A Vermont Sales Tax Exemption Certificate is a document that allows a business to purchase goods and services tax-free from suppliers for the purpose of reselling them. The certificate is also sometimes referred to as a “resale permit” or a “reseller’s permit.”

Check out the rest of this guide to determine who should get a sales tax exemption permit, what products and services are taxable, how to register, and reporting requirements.

Related: Guide to starting a business in Vermont

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 collected sales tax is then sent by the retailer to the Vermont Department of Taxes.

For instance, when a jewelry store in Vermont acquires a new collection of diamond earrings to sell in its shop, the owner will not typically pay sales tax on the purchase of inventory because they possess a sales tax exemption certificate. The sales tax becomes applicable when a retail customer purchases the diamond earrings from the store. At this stage, the retailer imposes the sales tax on the total cost of the earrings.

The jewelry store collects the state sales tax from all their transactions over a specified duration, typically at the end of the month, and sends these funds to the state. This mechanism effectively shifts the burden of paying the sales tax from the retailer to the retail customer, with the retailer acting as an intermediary, gathering and delivering the tax to the state.

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.

Steps to fill out the Vermont Certificate of Exemption – Form S-3

To get a Certificate of Exemption in Vermont, you must first register with the Vermont Department of Taxes to get a Vermont Sales Tax Number. After registering, a Sales & Use Tax Account Number will be provided by the Vermont Department of Taxes and will be used when filling out the Certificate of Exemption.

Step 1: Begin by downloading the Vermont Certificate of Exemption Form S-3 
Step 2:– Check whether the certificate is for a single purchase or multiple purchases.  If the retailer is expected to be purchasing items frequently from the seller, instead of completing a resale certificate for every invoice, the multiple purchase (also known as a blanket certificate) box should be checked
Step 3: Identify the name, FEIN (Federal Employment Identification Number), address, and description of the buyer’s business
Step 4: Include the name and address of the seller
Step 5: Describe the merchandise being resold  
Step 6: Check the box with the reason for claiming an exemption.  Most businesses reselling the merchandise being purchased will check the first box “For resale/wholesale.”  In that case, include the buyer’s Vermont Sales & Use Tax Account Number.
Step 7: The purchaser will certify the property being purchased is for resale and sign and date the certificate. 

Vermont Sales Tax Exemption Certificate FAQs