A state-by-state guide to exemption certificates
We’ve talked about sales tax exemptions many times on this blog. The big caveat is always the same: Each state has its own rules. Figuring out sales tax exemption certificates can be particularly daunting.
To that end, here’s a primer on sales tax exemption certificates. You can also just jump directly to our state-by-state guide to certificate requirements.
What is a sales tax exemption certificate?
A sales tax exemption certificate is a document that allows a business, organization, or individual to purchase normally taxable goods or services tax free.
Purchasers apply for exemption certificates and provide them to sellers at checkout. In the case of a blanket certificate, it’s not necessary to use a new certificate for each purchase, as long as the qualifying factors are the same and the certificate is valid.
Sellers are required to collect and validate certificates prior to exempting tax. If a certificate is incomplete, expired, or unavailable, the seller is responsible for collecting tax and the purchaser can later request a refund from the state.
Sellers store each certificate, so it’s accessible for future purchases or to validate the exemption if the business is audited.
What’s the difference between an exemption certificate and a resale certificate?
- An exemption certificate is a document that allows tax-exempt purchases based on the status or circumstances of the purchaser.
- A resale certificate is a document that allows a business to make tax-exempt purchases based on the assumption the goods will be resold and the sales tax will be paid by the end consumer.
Some states use the same document for both exemption and resale certificates. Others have different documents for each.
Who can use a sales tax exemption certificate?
Getting a sales tax exemption sounds like a pretty sweet deal, but alas, it’s not an option for everyone. Exempt entities vary for each state, but often include:
- Nonprofit organizations
- Religious or educational affiliations
- Federal, state, and local government
- Specific industries
- Manufacturers
Do states use the same exemption certificates for all exempt purchases?
No. Most states have certificates for specific types of exemptions. And collecting the wrong certificate for an exemption is often the same as having no certificate: The seller can be liable for the uncollected taxes.
Some states, like California and Kentucky, have different certificates for each type of exemption, including specific industries. This can also be true for different types of nonprofit organizations, as is the case for Colorado and Maine, to name a couple.
How long do you need to keep exemption certificates on file?
Exemption certificates are worth every penny of tax you’ve omitted, and possibly more. If you’re audited and can’t produce a certificate to justify an exempt sale, you may be responsible for the applicable taxes, as well as potential penalties.
States have their own statutes of limitations for sales tax audits. Certificates from exempt purchases should be kept for at least the time frame for which you could be assessed.
There are also variations on when certificates expire. Some certificates never expire, some are only good for a year. Even if there’s no official expiration, it’s good to verify the information is up to date every couple of years or so. Changes to a business, such as name, address, and ownership, can void an exemption certificate.
Can exempt sales establish nexus?
Sales tax nexus is a relationship between a business and a state that creates an obligation for the business to register to collect tax and file returns in a given state. All states with a general sales tax (plus Alaska, Puerto Rico, and Washington, D.C.) have economic nexus conditions based on a business’s amount of sales and/or number of transactions.
Each state has its own rules concerning whether exempt sales count toward economic nexus totals. So even if you aren’t required to collect taxes, you may still be required to register and file returns in a state.
If you do establish nexus, you’ll need to either collect sales tax or a valid exemption certificate on any normally taxable sales. Otherwise, you could be held liable for the uncollected tax.
Many states exempt certain products from sales tax, such as food for home consumption in Washington or diapers and feminine hygiene products in Colorado. In these kinds of cases, you do not need to collect a certificate to exempt tax on each sale.
State-by-state rules
Important note: Tax rules change and exceptions are common. The information here is subject to change and offered for informational purposes only. It should not be used as tax advice.
Please consult a sales tax expert who can discuss the details that apply to your business.
Reference
Alabama Department of Revenue FAQ
Accepted resale forms
- State and local government and their contractors for approved projects
- Nonprofit organizations | Form ST: EX-A1-SE
Statute of limitations
- 3 years from the due date or filing date, whichever is later
- 6 years if more than 25% of the taxable base is omitted
- No statute of limitations if a return is not filed, or if a fraudulent return is filed with intent to evade taxes
Alaska doesn’t have a state sales tax, but local sales tax is permitted and is in effect in multiple jurisdictions.
