Understanding Resale Certificates and Sales Tax Permits

Understanding Resale Certificates and Sales Tax Permits

A Sales Tax Permit allows a business to legally collect sales tax from customers and is issued by the state. A Resale Certificate is given to suppliers so you can purchase items tax-free, with the intention of reselling them. You must have a sales tax permit before you can use a resale certificate.

Step 1: Apply for a Vendor’s License (Sales Tax Permit)

Purpose

Before obtaining a resale certificate, you must first apply for a sales tax permit. This permit authorizes your business to collect sales tax from customers when selling taxable goods or services.

How to Apply

  1. Register with your state’s Department of Revenue or appropriate tax authority.
  2. Most states offer an online application process.
  3. You will typically need to provide:
    • Business name and address
    • Business structure and ownership details
    • Federal Tax ID number (EIN or SSN)

Step 2: Complete the Resale Certificate Form

Purpose

This form certifies that the goods you are purchasing are for resale and should be exempt from sales tax at the time of purchase.

How to Complete It

  1. Visit your state’s Department of Revenue website to obtain the form.
  2. Fill in the required business information, including your sales tax permit number.
  3. Include a clear description of the items you intend to purchase for resale.

Additional Information

State-Specific Requirements

Each state has its own rules and forms. Be sure to verify the correct process with your state’s Department of Revenue.

Multi-State Use

If your business operates in multiple states, consider using a multi-state certificate such as the Streamlined Sales Tax Exemption Certificate, where accepted. Check with your state to see if this is available for you.

Expiration and Renewal

Some states require resale certificates to be renewed periodically. Check for expiration policies and renew certificates as needed.

Resale Certificate & Sales Tax Permit FAQ

What is a sales tax permit?
A sales tax permit (also called a vendor’s license) allows your business to legally collect sales tax from customers on taxable goods or services. It is issued by your state’s Department of Revenue and is required before you begin selling.

What is a resale certificate?
A resale certificate allows you to purchase goods without paying sales tax at the time of purchase, as long as those goods are being bought specifically for resale. You give this certificate to your suppliers instead of paying tax upfront.

Do I need a sales tax permit before I can use a resale certificate?
Yes. You must have an active sales tax permit before you can issue a resale certificate. Your permit number is typically required on the certificate itself.

4. Where do I get a sales tax permit?
You can apply for a sales tax permit through your state’s Department of Revenue. Most states offer an online application process. You’ll need to provide basic business information, including your EIN or SSN.

5. How do I know which states I need to register for a sales tax permit in?
You need to register in any state where you have sales tax nexus.

A sales tax nexus refers to the connection between a business and a state that creates a legal obligation to collect and remit sales tax. While nexus was traditionally based on physical presence – like an office, warehouse, or employees – many states now enforce economic nexus rules, which are triggered by reaching certain sales thresholds, even without a physical location in the state.

For example, if your business is based in Ohio but you host events or parties in Kentucky or Indiana where sales take place in person, you may establish physical nexus in those states. This means you could be required to register for a sales tax permit in both Kentucky and Indiana and collect sales tax on those transactions.

Likewise, if you run an online store using a platform like Shopify and make a high volume of sales to customers in another state – such as $100,000 or 200+ transactions in Texas – you could establish economic nexus in Texas. Even without a physical location there, you'd be required to register for a sales tax permit in that state and collect the applicable sales tax on orders shipped to Texas customers.

Because each state defines nexus differently, it's important to consult with a tax professional to determine whether your business meets the criteria in any given state.

6. If I operate an online business, do I still need a sales tax permit and resale certificate?
Yes. Online sellers – including those operating ecommerce stores or participating in affiliate marketing – may still be required to collect sales tax in states where they have nexus (a tax connection). If you’re reselling physical products, you’ll likely need both a sales tax permit (to collect tax from customers) and a resale certificate (to purchase inventory tax-free).

Affiliate marketers who simply promote products and earn commissions generally do not need resale certificates, since they aren't purchasing or reselling goods themselves. However, if you store inventory, make direct sales, or meet state-specific economic nexus thresholds, you may still need to register for a sales tax permit.

7. Where do I get a resale certificate?
Resale certificate forms are typically available on your state’s Department of Revenue website. You’ll need to complete the form with your sales tax permit number and a description of the items being purchased for resale.

8. Can I use the same resale certificate in multiple states?
Some states accept multi-state resale certificates, such as the Streamlined Sales Tax Exemption Certificate, but many require their own state-specific form. Always check with each state's tax authority to confirm.

9. Do resale certificates expire?
Yes, resale certificates may have expiration dates depending on the state. Some states require renewal every year or every few years. It's your responsibility to keep them current and valid.
Euforia, through Avalara ECM Pro, actively monitors resale certificates for accuracy and expiration. Customers will receive a notification 30 days before their certificate is set to expire, allowing time to submit an updated version and avoid interruptions in ordering. However, the customer is ultimately responsible for submitting their updated certificates.

10. What happens if I don’t have a resale certificate?
You will be able to join Euforia, however, please note that Euforia requires a resale certificate to be on file before any purchases can be made. You will not be able to place an order until this is supplied and verified.

11. What if my state doesn’t require a sales tax permit or I don’t have a nexus there?
Euforia still needs you to go through the resale certificate process on our website so we have your information on file. When you choose your state, our process will ask the appropriate questions that are needed for our files.

12. Do I need to provide a resale certificate for every state where I have a sales tax permit?
Euforia requires that you provide a corresponding resale certificate for every state where you have shipments sent through Euforia.

For example, if Euforia ships one of your orders to Florida and another to Texas, you must have a resale certificate on file with Euforia for both Florida and Texas.

13. What information is required on a resale certificate?
A resale certificate usually includes:

  • Your business name and contact information
  • Your sales tax permit number
  • A description of the goods being purchased
  • A signed declaration that the items are for resale
  • Some states will require information about the Seller. If they do, please use the following:

Euforia Products, LLC
300 Main Street
Cincinnati, OH 45202

14. What does Euforia do with my resale certificate?
Euforia utilizes Avalara ECM Pro for the collection, verification and storage of resale certificates. Once a certificate is submitted, Avalara will verify the validity of the certificate before marking it as valid and updating the buyer’s account. This includes checking that the certificate is complete, matches the business information provided, and is acceptable for the delivery state.

Verification typically takes 1–3 business days. You will be notified once your certificate is approved or if any corrections are needed. During this time, you will not be able to place an order with Euforia until verification is complete.

15. How can I find out the requirements for my specific state?
Each state has its own rules and forms. Be sure to verify the correct process with your state’s Department of Revenue.

  • Avalara has worked with Sales Tax Institute to create a State-by-State Exemption Certificate Guide to help you identify which certificates are required for your state. In it, you’ll also find information on how often you should renew your documentation and links to the forms you need
  • You should also consult a sales tax expert who can discuss your specific requirements.

If you have questions about your tax forms or your compliance status, please email [email protected]. While we are unable to provide tax advice, we can confirm the status and validity of any resale certificates you’ve submitted.

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