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What is a business resale certificate?

A:

Quick Answer

A business resale certificate is used when a purchase of a product is made for resale and will not be subject to sales tax, according to the Board of Equalization, or BOE. The resale certificate confirms to the seller the product will be resold.

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Full Answer

When buying merchandise for the purpose of reselling, a resale certificate guarantees the product was bought for resale.

The BOE requires certain information for a resale certificate, such as the name and address of the person making the purchase. Also required is a seller's permit number and what is being purchased.

The certificate must list the products being purchased for resale, state that the property will be resold and that the sale was a nontaxable transaction, the date of the sale and a signature.

In some cases, a business can make a nontaxable purchase without a seller's permit, such as if the resale is not being made in the same state. In that case, the information that the person making the purchase does not have a reseller's permit should be written on the certificate.

If the buyer is purchasing items for personal use as well as for resale, a detailed list of the items for which purchase must be included on the certificate. Resale certificates are available for sale in most office supply stores.

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