If you sell items to resellers without collecting sales tax, you must have a valid resale certificate on file. Otherwise, your company could be liable for uncollected tax in the event of an audit. This state-by-state guide to verifying resale certificates explains how to ensure a certificate is valid.
If you sell taxable goods or services, you must collect sales tax in all states where you have physical or economic nexus. Sometimes, however, buyers are exempt from sales tax because they're resellers. When you sell to these exempt buyers and don't collect tax, you need a valid resale certificate on file.
Depending on the state, resale certificates are sometimes called exemption certificates or reseller's permits.
They allow a reseller to purchase items without paying sales tax because the reseller sells the items and collects the sales tax from the end consumer.
Unfortunately, if you do not have a valid resale certificate on file and you don't charge sales tax on a transaction, your company can be held responsible for uncollected tax, plus penalties and interest, if you are audited.
To protect against liability, you can confirm the validity of resale certificates by ensuring all required fields are complete, verifying that the buyer's permit or sales tax ID number is legitimate, and confirming that the certificate and permit or tax ID are active.
This step-by-step guide explains exactly how to verify resale certificates to ensure your business is compliant and audit-ready.
The process of verifying a resale certificate varies by state.
In five states—Alaska, Delaware, Montana, New Hampshire, and Oregon—there is no statewide sales tax, so this is not a concern. However, in Alaska, some local areas do charge sales tax, so you will need to check local rules for reseller certificate requirements.
In the remaining states, the majority allow you to verify a certificate's validity online. However, a minority of states require you to either judge validity based solely on the certificate's completeness or call the state to confirm that a certificate, resale permit, or reseller's permit number is valid.
Some states, including Louisiana and Massachusetts, require you to input your own seller/tax ID to verify a certificate. Others, like Ohio, make the process more cumbersome and challenging by requiring you to download a list.
Some, like California, have very strong good faith protections that reduce your risk of being liable for unpaid tax if there turns out to be an issue with a certificate.
For example, wholesalers typically don't collect sales tax from the reseller if they have a valid resale certificate. But if the resale certificate appeared valid but actually wasn't, the wholesaler is much less likely to be held liable.
Still, you should make every effort to verify resale certificates to reduce your liability if audited.
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These states allow you to verify resale certificates online:
In other states, there is no online verification process. You can call to verify via phone, but ultimately, the certificate itself provides your strongest protection. You should ensure it is complete and appears accurate to reduce your risk.
The table below shows the form name to complete in each state, as well as the state tax department phone number to call to verify a certificate.
The table does not include Alaska because Alaska has unique rules. There is no statewide sales tax in Alaska, but different local areas charge tax and have their own requirements for resller certificates. Contact the Alaska Remote Seller Sales Tax Commission to learn more.
In most states, you're protected from owing back tax on exempt sales made improperly if you collect a resale certificate and make a good faith effort to ensure that the certificate is valid.
However, ensuring the certificate is complete is crucial to making a good faith effort.
If you accept an incomplete certificate, even with a valid permit number, you are not protected by the certificate and can be held responsible for the uncollected tax.
Some of the key things to look for to confirm the certificate is fully complete include:
The Streamlined Sales Tax (SST) program is a multi-state initiative aimed at simplifying sales tax. It has a Streamlined Sales Tax Exemption Certificate accepted by 24 SST member states. Buyers can use it to claim exemptions in SST states, so you may receive it often.
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It is also important to watch for certain red flags during the verification process, as these issues may indicate that a certificate is invalid.
In some cases, if you miss the issues, it can make it more difficult to raise a good-faith defense and increase your liability risk.
These red flags include:
If you spot any of these issues, you should request additional documentation from the buyer before selling goods or services without charging sales or use tax. This could include a new certificate, a state sales tax registration, or a valid business license.
Your business is ultimately responsible for making sure a sale is exempt, and if you don't fulfill this obligation, you can become liable for the tax due.
Verifying the permit number can help you ensure the buyer is truly exempt and thus should not owe sales tax on the transaction. It can also help you demonstrate you acted in good faith, which can sometimes protect against liability if a certificate turns out to be invalid.
Many states have good-faith protections in place. California's rules, found in CDTFA Regulation 1668, provide some of the strongest protections, stating that:
"In absence of evidence to the contrary, a seller will be presumed to have taken a resale certificate in good faith if the resale certificate contains the essential elements as described in subdivision (b)(1) and otherwise appears to be valid on its face."
Many other states have similar laws in place, and demonstrating that you verified the buyer's permit number online can be one of the clearest sources of proof that you made the best possible effort to ensure a certificate's validity.
While presenting evidence of permit verification can always strengthen your good-faith defense, this is especially important in high-volume or high-dollar transactions where the stakes are higher if you fail to collect the full tax due.
SST member states generally accept the SST Uniform Exemption Certificate, although the buyer may still need to provide a valid registration number or otherwise satisfy state-specific requirements.
