Resale certificates, also known as resale permits or sales tax exemption certificates, are essential documents for businesses that sell goods for resale. Properly completed, these certificates allow vendors to sell items without charging and collecting sales tax to their customers. The frequency of updating resale certificates depends on the specific regulations of each state, but it is advisable to review and update these documents periodically to ensure compliance and avoid any potential legal issues.
Typically, resale certificates should be updated annually. This ensures that all information remains current and reflects any changes in the business structure, such as a change of address, business name, or ownership. Annual updates also provide an opportunity to verify that all suppliers have the correct and most recent certificate on file. Some states may have specific requirements for updating certificates less frequently, such as Illinois and its three-year recommendation for the CRT-61 form, but it is crucial for businesses to be updating certificates regularly to confirm that you are in compliance with record keeping requirements to document exempt sales.
As a vendor or supplier, it is good practice to have your customers annually update their certificates on file with you, providing you with the most up-to-date information for their business. Keeping resale certificates up to date not only ensures legal compliance but also helps maintain good relationships with customers, who rely on accurate documentation to manage their own tax obligations. By staying proactive and attentive to the status of resale certificates, businesses can avoid unnecessary complications upon an audit and focus on their core operations.
If you are selling goods to a state that you do not have nexus in, collecting and verifying resale certificates is still important for when economic nexus thresholds are reached or if contacted by a state department of revenue. Some states, such as California, require registration within their state for a reseller certificate to be valid. It is important to be aware of the specific rules of the states where you are conducting business.
If you have any questions in regard to resale certificates or record keeping, please contact a member of your Porte Brown advisory team, and we can work with you to address any questions you may have.
