How to verify a reseller permit

Which number you're checking, and who issued it

A reseller permit — seller's permit, sales tax permit, resale licence, the name varies by state — is a registration with the state's revenue department. It's issued to the buyer. The resale certificate is a different piece of paper: the buyer's own signed statement to a seller that the goods are being bought for resale, quoting that permit number. Verifying means two things — confirming the number is real and active with the state that issued it, and confirming the certificate in front of you is complete enough to lean on.

So the first question is which state. A buyer in Texas gives you a Texas number, and the place to check it is the Texas Comptroller, not your own state's site. A buyer from Oregon, Montana, New Hampshire, Delaware or Alaska has no state sales tax and therefore no permit to give you; those buyers document resale differently, and your own state's rules say how.

The state lookup tools worth bookmarking

Most states with a sales tax publish a search on the revenue department's site, and the four people ask us about most are these:

• California: the CDTFA's "Verify a Permit, License, or Account" tool on onlineservices.cdtfa.ca.gov checks a seller's permit number and tells you whether it's valid.
• Texas: the Comptroller's Sales Taxpayer Search at mycpa.cpa.state.tx.us confirms a permit is active. The Comptroller also says to question a certificate when the goods don't fit the buyer's line of business, and to refuse one when you know or have reason to believe the purchase isn't for resale.
• Washington: reseller permits are issued by the Department of Revenue itself and expire — four years as standard, two for contractors and businesses in their first year — so the DOR's Business Lookup at secure.dor.wa.gov shows the permit and its dates, there's a bulk verification service for sellers with many customers, and the DOR recommends re-checking each customer at least once a year.
• Florida: every registered dealer gets an Annual Resale Certificate that expires December 31, and sellers verify it online through the Department of Revenue's certificate verification system, by phone on 877-FL-RESALE (877-357-3725), or in the FL Tax mobile app. Each check returns a transaction authorisation number that's good for that purchase only, or a vendor authorisation good for the calendar year.

Everywhere else, and why the agency's site is the only one that counts

Other states range from a full public search to nothing at all, in which case the certificate and your own good faith are what you have. The revenue department's site is always the place to look; a number that checks out on a third-party site proves nothing, and a supplier's auditor will not be impressed by it.

If your state has no lookup, the certificate carries more weight, not less. Get it complete, get it at the time of sale, and if the buyer's business and the goods don't match, ask.

What a valid resale certificate has to contain

States write their own forms, but the elements are close to universal. California's regulation is a good template: a resale certificate is only a resale certificate if it has the buyer's signature (or an employee's or authorised representative's), the buyer's name and address, the buyer's seller's permit number — or a note explaining why it doesn't need one — a statement that the property is bought for resale using the actual phrase "for resale", the date, and a description of the goods, itemised or general.

Texas puts the same substance on Form 01-339 and insists on the buyer's Texas taxpayer number. Washington's version is the DOR-issued permit itself, or an approved exemption certificate. Florida's is the DOR-issued annual certificate. The through-line: a certificate missing the number, the signature or the resale statement isn't a certificate, and a seller relying on one is relying on nothing.

Check the description too. A buyer whose permit says restaurant supplies, buying twenty laptops "for resale", is the sort of purchase every state tells you to question, and California specifically says to ask for a certificate naming the specific property when the goods aren't what the buyer ordinarily sells.

Where the seller's liability actually sits

The seller is the one who didn't collect the tax, so the seller is where the state looks first. The general rule is that a seller who takes a complete certificate in good faith is relieved of the tax and the buyer becomes liable if the claim was false; a seller who takes an incomplete one, or one it had reason to doubt, stays on the hook. California's regulation relieves a seller who timely takes a certificate in good faith that has the required elements and "otherwise appears to be valid on its face". Washington says that a wholesale sale without a valid permit or documentation on file gets reclassified at audit and the seller owes the sales tax.

Timing matters more than people expect. Get the certificate at or near the time of sale, not when the auditor asks. Florida's system exists precisely so the seller can check the buyer's certificate before the sale and hold an authorisation number as evidence.

Then keep it. Texas says four years, Washington five, Florida three; your own state's rule is on the revenue department's site. A certificate you can't produce is the same as one you never took.

Multistate buyers: the SST and MTC certificates

If you sell across state lines, you'll be handed two multistate forms. The Streamlined Sales Tax Certificate of Exemption is accepted in all 24 Streamlined member states — Georgia, Indiana, Michigan, Minnesota, Nevada, New Jersey, North Carolina, Ohio, Washington and Wisconsin among them — and in those states the seller isn't required to verify the buyer's ID number, with one exception the Streamlined board flags: Georgia requires it. A seller who obtains a fully completed certificate at the time of sale, or within 90 days after it, is relieved of the tax if the buyer's claim turns out to be improper, unless the seller was in on it.

The Multistate Tax Commission's Uniform Sales & Use Tax Resale Certificate is broader and looser: 36 states have told the Commission that a properly completed form satisfies them, each with its own conditions printed in the form's instructions, and the Commission itself says to ask the state's revenue department whether it'll be accepted for your transaction. California, Texas and Florida aren't Streamlined states and run on their own forms and rules, and no multistate form turns a buyer with no permit into one with a permit — the number still has to exist and still has to be the right state's.

Drop shipping is the case that goes wrong. Goods shipped into a third state may need a certificate that third state accepts, and the Streamlined board's own advice is to check with the destination state. When the answer's unclear, that's a sales-tax adviser's question, and a real one.

If you're the buyer being asked for one

Register for the permit in the state where you're buying and selling — it's free in most states, and we file the registration for $50 flat plus whatever the state charges, which is nothing in most of them. Then fill in the certificate completely, one for each supplier who asks, and expect suppliers in Florida and Washington to look you up before they take it.

Use it only for goods you'll actually resell. Buying your own office chairs on a resale certificate is tax evasion in every state that has a sales tax, and Florida for one spells out that fraudulent use carries civil and criminal penalties. If a permit expires — Washington's do, Florida's every December 31 — renew it before your supplier's next check, because the alternative is being charged tax on your own inventory.

Common questions