A New York Resale Certificate is a document issued by the New York Department of Taxation and Finance that allows businesses to buy goods for resale without paying sales tax on those goods.
Learn more about how a New York Resale Certificate works, how to get one, and more.
What is a New York Resale Certificate?
When retailers purchase products to resell, they often don’t pay sales tax to the supplier. The state sales tax will still be paid, but instead of the retailer paying sales tax, the retailer charges sales tax to their customer on the final value of the merchandise. The retailer then sends the collected sales tax to the New York Department of Taxation and Finance.
For instance, consider a computer store in New York that buys laptops to sell in its store. With the resale certificate, the store won’t pay sales tax on inventory purchased from the wholesaler. Then, when an individual purchases a laptop, the retailer will apply sales tax based on the full retail price of the laptop.
The computer shop collects state sales tax from all its sales and usually submits the accumulated sales tax to the state once a month.
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 New York Resale Certificate (Form ST-120)
Before a business starts selling products or providing taxable services, it must first get a New York Sales Tax Certificate of Authority (sometimes referred to as a seller’s permit, sales tax permit, or sales tax license) from the New York Department of Taxation and Finance. After registering for the certificate, the New York Department of Taxation and Finance will provide a Certificate of Authority Number, which will be needed to fill out the Resale Certificate.
Step 1: Begin by logging into your NY.gov Business account or download Form ST-120.
Step 2: Identify the name and business address of the seller.
Step 3: Identify the name and business address of the buyer.
Step 4: If the retailer is expected to purchase items frequently from the seller, the blanket certificate box can be checked instead of completing a resale certificate for every invoice. Otherwise, select a single-use certificate.
Step 5: Describe the purchaser’s type of business and the primary products sold.
Step 6: New York-based vendors will enter their Certificate of Authority Number of the vendor (purchaser) in Part 1.
Step 7: New York-based vendors will select whether the purchase being made is:
- Tangible personal property for resale or certain services
- A service for resale; or
- Restaurant-type food, heated food, or heated drink for resale
Step 8: Out-of-state purchasers will enter their state of registration and sales tax ID number in addition to the purchased merchandise.
Step 9: The purchaser will certify that the property is for resale and sign and date the sales tax exemption form.
Form ST-120 Resale Certificate
New York Resale Certificate FAQs
How much does a New York Resale Certificate cost?
There is no cost for a Certificate of Exemption in New York.
Does a New York Resale Certificate Expire?
If selecting a blanket certificate, the resale certificate does not expire.
How often is New York 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 quarterly or annual filing frequency instead.
Where do I file the New York Resale Certificate?
In New York, the certificate is not filed with any government agency. Instead, it is kept by the seller (the business selling the merchandise for resale).
Are sellers required to accept resale certificates?
Vendors can decline resale certificates, even if they’re valid and properly completed. While most accept resale certificates as standard practice, there’s no legal requirement for them to do so.
If a vendor refuses to accept your resale certificate, you can still complete the purchase by paying the sales tax. The tax paid in this situation isn’t lost – you can file a claim with the New York Department of Taxation and Finance to receive a refund or credit for the sales tax paid on items purchased for resale.
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 New York 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 New York Certificate of Authority Number is valid by visiting the Department of Taxation and Finance’s Registered Sales Tax Vendor Lookup database.
– 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.