Sales tax exemptions are also determined by individual municipalities.
Reference
Reference
Arizona Department of Revenue TPT exemptions page
Accepted resale forms
- Vendors | Form 5000
- Non-TPT licensed contractors | Form 5000M
- Arizona accepts specialized certificates for qualified industry exemptions
Statute of limitations
- 4 years from the due date or filing date, whichever is later
- 6 years if more than 25% of the taxable base is omitted
- No statute of limitations if a return is not filed, or if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
- Exemption Certificate | ST-391
- Commercial Farm Exemption Certificate | ST-403
- Commercial Farm Exemption for All-Terrain Vehicles Form | ET-819
- SST Certificate of Exemption
Statute of limitations
- 3 years from the due date or filing date, whichever is later
- 6 years if more than 25% of the taxable base is omitted
- No statute of limitations if a return is not filed, or if a fraudulent return is filed with intent to evade taxes
Reference
Sales and use tax exemption information
Accepted exemption forms
- California accepts specialized certificates for qualified industry exemptions
Statute of limitations
- 3 years from the end of the month following the quarter being assessed or filing date, whichever is later
- 8 years if more than 25% of the taxable base is omitted
- No statute of limitations if a return is not filed, or if a fraudulent return is filed with intent to evade taxes
Accepted exemption forms
Statute of limitations
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Reference
Accepted exemption forms
- Qualified government agencies | CERT-134
- Qualified exempt organizations | CERT-119
- Connecticut accepts specialized certificates for qualified industry exemptions
Statute of limitations
- 3 years from the due date or filing date, whichever is later
- No statute of limitations if a return is not filed, or if a fraudulent return is filed with intent to evade taxes
Delaware doesn’t have a state sales tax, or similar. Therefore, an exemption certificate is not applicable.
Reference
Accepted exemption forms
Statute of limitations
- 3 years from the due date or filing date, whichever is later
- No statute of limitations if a return is not filed, or if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
- Qualified government entities and nonprofits, resellers | Form ST-5
- Georgia accepts specialized certificates for qualified industry exemptions
- SST Certificate of Exemption
Statute of limitations
- 3 years from the due date or filing date, whichever is later
- 6 years if more than 25% of the taxable base is omitted
- No statute of limitations if a return is not filed, or if a fraudulent return is filed with intent to evade taxes
Reference
General excise and use tax information
Accepted exemption forms
Statute of limitations
- 3 years from the due date or filing date, whichever is later
- No statute of limitations if a return is not filed, or if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
Statute of limitations
- The most recent 3 years of business
- The most recent 7 years of business if you don’t have a permit or haven’t filed regularly
- No statute of limitations if a return is not filed, or if a fraudulent return is filed with intent to evade taxes
Reference
Exempt organization information
Accepted exemption forms
Statute of limitations
- 3 years from the due date or filing date, whichever is later
- No statute of limitations if a return is not filed, or if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
Statute of limitations
- 3 years from the due date or filing date, whichever is later
- No statute of limitations if a return is not filed, or if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
- Iowa tax exemption certificate | Form 31-014
- Iowa accepts specialized certificates for qualified industry exemptions
- SST Certificate of Exemption
Statute of limitations
- 3 years from the due date or filing date, whichever is later
- 6 years if return does not include items of gross income as defined in the Internal Revenue Code as amended
- No statute of limitations if a return is not filed, or if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
- Kansas accepts specialized certificates for qualified industry exemptions (starting on page 17 of the booklet linked above)
- SST Certificate of Exemption
Statute of limitations
- 3 years from the filing date
- 6 years if return does not include items of gross income as defined in the Internal Revenue Code as amended
