When a business purchases inventory to resell, it can often do so without paying sales tax. To do so, the retailer needs to provide its vendor with an Idaho Sales Tax Resale Certificate.
Learn how the Idaho Resale Certificate works, how to get one, and more.
How Does An Idaho Resale Certificate Work?
When retailers purchase products to resell, they often don’t pay state 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, when a farming supply store in Idaho purchases items like seeds, fertilizer, or farming tools from a wholesaler to sell in their store, by having a resale certificate, the store owner won’t pay sales tax on these transactions. When a home gardener purchases these supplies, the retailer will charge sales tax to the customer based on the full price of the items. Then, typically, at the end of the month, the store owner takes all of the money collected as state sales taxes and sends them to the Idaho State Tax Commission.
Note that the sales tax exemption is only intended for tangible personal property 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 Idaho Sales Tax Resale Certificate (Form ST-101)
Before a business starts selling products or providing taxable services, it must first get an Idaho Seller’s Permit (sometimes referred to as a sales tax permit) from the Idaho State Tax Commission. After registering for the permit, a seller’s permit number will be issued by the State Tax Commission, which will be needed to fill out the Sales Tax Resale Certificate.
Step 1: Download Form ST-101 from the Idaho State Tax Commission
Step 2: Enter the buyer’s name (the business reselling merchandise)
Step 3: Enter the seller’s name (the business selling to the reseller)
Step 4: Indicate what the business does, the products sold, and the seller’s permit number.
Step 5: Enter any producer exemptions. This section is only used by a few industries where all goods are tax-exempt.
Step 6: This is only used by certain tax-exempt buyers.
Step 7: If your business provides contractor services, you will enter your information here.
Step 8: A few other types of goods or groups are eligible to purchase goods without paying sales tax. These aren’t common for a small business.
Step 9: Sign and date the form.
Idaho Resale Certificate FAQs
How much does an Idaho Resale Certificate?
There is no cost for an Idaho Resale Certificate.
Does an Idaho Resale Certificate Expire?
While sales tax numbers can become inactive or revoked if not used, resale certificates will not expire. To ensure the buyer’s information is up-to-date, the state recommends that certificates be updated at least every three years.
Where do I file the Idaho Resale Certificate?
In Idaho, the certificate is not filed with any government agency. Instead, it is kept by the seller (the business selling the merchandise to the reseller).
How often is Idaho sales tax due?
Most new businesses are set up to file and pay sales and use tax monthly, but depending on the amount of tax collected, your business may have a different filing frequency.
Is a Resale Certificate the same as a Seller’s Permit?
No – The Seller’s 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.
These are two of several registrations your business may need. To learn more, check out our guide to Idaho 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 Idaho 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 Idaho Seller’s Permit by logging into the Idaho State Tax Commission’s Taxpayer Access Point (TAP) website and selecting “Validate Seller’s Permit.”
– 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 should investigate further.
– Keep a file of resale certificates.
