How Do You Apply for a Sales Tax Exemption?


Quick Answer

Sales tax rates and laws differ by state and locality, as reported by the U.S. Small Business Administration. Sales tax exemptions are generally provided for resold items at retailers and for nonprofit organizations. Applying for sales tax exemption must occur on a local level since the federal government is not involved.

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Full Answer

Applications for sales tax exemption are usually available on state websites or may be obtained from the state directly, as the SBA claims. Sales tax exemption may require a copy of federal tax-exemption status from the IRS for nonprofit organizations. Retailers do not usually pay sales tax on items purchased wholesale and resold to customers. The customer pays sales tax and retailers collect the tax for the state.

Retailers are issued a number by the state certifying exemption from sales tax. Retail businesses must assess and collect sales taxes based on local and state rates. These funds are submitted directly to the state or local government. Businesses should contact state and local governments directly to apply for wholesale exemption from sales tax, find the correct rates to charge, and obtain instructions for how to submit sales tax returns. The SBA has more information about how to identify contacts and apply for sales tax exemption.

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