sales Tax Permit: If you don’t already have one, apply for a Pennsylvania Sales Tax Permit through the PA Department of Revenue website. This permit is required before you can issue or use a resale certificate.
Need help? Read our blog: How to Get a Seller’s Permit in Pennsylvania
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 Pennsylvania state sales tax permit number (if already obtained)
- Your business type (e.g., sole proprietorship, LLC, corporation).
4. Complete the REV-1220: Download and fill out the Pennsylvania Exemption Certificate (REV-1220) from the PA Department of Revenue’s website. You’ll present this form to your suppliers when making tax-exempt purchases.
5. Submission: No submission required in Pennsylvania. 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 the REV-1220. However, you’ll need a valid Pennsylvania Sales Tax Permit. To see if there’s a cost for the permit, check out our guide on Sales Tax Permit fees.
7. Understand Renewal Requirements: Your Pennsylvania resale certificate remains valid only while your Sales Tax Permit is active. To maintain your ability to make tax-exempt purchases for resale, you must renew your Pennsylvania Sales Tax Permit as the state requires.
Renewal of your permit is typically initiated by the state no less than every 5 years. A supplier may also request an updated certificate if their records are outdated or after their retention period (typically 4 years).
How to Use a Resale Certificate in Pennsylvania
To properly utilize your resale certificate in Pennsylvania when making tax-exempt purchases for resale, you’ll need to present a valid copy of your Pennsylvania Sales and Use Tax Exemption Certificate (REV-1220) to your supplier at the time of purchase.
Pennsylvania generally accepts valid resale certificates issued by other states. However, out-of-state buyers are typically required to fill out the Pennsylvania Exemption Certificate (REV-1220).
Here are other conditions you may need to meet as an out-of-state buyer purchasing from a seller in Pennsylvania if you want to be exempted from paying sales tax:
- Provide a valid reason: If you don’t have a PA Sales Tax License ID, you must explain why on Form REV-1220 (e.g., you are an out-of-state vendor purchasing for resale and do not have nexus in PA). This also applies to multijurisdiction resale certificates, which still require completion of the PA form.
- Good Faith Acceptance: Vendors in Pennsylvania may accept an out-of-state resale certificate in good faith, provided it is properly completed and contains all the necessary information (buyer’s name, address, seller’s permit number from the issuing state, reason for exemption, etc.). The seller is relieved of liability if they accept a valid certificate in good faith.
- Reciprocity: While Pennsylvania generally accepts valid out-of-state resale certificates, the overall framework of interstate tax relations and acceptance practices can be influenced by reciprocal agreements between states.
For more information regarding sales tax exemption laws in Pennsylvania, you may read the state’s official guidelines.
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 Pennsylvania 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). Pennsylvania requires you to include your Pennsylvania Sales Tax Permit number and properly complete the form. But if you don’t have a sales tax permit number, you must provide a reason as to why you aren’t registered. You can find this form on the Multistate Tax Commission (MTC) website. Take note that this form is valid as a resale certificate, subject to the provisions of 61 PA Code §32.3.
- Streamlined Sales Tax (SST) Certificate of Exemption: Pennsylvania is not a member of the Streamlined Sales Tax Governing Board. Therefore, while a Pennsylvania vendor might accept an SST Certificate of Exemption, they are primarily looking for a Pennsylvania Resale Certificate (REV-1220) or the Uniform Sales & Use Tax Resale Certificate. You can find more information about the SST and its member states on the Streamlined Sales Tax Governing Board website.
As stated in the MTC’s official form, Pennsylvania accepts its multi-jurisdictional resale certificate.
However, buyers must still inquire with their suppliers whether they’ll accept these alternative forms or not. This ensures a seamless transaction and avoids potential audit issues.
Responsibilities When Using or Accepting a Pennsylvania Resale Certificate
Buyer Responsibilities
You are responsible for ensuring that you use a Pennsylvania 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.
- Pennsylvania-based buyers: Provide a fully completed REV-1220 to your suppliers for qualifying purchases. Prepare your Pennsylvania sales and use tax registration number or exemption number as required.
- Out-of-state buyers: You are generally not required to register your business in Pennsylvania to obtain a PA sales tax exemption number, unless your business has nexus in Pennsylvania. If unregistered, you must provide a valid reason as to why on the REV-1220 form, along with your home state’s sales tax exemption number.
Take note that you can’t use the REV-1220 for sales tax exemption on vehicle purchases or registrations.
Seller Responsibilities
As a seller in Pennsylvania, accepting a resale certificate comes with a variety of responsibilities. Such as verifying and retaining proper documentation for tax-exempt sales. Other than that, you must also:
- Accept the certificate in good faith
- Verify the buyer’s sales tax permit number if practical, though Pennsylvania does not provide a public online portal for direct verification.
- 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). The same applies if the items intended for resale are tobacco products.
Keep records for at least 4 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 four years in case of a sales tax audit by the PA Department of Revenue.
Frequently Asked Questions About the Pennsylvania Resale Certificate
Are There Penalties for Misusing a Pennsylvania Resale Certificate?
Yes. The improper use of a Pennsylvania resale certificate leads to a misdemeanor charge. This may result in 1 year imprisonment and/or a fine not exceeding $1,000. Learn more via the Pennsylvania Code.
Does a Pennsylvania Resale Certificate Expire?
The resale certificate (REV-1220) has no expiration date. However, it is only valid while your Pennsylvania Sales Tax Permit remains active.
How Do I Verify a Resale Certificate in Pennsylvania?
There is no online verification method for a Pennsylvania resale certificate. While you may accept the buyer’s PA sales tax account number on the REV-1220, Pennsylvania does not provide a public online portal for direct validation of individual sales tax permit numbers. For additional verification, you must contact the PA Department of Revenue. For additional verification, you must contact the PA Department of Revenue.
How TaxHero Can Help
You don’t have to complicate managing sales tax compliance and resale certificates in Pennsylvania. TaxHero simplifies the process—from keeping your Pennsylvania Sales Tax Permit active to ensuring you use resale certificates correctly.
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Schedule a Demo to see how TaxHero can streamline your resale certificate in Pennsylvania process today!