A resale certificate is a document that allows a business to buy merchandise that will be resold without paying sales tax. To be eligible for the sales tax exemption, the retailer will provide their vendor a South Carolina Resale Certificate.
Learn more about how a South Carolina Resale Certificate works, how to get one, and more.
What is a South Carolina Resale 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 home decor store in South Carolina. With a valid resale certificate (also referred to as a reseller number, seller’s permit, exemption certificate, wholesale license, or reseller’s license), the store owner can purchase decorative items like wall art, lamps, and vases from suppliers without paying state sales tax on those transactions. When a retail customer visits the store and purchases a wall art piece, the retailer will charge sales tax to the customer based on the item’s full price. The retailer will collect the sales tax from all their transactions and periodically remit the sales tax to the South Carolina Department of Revenue.
It’s important to know 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 South Carolina Resale Certificate (Form ST-8A)
Before a business starts selling products or providing taxable services, it must first get a South Carolina Retail License from the South Carolina Department of Revenue. The Retail License is sometimes referred to as a seller’s permit, sales tax number, or sales tax license. After registering for the license, the Department of Revenue will provide a retail license number, which will be used when filling out the Resale Certificate.
Step 1: Begin by downloading the South Carolina Resale Certificate Form ST-8A
Step 2: Identify the name and business address of the seller
Step 3: Include the kind of business the purchaser is engaged in
Step 4: Describe the items that are sold, leased, or rented from the purchaser
Step 5: Identify the name and business address of the buyer
Step 6: Enter the purchaser’s South Carolina Retail License Number
Step 7: The purchaser will certify that the property is for resale, including their name and title, and sign and date the certificate.
South Carolina Resale Certificate FAQs
How much does a South Carolina Resale Certificate cost?
There is no cost for a Resale Certificate in South Carolina.
Does a South Carolina Resale Certificate Expire?
South Carolina Resale Certificates do not expire as long as the purchaser’s business is in operation.
How often is South Carolina 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 South Carolina Resale Certificate?
In South Carolina, the Resale 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 state 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 make the seller liable for South Carolina sales taxes.
Before accepting a resale tax certificate, a seller should:
– Review the resale certificate to make sure it is completely filled out.
– Verify the purchaser’s South Carolina Retail License is valid and active by calling the Department of Revenue at 844-898-8542, option 2, then option 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 wants to purchase office supplies tax-free, the seller should investigate further.
– Keep a file of resale certificates in case of audit.
Is a Resale Certificate the same as a Retail License?
The Retail License and Resale Certificate are commonly thought of as the same thing, but they are actually two separate documents. The Retail 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.
These are two of several registrations your business may need. To learn more, check out our guide to South Carolina business licenses.