However, some states do not accept resale certificates issued by another state. Many sellers don't realize this, and it can create significant liability if you sell to a buyer from another state, exempt the sale, and your state doesn't accept their out-of-state certificate as valid.
The states that don't accept out-of-state resale certificates include:
There are also certain limitations and restrictions even in states that accept out-of-state resale certificates. For example, Virginia accepts certificates from other locations if they contain the same information as Virginia's form.
If your state is on this list, your buyers must provide a certificate from your state in order to qualify to make a tax-exempt purchase for resale. This means they must be registered in the state. If they cannot do that, you should charge them tax.
Typically, when you verify a resale certificate, most of the certificates you’ve been provided will be valid. But what happens if that is not the case? You could be faced with an invalid certificate if the verification process shows:
In these situations, don't automatically assume your buyer is committing fraud. Resale or exemption certificates can lapse and be renewed, and the buyer may have provided an outdated certificate. Business information can also change, and mistakes can be made.
Ask the buyer for a valid, verifiable certificate as the next step after a verification failure. If the buyer cannot or won't provide a valid, verifiable certificate, collect sales tax on the transaction.
You should always document your attempts to verify the reseller certificate. Do this even if those attempts fail, as it can protect you in case of a future audit. And if you do suspect the buyer was trying to commit intentional fraud, you don't have to complete the sale and may not want to.
You should keep a copy of every exemption certificate you accept for all buyers who completed transactions where you did not charge tax. This could be a paper copy, a digital copy, or both.
Most states recommend keeping these certificates on file for three to four years, or until the end of a lookback period for a sales tax audit. Some require you to keep copies for longer. For example:
If you continue to do business with a buyer and the certificate remains valid, it should be kept on file indefinitely. You should also reverify blanket certificates periodically, as certificates expire on a set schedule in some states and must always be updated if business information changes.
In Florida, for example, resale certificates expire on December 31 each year, while in New York and California, there is no fixed expiration, but periodic review is recommended. You can check out our state-by-state guide to exemption certificate expirations to learn more.
You should also do more than just keep the certificate itself. You want to document the date you verified it and what steps you took to do so.
A screenshot showing that you looked up the permit and confirmed its validity with the state is ideal in case you must raise a good-faith defense later.
Collecting, storing, and tracking resale certificates can be incredibly complicated and burdensome, especially as your sales increase and you have many buyers across different states.
Numeral can help.
We offer end-to-end exemption certificate management for multiple types of exemption certificates, including resale, government, and nonprofit exemptions. Numeral:
Numeral makes the process truly effortless. You don't have to manually override tax on transactions, as we automatically ensure no tax is charged to exempt customers. We also automate the collection, storage, and management of certificates.
And that's not all Numeral does. Numeral can handle every aspect of sales tax compliance for companies, including:
This is all backed by our Numeral Guarantee. If we make an error that results in you owing fees and interest, we'll cover the costs.
And we do it all with no long-term commitments. Nexus monitoring is always free, and you pay a flat $75 for filings and $150 for registrations.
Get started or book a demo to start the process of offloading your sales tax compliance headaches so you can focus on what matters.
Still need to know more? Here are the answers to some frequently asked questions about resale certificate verification.
If you accept an invalid resale certificate, you could be liable for the uncollected sales tax as well as for penalties and interest. This is why verifying resale certificates is so important. Verification can also protect you in case a certificate is invalid, as many states allow proof that you made a good faith effort to verify the certificate as a defense to owing back taxes.
Not every state allows you to verify a resale certificate online. 16 states do not have an online verification process. In states without an online process, you can contact the local tax authority to verify that the certificate is valid.
A blanket resale certificate covers ongoing purchases and multiple transactions, rather than a certificate that covers a single transaction.
Verifying a blanket certificate can be especially important because you could have a substantial amount of liability for uncollected tax if there is a problem. In some states, certificates also expire, so you may need to update and re-verify on a set schedule.
There are 10 states that don't accept an out-of-state resale certificate. Those states include:
If you are in one of these states and receive an out-of-state certificate from a buyer, you will need to charge tax on the transaction or request a new certificate from your state (which means the buyer must be registered for sales tax in your state).
The Streamlined Sales Tax program is a program with 24 member states that aims to simplify sales tax compliance in the United States. Member states have agreed to adopt the same rules on things like what goods are taxable and to provide a centralized registration portal.
The SST program also has a uniform Streamlined Sales Tax Exemption Certificate accepted by member states. The 24 member states accept this certificate, but you may still need to verify the permit numbers and obtain additional documentation from the business to confirm their validity.
You should reverify a customer's resale certificate according to the state's schedule for certificate expiration. In some states, like Florida, this could be as often as yearly. You will also need to reverify the certificate when business information changes.
In other states, certificates do not expire on a set schedule, but periodic re-verification to ensure continued validity is still advisable.
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