A North Dakota Certificate of Resale, also known as a resale license or reseller’s permit, is a document that allows businesses to avoid paying sales tax on products that are purchased from wholesalers or manufacturers to resell them to customers.
Learn more about how the North Dakota Certificate of Resale works, how to get one, and more.
What is a North Dakota Certificate of Resale?
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 sales tax, the retailer charges sales tax to their customer on the final value of the merchandise.
For instance, when a furniture store in North Dakota orders a new line of sofas to sell in their showroom, and by having a resale certificate, the furniture store owner isn’t required to pay sales tax on that purchase. When a homeowner decides to buy one of the sofas from the retailer, the furniture store will apply sales tax based on the full retail price of the sofa.
The furniture store gathers the sales tax from all their transactions and, generally monthly, submits the total sales tax to the state. This process enables the tax obligation to be smoothly transferred to the end user while the furniture store performs the role of tax collector for the state.
It’s important to note that the sales tax exemption is only intended for inventory that will be resold and is not intended for the tax-free purchase of items used in normal business operations, such as paper, pens, etc.
How to fill out the North Dakota Certificate of Resale (Form SFN 21950)
Before a business starts selling products or providing taxable services, it must first get a North Dakota Sales Tax Permit (sometimes referred to as a seller’s permit, sales tax number, or sales tax license) from the North Dakota Office of State Tax Commission. After registering, the North Dakota Office of State Tax Commissioner will provide a Sales and Use Tax Permit Number, which will be needed to fill out the Certificate of Resale.
Step 1: Begin by downloading the North Dakota Certificate of Resale Form SFN 21950
Step 2: Enter the purchaser’s State of origin and State and Use Tax Permit number
Step 3: Identify what the purchaser’s business sells, leases, or rents
Step 4: Include the name of the seller
Step 5: Enter the purchaser’s business name and address, then sign the certificate
SFN 21950 Certificate of Resale Form
North Dakota Certificate of Resale FAQs
How much does a North Dakota Certificate of Resale cost?
There is no cost for a Certificate of Resale in North Dakota.
Does a North Dakota Certificate of Certificate Expire?
A North Dakota Certificate of Resale does not expire.
How often is North Dakota 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 filing frequency instead.
Where do I file the North Dakota Certificate of Resale?
In North Dakota, the Certificate of Resale is not filed with any government agency. Instead, it is kept by the seller (the business selling the merchandise for resale).
Is a Certificate of Resale the same as a Sales Tax Permit?
The Sales Tax Permit and Certificate of Resale 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 North Dakota business licenses.
Are sellers required to accept resale certificates?
Sellers are not required to accept resale certificates for tax-exempt purchases; however, most do. If the vendor doesn’t accept the certificate, the buyer will have to pay sales tax on the merchandise being purchased. A credit for the sales taxes paid is usually available when filing the North Dakota sales tax return.
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 paying North Dakota 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 North Dakota Sales u0026amp; Use Tax Permit is valid by running a Sales & Use Tax Permit Inquiry on the North Dakota State Tax Commissioner’s website.
– 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.
