A seller’s permit is a state license that allows you to sell items at the wholesale or retail level and to issue resale certificates to suppliers. A seller’s permit allows a state to identify a business as a collector of sales tax.
When you sell or lease merchandise, vehicles, or other tangible personal property in your state, even temporarily, you are generally required to register with the State, and to pay sales tax on your taxable sales. Sometimes people incorrectly refer to a seller’s permit as a resale number or resale permit. Seller permits may also be referred to as a resale permit, resell permit, permit license, reseller permit, reseller number, resale ID, state tax ID number, or reseller license permit.
As seller’s permits are issued by the state tax department, by applying for a seller’s permit you may be responsible for tax assessments from the state based on your taxable sales or projected taxable sales. It is your responsibility to file tax returns and pay assessed taxes.
Seller permits are required for sole proprietors, partnerships, limited liability companies and corporations that sell tangible property to the public as a wholesaler or a retailer.
Tangible property is a physical item such as a toy, jewelry or a vehicle (just a few examples). A seller’s permit allows a state to identify a business as a collector of sales tax. Some states may call this permit a “sales tax” permit or license.
Tangible property may also include construction materials for homes and repair. Some states may require service-oriented businesses (accountants, lawyers, therapists) to collect a tax, which would require the business owner to obtain a seller’s permit. Some foods maybe taxable as well, depending on the state.
When you have a garage sale and sell used items, you are generally not required to hold a seller’s permit unless you have more than two garage sales in a 12-month period or are required to hold a seller’s permit for being engaged in the business of selling merchandise, goods or items (tangible personal property).
Making sales of merchandise, goods or other items in most states without first getting a seller’s permit violates the law and subjects you to fines and penalties. Most state law requires a seller’s permit be held for warehouse locations when: the retailer has one or more sales offices in this state, the sale is negotiated out of state, and the order is filled from the retailer’s in-state stock of goods at the warehouse.
You are not required to hold a seller’s permit if all your sales are made exclusively in interstate or foreign commerce, and you make no sales in that state. However, your business may meet the requirements of a “qualified purchaser” and you may be required to register for a use tax account as discussed in the next section.
Resale certificates identify a business as having the right to make certain nontaxable purchases.
These include wholesale items for resale and items that are purchased for use in the manufacture of products for resale. Resale certificates prevent the double collection of sales tax on products. Sales tax is collected further down the road when the item is purchased by the final customer. The seller of the original items will require the purchaser to provide a copy of a resale certificate to keep on file for tax purposes. Resale certificates can be issued once you have your seller’s permit (which provides you your state tax ID number).
Businesses buying for resale purposes must provide a resale certificate to the seller to avoid paying the sales tax. A copy of the certificate is the proof the seller needs if the state ever questions why he did not collect tax for the purchase. Resale certificates usually require the business owner to identify the items they need to purchase tax-free to prevent them from purchasing other items. Some states may require a business to complete an application to obtain a resale certificate and others may provide a list of information the purchaser must provide in the form of a letter, memorandum or note to the seller. Resale certificates are not usually transferable across state lines. Resale certificates also are known as nontaxable transaction certificates, sales tax exemption certificates, and sales and use tax resale certificates.
The amount of personal information that must be submitted by individuals or businesses to obtain a seller’s permit vary by state. Some states may require more or less, but below is a list of paperwork generally required to obtain a seller’s permit:
Social Security Number
Date of birth
Contact information including email address
Driver’s license number, state ID number, passport or military ID
Incorporation date, corporate number, and FEIN number, if a corporation or LLC
The name and location of bank accounts, and names of those maintaining the accounts
Information on suppliers
Projected monthly taxable sales
Not all of the information may be needed; require information varies from state to state. You may also be able to obtain a seller permit free from your state; check with your local state’s tax department. Get started with our online forms – we will contact you in case anything is missing.
Seller permits may also be referred to as a resale permit, resell permit, permit license, reseller permit, reseller number, resale ID, state tax ID number, or reseller license permit. A seller’s permit is entirely separate from a business license. Each state may have a different name for the seller’s permit, but most states require individuals or businesses to obtain one if their business activities involve selling merchandise, vehicles, or any other type of property.
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