Sales and Use Tax Certificate Explained With State Rules and Application Process

When a business purchases goods for resale, paying sales tax upfront creates unnecessary friction. These taxes aren’t meant for intermediaries,  they’re meant for the end customer.

A sales and use tax certificate helps you avoid that. It signals to suppliers that your purchases qualify for tax exemption. 

In this article, we’ll cover who can use this certificate, how to apply, how long it stays valid, and how the rules vary across states.

What a Sales and Use Tax Certificate Allows You to do?

A sales and use tax certificate allows qualifying businesses to purchase goods without paying sales tax at the point of sale but only when those goods are intended for resale or use in manufacturing. It serves as proof to vendors that the purchase is tax-exempt under state law.

Here’s what it enables:

• Avoid sales tax on resale goods – You don’t pay sales tax on items you plan to sell to customers.
• Claim use tax exemptions – In some cases, you may also avoid use tax on out-of-state purchases used in your business.
• Ensure compliance with state regulations – Proper use of the certificate helps avoid penalties and audits.

Who Can Use a Sales and Use Tax Certificate?

Sales and use tax certificates are primarily designed for businesses that resell goods or incorporate them into products for resale. This includes retailers, wholesalers, and manufacturers operating in taxable product categories.

In certain states, additional entities may qualify:

• Nonprofits – For tax-exempt purchases related to their mission.
• Contractors – When purchasing materials for tax-exempt projects.
• Government agencies or educational institutions – Depending on state rules.

Eligibility criteria vary by state, so it’s important to check the specific regulations before using a certificate.

How to Apply for a Sales and Use Tax Certificate?

Every state has its own form and terminology, but the application steps are broadly similar. Here’s how it typically works:-

Step 1: Go to Your State’s Tax Authority Website

Start by visiting your state’s Department of Revenue website. This is where you’ll register your business and access the resale or exemption certificate form. For example, in Texas, go to comptroller.texas.gov; in New York, it’s tax.ny.gov; and in California, it’s cdtfa.ca.gov, and so on.

Step 2: Register for a Sales Tax Permit (if required)

Most states require you to first register for a sales tax license or permit before you can use a resale certificate.

• In California, you must register for a Seller’s Permit through the CDTFA before issuing resale certificates.
• In New York, you apply for a Certificate of Authority before you can legally make tax-exempt purchases.
• In Texas, the resale certificate is tied to your Texas Sales and Use Tax Permit.

Step 3: Complete the Certificate Application

Fill out the certificate form with required details such as:

• Business name and address
• Tax ID or Sales Tax Permit Number
• Type of goods purchased for resale
• Signature and resale affirmation clause

Texas Form 01-339 is the state's resale certificate. New York Form ST-120 serves the same purpose. And, California’s CDTFA-230 is their resale certificate form.

Step 4: Submit and Store Your Certificate

Submit the form to vendors, not the state unless instructed otherwise. Keep copies of the completed certificate in your records.

• In California, vendors must keep a signed CDTFA-230 on file.
• In New York, the ST-120 must be retained by the seller to show tax wasn’t due.
• In Texas, you provide Form 01-339 directly to suppliers at the time of purchase.

What Should You Include While Filling the Certificate?

To ensure your certificate is valid and accepted by vendors or auditors, it must be filled out completely and accurately. Most states require similar information, even if the forms look different.

Here's what you'll typically need to include:

• Business Name and Address – This should match your official business registration details.
• Tax ID or EIN – Usually your state-issued sales tax permit number or your federal Employer Identification Number.
• Description of Goods or Services – Clearly state what you’re buying tax-free and confirm it’s for resale or exempt use.
• Vendor Information – The name and address of the seller you're purchasing from.
• Signature and Resale Declaration – A signed statement affirming the goods are for resale or other exempt purposes.

Mistakes like leaving fields blank or using an expired certificate can result in denied exemptions or later tax liability. Always double-check the form before submitting it to a vendor.

Does One Certificate Work in Every State?

No. A single certificate won’t cover you across all states. While many states accept a standardized form called the Multistate Tax Commission (MTC) Uniform Sales & Use Tax Certificate, others require their own version.

The MTC certificate is accepted in over 35 states, including Florida, Illinois, and Washington. But states like California and New York require a specific form and won’t accept the MTC version.

Here’s a quick comparison:

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Tip: Even if a state accepts the MTC certificate, vendors may still request their own form. Always verify with the supplier and review the state’s latest guidance.

How Long a Sales and Use Tax Certificate Stays Valid?

Sales and use tax certificates don’t last forever. Their validity depends on the rules of the issuing state. Some states issue certificates with fixed expiration dates (typically one to three years), while others treat them as valid indefinitely unless revoked or updated.

Here’s what you should keep in mind:

• Renewal timelines vary – Some states, like Florida, require renewal every year. Others, like Texas, issue certificates with no set expiration but recommend periodic updates.
• Vendors may set their own rules – Even if the state doesn’t require renewal, your suppliers might ask for updated certificates regularly.
• Update records proactively – Whenever your business address, entity name, or tax ID changes, notify your vendors and file updated certificates as needed.

What’s the Difference Between Resale Certificate Differs and Sales Tax License?

Though they’re often confused, a resale certificate and a sales tax license serve different purposes. You’ll likely need both if your business sells taxable goods.

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The resale certificate tells vendors you’re purchasing goods to resell, so you shouldn’t be charged sales tax. The sales tax license, on the other hand, gives you the legal authority to collect sales tax from customers and remit it to the state.

Talk to Inkle to streamline your sales tax compliance

Inkle helps you manage every part of your sales tax compliance. From registering in multiple states to renewing certificates and keeping up with local requirements, our team ensures you stay on track and audit-ready.

Schedule a demo with us, and streamline your sales tax compliance today.

Frequently Asked Questions

Do I need to submit a separate sales and use tax certificate for each vendor I purchase from?

Yes. Most states require you to provide a signed certificate to each vendor you buy from. Even if the state doesn’t mandate separate submissions, vendors typically need one for their records to justify not charging sales tax.

Will a digital copy of my sales and use tax certificate be accepted by state auditors during a compliance check?

Generally, yes. Most states and auditors accept electronic copies, as long as the certificate is complete, accurate, and can be produced upon request. Make sure it’s stored securely and easy to retrieve.

What should I do if the state where I’m buying doesn’t accept the Multistate Tax Commission resale certificate?

You’ll need to complete that state’s specific resale certificate form. States like California and New York require their own documents and won’t honor the MTC version.

Are businesses that sell services eligible to use a sales and use tax certificate for tax exemptions?

Only in certain cases. Most service-based businesses don’t qualify unless they also sell taxable goods or use tangible items in resale. State rules vary, so check with your Department of Revenue.

How can I find and download the correct sales and use tax certificate form for my state?

Visit your state’s Department of Revenue website and search for “resale certificate” or “sales and use tax exemption form.” Most sites offer downloadable PDFs or online submission portals.