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How To Get A Virginia Sales Tax Certificate Of Exemption

How To Get A Virginia Sales Tax Certificate Of Exemption

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How To Get A Virginia Sales Tax Certificate Of Exemption

If you make purchases for resale or intend to sell taxable items and services in Virginia, you need to apply for a Virginia Sales Tax Certificate of Exemption. You can get this certificate from the Virginia Department of Taxation.

A Sales Tax Certificate of Exemption (called a Resale Certificate in many states) allows you to purchase items and services tax-free. This can save your business a lot of money since you won’t have to pay sales tax on the items you purchase for resale.

Learn more about what a resale certificate is, how to get one, and more.

Related: Guide to starting a business in Virginia

What is a Virginia Sales Tax Certificate of Exemption?

In Virginia, when you’re in the business of selling products, you usually don’t have to pay sales tax when you buy inventory to resell. Instead, you collect sales tax from your customers when they buy the products from you and then send this tax to the Virginia Department of Taxation.

For instance, if you run a store selling musical instruments in Virginia and you buy guitars to sell, you won’t pay sales tax on these guitars if you have a Sales Tax Certificate of Exemption (also referred to as a resale certificate, seller’s permit, wholesale license, or reseller’s license) and instead, you charge sales tax to your customers when they purchase the guitars from you. After collecting sales tax on all sales, you send the total amount to the state, typically at the end of the month.

This system shifts the duty of paying the sales tax from you, the retailer, to your customers. You act as the middleman by collecting the sales tax and then passing it on to the state.

It’s important to note 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 Virginia Resale Certificate of Exemption (Form ST-10)

Before a business starts selling products or providing taxable services, it must first get a Virginia Sales Tax Certificate from the Virginia Department of Taxation. The Sales Tax Certificate is sometimes referred to as a seller’s permit, sales tax number, or sales tax license.

Step 1: Begin by downloading the Virginia Resale Certificate of Exemption Form ST-10 

Step 2: Identify the name and business address of the seller

Step 3: Check the box that represents the sales tax exemption.  Most businesses purchasing merchandise for resale will choose the first box, “Tangible personal property for RESALE only.”

Step 4: Enter the buyer’s name, Virginia sales tax account number, business name, and address.

Step 5: Provide a description of the buyer’s business.

Step 6: The purchaser will certify the property being purchased is for resale and sign the certificate. 

Virginia Sales Tax Exemption Certificate FAQs

How much does a Virginia Sales Tax Exemption Certificate cost?

There is no cost for a Certificate of Exemption in Virginia.

Does a Virginia Resale Certificate Expire?

A Virginia Certificate of Exemption does not expire until revoked by the Virginia Department of Taxation.

Where do I file the Virginia Sales Tax Exemption Certificate?

In Virginia, the Sales Tax Certificate of Exemption is not filed with any government agency. Instead, it is kept by the seller (the business selling the merchandise for resale).

How often is Virginia sales tax due?

Most new businesses in Virginia 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 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 when filing the Virginia sales tax filing. 

What steps should a business take to accept a Certificate of Exemption?

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 result in the seller being liable for Virginia sales taxes.

Before accepting a resale certificate, a seller should:

Review the resale certificate to make sure it is completely filled out. 
– Verify the purchaser’s Virginia account ID is valid and active by calling the Department of Taxation at 804.367.8037.
– 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.  
– Keep a file of resale certificates in case of an audit. 

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

No – The Sales Tax Certificate and Sales Tax Certificate of Exemption are commonly thought of as the same thing, but they are actually two separate documents. The Sales Tax Certificate allows a business to sell and collect sales tax from taxable products and services in the state, while the Sales Tax Certificate of Exemption allows the retailer to make tax-exempt purchases for products they intend to resell.

The Department of Taxation will provide a sales tax account number after Registration. This number will be listed on the Resale Certificate of Exemption.

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 Virginia Sales Tax Certificate Of Exemption

How To Get A Virginia Sales Tax Certificate Of Exemption

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