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What is a blanket certificate of exemption?

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Quick Answer

A blanket certificate of exemption authorizes a sales tax exemption for all similar purchases between a buyer and seller, according to the New York Department of Taxation and Finance. Many states assess sales tax on purchases of goods, and the only way a buyer can avoid the tax is by showing a sales tax exemption certificate.

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Full Answer

Although each state passes its own laws regarding sales taxes, the ones that assess such taxes also allow certain types of buyers to make tax-free purchases. These exempt buyers must provide a seller with a sales tax exemption certificate at the time of the sale to prove the buyer does not have to pay sales tax on the transaction, as noted by the New York Department of Taxation and Finance. Typically, the buyer produces a separate certificate for each individual sale, but if a buyer does business with a seller regularly for the same type of goods, the buyer can put a blanket certificate of exemption on file with the seller that applies to all future transactions.

Buyers that typically fall into a state's sales tax exempt category include charitable, educational and religious organizations, as explained by the Texas Comptroller of Public Accounts. Most states require the buyer fill out an application and only use tax-free purchases to further the buyer's exempt purposes.

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