If you are a business owner in Ohio, you will probably want to get a Sales Tax Exemption Certificate to purchase goods for resale without paying sales tax. A resale certificate allows businesses to buy items without paying sales tax as long as they intend to resell them.
Learn more about how the Ohio Sales Tax Exemption Certificate works, how to get one, and more.
Related: Guide to starting a business in Ohio
What is an Ohio Sales Tax Exemption Certificate?
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 example, let’s consider a furniture store in Ohio. With a valid sales tax exemption certificate (also called a resale certificate in some states), the retail store can purchase furniture from manufacturers without paying sales tax on the transaction. Once the furniture is sold to a retail customer, the furniture store will charge sales tax to the end users, who are the customers purchasing the furniture for personal use. The retailer collects the tax from the retail sale of all transactions and, typically monthly, sends the accumulated sales tax to the state.
Please note that the sales tax exemption is only intended to be used for inventory that will be resold and not intended for the tax-free purchase of items used in normal business operations such as paper, pens, etc.
How to fill out the Ohio Sales and Use Tax Exemption Certificate
Before a business starts selling products or providing taxable services, it must first get an Ohio Vendor’s License from the Ohio Department of Taxation. The Vendor’s License is sometimes referred to as a seller’s permit, sales tax number, or sales tax license. After registering for the license, a Vendor’s license number will be provided by the Ohio Department of Taxation, which will be used when filling out the exemption certificate.
Ohio uses two types of certificates. One is the Single Unit Exemption Certificate (Form STEC U) or the Blanket Certificate (Form STEC B). The Single Unit Exemption Certificate is for one-time transactions, while the Blanket Certificate is what most retailers will use if they are purchasing inventory for resale.
Step 1: Begin by downloading the Ohio Sales and Use Tax Exemption Certificate STEC U for a single transaction or STEC B for multiple transactions.
Step 2: Enter the vendor’s name
Step 3: Describe the reason for claiming the sales tax exemption. If purchasing merchandise for resale, some wording regarding the resale of products will likely be included
Step 4: Include the name, type of business, address, title, Vendor’s License Number, and signature of the purchaser.
Ohio Sales Tax Exemption Certificate FAQs
How much does an Ohio Sales Tax Exemption Certificate cost?
There is no cost for a Sales and Use Tax Exemption Certificate in Ohio
Does an Ohio Resale Certificate Expire?
Ohio Resale Certificates do not expire.
Where do I file the Ohio Sales Tax Exemption Certificate?
In Ohio, the Sales Tax Exemption Certificate is not filed with any government agency. Instead, it is kept by the seller (the business selling the merchandise for resale).
How often is Ohio 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 semi-annual filing frequency instead.
Is a Sales Tax Exemption Certificate the same as a Vendor’s License?
No – The Vendor’s License and Exemption Certificate are commonly thought of as the same thing, but they are actually two separate documents. The Vendor’s License 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.
In addition to the Exemption Certificate and Vendor’s License, your business may also need to register for additional items. For more information, check out our guide to Ohio 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. In most cases, a credit for the sales taxes is available when filing the Ohio sales tax return.
What steps should a business take to accept a resale certificate?
When a business is presented with a resale certificate, the burden of proof is on the seller to verify that the buyer’s information is correct and to keep these records.
If audited, the Ohio Department of Taxation requires the seller to have a correctly filled-out certificate. Without it, the seller could end up owing sales taxes that should have been collected from the buyer, in addition to penalties and interest.
Before accepting a resale certificate, a seller should:
1) Review the resale certificate to make sure it is completely filled out.
2) Verify the purchaser’s Ohio Vendor License is active on the Department of Taxation’s website.
– The first 88 tabs of the report are for active county Vendor’s Licenses. The first tab is “County VL_1,” which refers to Adams County, while the last county tab, “County VL_88,” is Wyandot County.
– Transient vendors, who are those with temporary locations, vending machines, or service providers, are listed on the “Transient VL_89” tab. While out-of-state sellers are listed on the “Seller’s Use_91” tab.
3) 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 they want to purchase office supplies tax-free, the seller should investigate further.
4) Keep a file of resale certificates in case of an audit.
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