- 2 years from the discovery of the fraud, if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
- Purchase exemption certificate | Form 51A126
- Out-of-state purchase exemption certificate | Form 51A127
- Kentucky accepts specialized certificates for qualified industry exemptions
- SST Certificate of Exemption
Statute of limitations
- 4 years from the due date or filing date, whichever is later
- No statute of limitations if a return is not filed, or if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
Louisiana accepts specialized certificates for qualified industry exemptions
Statute of limitations
- 3 years from the due date or filing date, whichever is later
- No statute of limitations if a return is not filed, or if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
- Maine accepts specialized certificates for qualified tax exempt organizations and industries
Statute of limitations
- 3 years from the due date or filing date, whichever is later
- 6 years if tax reported is less than 50% of the tax due
- No statute of limitations if a return is not filed, or if a fraudulent return is filed with intent to evade taxes
Reference
Exemption certificate information
Accepted exemption forms
Statute of limitations
- 3 years from the due date
- No statute of limitations if a return is not filed, is underpaid by 25% or more, or if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
- Sales tax exemption certificate | Form ST-5
- Contractor’s sales tax exemption certificate | Form ST-5C
- Sales tax exempt certificate for books used for instructional purposes | Form ST-8
- Sales tax exempt certificate for sales of certain medical equipment | Form ST-12B
Statute of limitations
- 3 years from the due date
- 6 years if there is a massive underpayment or if returns are filed late
- No statute of limitations if a return is not filed or if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
- Sales tax resale and exemption certificate | Form 3372
- Donated motor vehicle exemption | Form 4288
- Data center exemption | 5726
- SST Certificate of Exemption
Statute of limitations
- 4 years from the due date or filing date, whichever is later
- 6 years if return does not include items of gross income as defined in the Internal Revenue Code as amended
- 2 years from the discovery of the fraud, if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
Statute of limitations
- 3.5 years from the due date or filing date, whichever is later
- No statute of limitations if a return is not filed or if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
- Church utility exemption affidavit | Form 72-15-09
- Interstate sales exemption | Form 72-315
- Farmer and logger ATV and UTV exempti
- School exemption | Form 72-621-13
- Temporary storage exemption | Form 72-16-01
- Tobacco stamps exemption | Form 72-001-15
- Utility exemption | Form 72-15-06
- Contractor’s materials exemption | Form 72-405
Statute of limitations
- 3.5 years from the due date or filing date, whichever is later
- 6.5 years if underpaid by more than 25%
- No statute of limitations if a return is not filed or if a fraudulent return is filed with intent to evade taxes
Reference
Exemption information search hub
Accepted exemption forms
- Exemption certificate | Form 149
- Tire and lead-acid battery exemption certificate | Form 149T
- Handicraft exemption certificate | Form 2478
- Residential utility exemption certificate | Form 4438
- Project exemption certificate | Form 5060
Statute of limitations
- 3 years from the due date or filing date, whichever is later
- No statute of limitations if a return is not filed or if a fraudulent return is filed with intent to evade taxes
Montana doesn’t have a state sales tax, or similar. Therefore, an exemption certificate is not applicable.
Reference
Accepted exemption forms
Statute of limitations
- 3 years after the last day of the month following the determination period or after the return is filed, whichever is later
- 8 years if there’s an underpayment or no return is filedNo statute of limitations if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
- Farming exemptions
- Religious, charitable, or educational exemption | Form APP-02.01
- SST Certificate of Exemption
Statute of limitations
- 3 years after the last day of the month following the determination period or after the return is filed, whichever is later
- 8 years if no return is filed, a fraudulent return is filed with intent to evade taxes, or there’s an underpayment of more than 25%
New Hampshire doesn’t have a state sales tax, or similar. Therefore, an exemption certificate is not applicable.
