Sales tax exemption certificates allow businesses to make tax-free purchases on items that will be resold. To do so, the retailer must provide their vendor with a Utah Exemption Certificate (commonly known as a Resale Certificate, Wholesale License, and similar names).
Learn more about the Utah Sales Tax Exemption Certificate, how to get one, and more.
What is a 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. The retailer then sends the collected sales tax to the Utah State Tax Commission.
For example, when a gourmet kitchenware shop in Utah orders a selection of high-end pots and pans to sell in their store, by having a sales tax exemption certificate, the shop owner will not pay sales tax on the purchase of inventory. Sales tax comes into play when a retail customer buys cookware from the shop for use at home. The retailer adds the sales tax to the total price of the cookware to the end user.
The gourmet kitchenware shop accumulates the state sales tax from all their transactions throughout a specified period, usually at the end of the month, and then sends the sales tax to the state.
It’s worth noting 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.
Steps to fill out the Utah Sales Tax Exemption Certificate (Form TC-721)
Before a business starts selling products or providing taxable services, it must first get a Utah Sales Tax License from the Utah State Tax Commission. After registering for the license, the Utah State Tax Commission will provide a sales tax number, which will be listed on the Resale Exemption Certificate.
Step 1: Begin by downloading the Utah Exemption Certificate Form TC-721
Step 2: Identify the name, address, phone number, name, title and signature of the purchaser
Step 3: Enter the name of the supplier
Step 4: For businesses requesting a sales tax exemption because of reselling goods, enter the buyer’s sales tax license number
Step 5: If reselling goods, check the first box, Resale or Release
Utah Sales Tax Exemption FAQs
How much does a Utah Sales Tax Exemption Certificate cost?
There is no cost for a Sales Tax Exemption Certificate in Utah.
Does a Utah Resale Exemption Certificate Expire?
A Utah Resale Exemption Certificate does not expire, provided the buyer purchases from the seller at least once every 12 months.
How often is Utah sales tax due?
Most new businesses in Utah are set up to file and pay sales and use tax monthly. Depending on the amount of tax collected, your business may have a semi-monthly, quarterly, semi-annual, or annual basis filing frequency instead.
Where do I file the Utah Exemption Certificate?
In Utah, the Exemption 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 receive a refund or credit for the sales tax paid on items purchased for resale from the state.
Is a Sales Tax Exemption Certificate the same as a Sales Tax License?
No – The Sales Tax License and Sales Tax Exemption Certificate are commonly thought of as the same thing, but they are actually two separate documents. The Sales Tax License allows a business to sell and collect sales tax from taxable products and services in the state, while the Sales Tax Exemption 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 Utah business licenses.
