How to Use a Mississippi Resale Certificate

by TaxJar July 24, 2018

Like most states, Mississippi asks sellers to collect sales tax on tangible goods. But the Mississippi Department of Revenue provides exemptions in some cases, including resellers buying goods for inventory. While it’s a common practice to use resale certificates for these transactions in other states, Mississippi does things a little differently.  

Using a Mississippi Resale Certificate

Many states will use the permit application process to validate a seller for a resale certificate. However, Mississippi allows anyone with a valid tax permit to claim a sales tax exemption as long as the goods will be resold.

If the Mississippi Department of Revenue provided exemption certificates for resellers, it would make things a lot easier. But that’s not how things work. Since any business licensed for sales tax is eligible for the exception, it doesn’t make sense to provide additional paperwork. Instead, when buying an item from a vendor for resale, resellers should provide a copy of their sales tax license and/or a valid sale tax permit number.

These items are provided to you when your initial application to the Department of Revenue is accepted. If you need another copy of your license or to confirm your permit number, you can contact them for the information.

Accepting a Mississippi Resale Certificate

Like most states, Mississippi puts the responsibility of verifying the reseller’s exempt status on the vendor. You’re in charge of verifying that the buyer has a valid sales tax license and/or tax permit number. You can do that by going to the Mississippi Department of Revenue website. They have a Mississippi reseller verification tool that you can use to look up tax permit statuses.  (Click “Verify a Permit Number.”)

If you can verify the permit, you still need to complete the action “in good faith.” This only means that the goods you are selling will be resold and the person or organization you’re selling to has the right to the exemption to the best of your knowledge.

Let’s say that you do business with a reseller several times a year. You’ve got their information on file and you’ve verified that they have a valid tax permit number. But on this sale, they mention that the goods will not be resold. Your buyer plans to keep the products for themselves. Well, then you shouldn’t complete the transaction. If you don’t have “good faith” that the transaction fits the criteria for a resale exemption, you have to collect sales tax on that order.

As the vendor, you’ll need to keep records of your tax exempt sales for a minimum of four years. Since the Mississippi Department of Revenue doesn’t provide resale certificates, a vendor who regularly works with resellers might put together a form that serves the same purposes. Essentially, you’ll have a form to collect the buyer’s name, address, and permit number. It should also include the details of the transaction–the date, the products sold, and the rate paid. You could also attach a copy of the tax license, if they provide it. Then put all of that in your records just in case you ever need it for an audit.

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