A Connecticut Resale Certificate is a state document that allows businesses to buy goods and services for resale without paying sales tax.
Learn how the Connecticut Resale Certificate works, how to get one, and more.
How Does a Connecticut Resale Certificate Work?
When retailers purchase products to resell, they often don’t pay sales tax to the supplier on the purchase. The sales tax will still be paid, but instead of the retailer paying the state sales tax, the retailer charges sales tax to their customer on the final value of the merchandise.
For instance, if a clothing boutique in Hartford, Connecticut, purchases clothes from designers or manufacturers to sell in their store with a resale certificate, the boutique owner won’t pay sales tax on the inventory they purchase. When a customer enters the boutique and buys a dress, the retailer will add Connecticut’s sales tax to the price of the dress. This sales tax is based on the full price of the dress, and the customer pays this tax at the point of sale, which the boutique collects. Then, typically, at the end of the month, the boutique will tally all the sales tax it has collected from its transactions and send the funds to the Connecticut Department of Revenue Services.
It’s important to note that the sales tax exemption is only intended for inventory that will be resold and not for the tax-free purchase of items used in normal business operations, such as paper, pens, etc.
How To Fill Out the Connecticut Resale Certificate Form
Before a business starts selling products or providing taxable services, it must first get a Connecticut Sales Tax Permit (sometimes referred to as a Seller’s Permit) from the Connecticut Department of Revenue Services. After registering for the permit, the Connecticut Department of Revenue Services will provide a sales tax number which will be used to fill out the Resale Certificate.
Step 1: Begin by downloading the Connecticut Resale Certificate Form
Step 2: Identify the name and business address of the seller
Step 3: Indicate whether the seller is a wholesaler, retailer, manufacturer, lessor, or other type of business
Step 4: Provide a general description or itemized list of the products to be purchased from the seller.
Step 5: Include the city and state where products will be shipped along with the sales tax permit number or state tax registration number if shipping to another state.
Step 6: The purchaser will certify that the property is for resale and sign and date the certificate.
A resale certificate may be used for a single purchase or continual purchases of the same type. If ongoing purchases will occur, the “Blanket Certificate” must be written on the form.
State of Connecticut Resale Certificate Form
Connecticut Resale Certificate FAQs
How much does a Connecticut Resale Certificate cost?
There is no cost for a Resale Certificate in Connecticut.
Does a Connecticut Resale Certificate Expire?
Connecticut resale certificates are valid for three years from the issue date.
Where do I file the Connecticut Resale Certificate?
In Connecticut, the certificate is not filed with any government agency. Instead, it is kept by the seller (the business selling the merchandise to the reseller).
Is a Resale Certificate the same as a Sales Tax Permit?
No – The Sales Tax Permit and Resale Certificate are commonly thought of as the same thing, but they are actually two separate documents. The Sales Tax Permit allows a business to sell and collect sales tax from taxable products and services in the state, while the Resale Certificate allows the retailer to make tax-exempt purchases for products they intend to resell.
Your business may also need to register for additional items. For more information, check out our guide to Connecticut business licenses.
What steps should a business take to accept a resale certificate?
When a business is presented with a resale certificate, the seller has the burden of proof to verify that the buyer’s information is correct and to keep these records. Failing to verify this information may result in the seller being liable for Connecticut sales taxes.
Before accepting a resale certificate, a seller should:
– Review the resale certificate to make sure it is completely filled out.
– Verify the purchaser’s sales tax permit is valid and active by visiting the Connecticut Secretary of State’s website and entering the Business ID and Certificate Number.
– Sellers are also responsible for examining the certificate and evaluating whether the goods sold are reasonably consistent with the purchaser’s line of business. For example, if the buyer’s business is a car dealership but wants to purchase office supplies tax-free, the seller may wish to investigate further.
– Keep a file of resale certificates.
