If you make purchases for resale or intend to sell taxable items and services in Virginia, you should 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 a resale certificate, how to get one, and more.
What is a Virginia Sales Tax Certificate of Exemption?
In Virginia, when 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 your products and then send it 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, 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.
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: Describe the buyer’s business.
Step 6: The purchaser will certify that the property 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?
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.
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 make the seller 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 wants 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.
These are two of several registrations your business may need. To learn more, check out our guide to Virginia business licenses.
