An Illinois Certificate of Resale allows a business to purchase merchandise tax-free from suppliers for the purpose of reselling it. To avoid paying sales tax, the retailer needs to provide an Illinois Certificate of Resale (also referred to as a Resale Certificate) to their vendor.
Learn how the Illinois Certificate of Resale works, how to get one, and more.
How Does an Illinois Certificate of Resale Work?
When retailers purchase products to resell, they often don’t pay sales tax to the supplier. 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 example, when an auto parts store in Illinois purchases components, such as batteries or brake pads, to sell in their store by having a resale certificate, the store owner won’t typically pay state sales tax on their inventory purchase. When a customer purchases an auto part, the retailer will charge sales tax to the customer based on the full price of the item. Then, typically, at the end of the month, the store owner will take all of the collected state sales taxes and send them to the Illinois Department of Revenue..
It’s important to realize 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 Illinois Certificate of Resale (Form CRT-61)
Before a business starts selling products or providing taxable services, it must get an Illinois Sales Tax Permit (sometimes called a seller’s permit) from the Illinois Department of Revenue. After registering for the permit, the Department of Revenue provides a sales tax number used when filling out the Certificate of Resale.
Step 1: Begin by downloading the Illinois Certificate of Resale Form CRT-61
Step 2: Indicate the name and business address of the seller
Step 3: Enter the name and business address of the buyer
Step 4: Complete information about the buyer by selecting one of the three boxes:
- The purchaser is registered as a retailer with the state of Illinois (Enter the Account ID number)
- The purchaser is registered as a reseller with the state of Illinois (Enter the resale number)
- The purchaser is authorized to do business out-of-state and will resell and deliver property only to purchasers located outside the state of Illinois.
Step 5: Describe the tangible personal property being resold or list the invoice number and date of purchase.
Step 6: If the retailer is expected to purchase items frequently from the seller, the blanket certificate section should be used instead of completing a resale certificate for every invoice. In this section, one of the boxes must be selected, indicating whether all purchases are for resale or a certain percentage will be.
If, at any time, the percentage of purchases for resale changes, the certificate should be updated.
Step 7: The purchaser will certify that the property is for resale and sign and date the certificate.
Illinois Resale Certificate FAQs
How much does an Illinois Certificate of Resale cost?
There is no cost for a Certificate of Resale in Illinois.
Does an Illinois 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 of Illinois recommends that certificates be updated at least every three years.
Where do I file the Illinois sales tax exemption certificate?
In Illinois, the certificate is not filed with any government agency. Instead, it is kept by the seller (the business selling the merchandise to the reseller).
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 make the seller liable for Illinois 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 Illinois account ID or Illinois resale number is valid and active by visiting MyTax Illinois and using the Verify a Registered Business tool.
– 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.
How often is Illinois 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 Certificate of Resale the same as a Sales Tax Permit?
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.
These are two of several registrations your business may need. To learn more, check out our guide to Illinois business licenses.
