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How to Use a Washington Resale Certificate
May 31, 2016
If you buy products at retail in order to resell them, you can often avoid paying sales tax when making the purchase.
In Washington, this involves presenting a Washington resale certificate (AKA Washington reseller permit) to the merchant from whom you’re buying the products.
This quick guide will explain what you need to know about buying products in Washington for resale.
If you Wish to Use a Washington Resale Certificate
According to the Washington Department of Revenue, resellers are allowed to use a Washington reseller permit to purchase products for resale or to purchase or component parts to create or manufacture a product that you intend to resale.
How to obtain a Washington resellers permit:
Washington is one of the states that will not allow retailers to accept out of state resale certificates (with a couple of exceptions noted below). So if you wish to buy items for resale using a resellers permit in Washington, you’ll need to use a permit issued by the Washington Department of Revenue.
There are two ways go to about this:
Register for a Washington sales tax permit – If you are registered to collect sales tax in Washington, you should also receive a Washington resellers permit to use when buying products for resale. That said, this also means that you will be required to collect sales tax from Washington customers and remit it to the Washington Department of revenue periodically. Find out more here in our Washington Sales Tax Guide for Businesses.
Use an approved certificate – If you are not required to be registered to collect sales tax in Washington and still wish to buy products for resale in Washington, you can also present a Streamlined Sales Tax (SST) Exemption Certificate or your Multi-state Sales Tax (MTC) Exemption Certificate. (Be warned that registering for either SST or the MTC could mean you will be liable for collecting sales tax in multiple states.)
Washington resellers permits are generally valid for four years, with automatic renewal, as long as you remain in good standing with the Washington Department of Revenue.
Penalties for misusing a Washington resellers permit:
Misuse – even if no fraud was intended – will result in the tax due plus a 50% penalty. Sellers may also have their permit revoked.
If You are Presented with a Washington Resale Certificate
If a customer gives you a Washington resale certificate, make sure to verify that it is valid by doing these things:
1.) Verify that the buyer’s resale certificate it valid – Under “I Want To” click “Look Up a Business.” From there, click “Reseller Permit” at the far right, then enter the reseller permit number.
2.) Scrutinize the transaction – Ensure that the buyer actually intends to resale the products. For example, if the buyer owns a furniture store and is attempting to buy clothing at resale, the sale may not actually be a valid use of a resale certificate. You have to right to refuse a resale transaction if you feel like the certificate is not valid. Your buyer can always attempt to recover the sale tax you have charged when filing his sales tax return.
3.) Document the sale – Keep a copy of the buyer’s Washington resale certificate on file to protect yourself in the event of an audit. You can do this in one of several ways:
- A paper or electronic copy of the reseller permit.
- The confirmation codes received through the Reseller Permit Verification Service.
A Couple More Facts about Washington Resale Certificates
If you have already paid Washington sales tax on products that you intend to resale, you can attempt to recover sales tax paid.
You can find out a whole lot more about Washington resellers permits here.
Do you have questions or comments about Washington resale certificates? Start the conversation in our Sales Tax for eCommerce Sellers Facebook group!
Ready to automate sales tax? To learn more about TaxJar and get started, visit TaxJar.com/how-it-works.