Sales Tax Fundamentals
Get up to speed on the basics of sales tax
How to Use a New York Resale Certificate
byMay 18, 2017
If you buy products to resale in the state of New York, you can avoid paying sales tax on your purchases by presenting a New York resale certificate at checkout. Always keep in mind that you should only use your resale certificate to buy items you intend to resale or that you intend to use as a component part of an item for resale. Any other use of the resale certificate is usually considered unlawful.
If You Wish to Use a New York Resale Certificate
To use a New York resale certificate (sometimes called a reseller’s permit) you must already be registered to collect sales tax in the state of New York. This registration also allows you to buy items from retailers tax-free if you intend to resale them.
Before shopping, print a copy of the New York Resale Certificate (ST-120). When presenting this certificate to your vendor, make sure it is fully filled out with the required info, which includes:
- Your business identification information (name, address, etc.)
- Your New York “certificate of authority” number (for online sellers, this is generally your sales tax registration number)
- The type of business you run and the types of products you sell
- Your signature and the date of the purchase
Note that if you are not required to collect sales tax in New York, there’s a portion on the form for you to fill out, too.
Keep in mind that you are only allowed to buy tax-free items that you intend to resell to customers. If you end up using the item yourself, or not selling it, then you are required to remit the sales tax you didn’t pay at the time of purchase.
If You are Presented with a New York Resale Certificate
If a customer presents you with a New York Resale Certificate, you should take steps to ensure that it is valid. Unfortunately, New York is like most states that if you accept (even accidentally) an expired, fraudulent or otherwise invalid certificate, the burden of paying the tax can fall on you, the seller.
Luckily, New York is lenient if you accept a resale certificate “in good faith.” Here’s what you should do if someone wants to buy tax free from you in the state of New York:
- Be sure to have the resale certificate in hand within 90 days of the purchase
- Have the seller fill the resale certificate out entirely
- Ensure that the entire ST-120 New York Resale Form is properly filled out
- Verify any New York customer’s Certificate of Authority Number. (Not in NY? You can verify resale certificates from all U.S. states here.)
- Keep the document on file for at least 3 years after the purchase date, in case of audit
If everything is in order, you’re clear to make the tax-free sale!