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How To Get A Vermont Sales Tax Exemption Certificate

How To Get A Vermont Sales Tax Exemption Certificate

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How To Get A Vermont Sales Tax Exemption Certificate

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

How much does a Vermont Sales Tax Exemption Certificate cost?

There is no cost for a Sales Tax Certificate in Vermont.

Does a Vermont Sales Tax Exemption Certificate?

Vermont Resale Exemption Certificates do not expire.

Where do I file the Vermont Sales Tax Exemption Certificate?

In Vermont, 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 the Vermont sales tax due?

Most new businesses in Vermont 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.

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 will be provided by filing the Vermont sales tax filing. 

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.  Failing to verify this information may put the liability of paying Vermont sales taxes on the seller.

Before accepting a resale certificate, a seller should:

– Review the resale certificate to make sure it is completely filled out. 
– Verify the purchaser’s Vermont Tax Account Number is valid and active by calling the Department of Taxes at 802-828-2505 Option 2.   – 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 for at least three years from the date of the last transaction. 

Is a Sales Tax Exemption Certificate the same as a Sales Tax Number?

The Sales Tax Number and Sales Tax Exemption Certificate are commonly thought of as the same thing, but they are actually two separate documents. The Sales Tax Number allows a business to sell and collect sales tax from taxable products and services in the state, while the Exemption Certificate allows the retailer to make tax-exempt purchases for products they intend to resell.

Author

  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

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How To Get A Vermont Sales Tax Exemption Certificate

How To Get A Vermont Sales Tax Exemption Certificate

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