Reference
Sales tax exemption administration bulletin
Accepted exemption forms
- Farmer’s exemption certificate | Form ST-7
- Capital improvement exemption certificate | Form ST-8
- Textbook exemption certificate | Form ST-16
- Contractor’s exemption certificate | Form ST-13
- Tax exempt organization certificate | Form ST-5
- SST Certificate of Exemption
Statute of limitations
- 4 years from the filing date
- No statute of limitations if a return is not filed or if a fraudulent return is filed with intent to evade taxes
Reference
Non-taxable transaction certificates (NTTCs)
Accepted exemption forms
- Non-taxable transaction certificate | Type 2
- Construction contractor’s certificate | Type 6
- Non-taxable organization certificate | Type 9
- Energy facility certificate | Type 10
- Manufacturer’s certificate | Type 11
- Manufacturer’s certificate | Type 12
- Federal contractor’s certificate | Type 15
- Leasing certificate | Type 16
Statute of limitations
- 3 years from the end of the year in which filing was due
- 6 years if there’s an underpayment of more than 25%
- 7 years if a return is not filed
- 10 years if a fraudulent return is filed with intent to evade taxes
Reference
Exemption certificate information
Exempt organizations and entities
Accepted exemption forms
- Government exemption certificate | Form AC-846
- Contractor’s exemption certificate | Form 120.1
- Tax exempt organization | Form ST-119.1
- New York accepts specialized certificates for qualified industry exemptions
Statute of limitations
- 3 years from the filing date
- No statute of limitations if a return is not filed or if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
Statute of limitations
- 3 years from the due date or filing date, whichever is later
- No statute of limitations if a return is not filed or if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
- Tax exempt organization | Form SFN 21919 (6-2021)
- North Dakota accepts specialized certificates for qualified industry exemptions
- SST Certificate of Exemption
Statute of limitations
- 3 years from the due date or filing date, whichever is later
- 6 years if a return is not filed or is underpaid by more than 25%
- No statute of limitations if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
- Construction exemption certificate | Form STEC CC
- Contractor’s exemption certificate | Form STEC CO
- Software exemption certificate | Form STEC MPU
- Single purchase exemption certificate | Form STEC U
- Exemption certificate | STEC B
- SST Certificate of Exemption
Statute of limitations
- 4 years from the due date or filing date, whichever is later
- No statute of limitations if a return is not filed
Reference
Accepted exemption forms
- Tax exempt organizations | Packet E
- Agriculture exemption certificate | Form 13-8
- Volunteer fire department exemption certificate | Form 13-36
- SST Certificate of Exemption
Statute of limitations
- 3 years from the filing date
- No statute of limitations if a return is not filed or if a fraudulent return is filed with intent to evade taxes
Oregon doesn’t have a state sales tax, or similar. Therefore, an exemption certificate is not applicable.
Reference
Accepted exemption forms
- Nonprofit and corporation certificate | Form REV-72
- Exempt organization certificate | Form REV-1715
- Approved industry and resale exemption certificate | Form REV-1220
Statute of limitations
- 3 years from the filing date or end of the year in which taxes are due
- No statute of limitations if a return is not filed or if a fraudulent return is filed with intent to evade taxes
Reference
Sales tax information (translation available)
Accepted exemption forms
Statute of limitations
4 years from the filing date or end of the year in which taxes are due, whichever is later
Reference
Information for exempt organizations
Accepted exemption forms
- Tax exempt organization | Form EXO-SUE
- Artistic works exemption | Application
- Farm equipment/construction material exemption
- SST Certificate of Exemption
Statute of limitations
- 4 years from the filing date or the 15th day of the month after the month for which taxes are due, whichever is later
- No statute of limitations if a return is not filed or if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
- Exemption certificate | Form ST-10
- Construction contractor’s exemption | Form ST-10-C
- Federal contractor’s exemption | Form ST-10-G
- Exempt organization certificate | Form ST-387
- Admissions tax exemption | Form L-2068
- Single-sale certificate | Form ST-8
Statute of limitations
- 3 years from the due date or filing date, whichever is later
- No statute of limitations if no return is filed, a fraudulent return is filed with intent to evade taxes, or there’s an underpayment of more than 20%
Reference
Accepted exemption forms
- Prime contractor exemption | Form 1346
- South Dakota SST exemption certificate | Form 2040
- SST Certificate of Exemption
Statute of limitations
- 3 years from the filing date
- No statute of limitations if a return is not filed, if a fraudulent return is filed with intent to evade taxes, or if there is an underpayment of the return.
Reference
Accepted exemption forms
- Tax exempt organizations | Form RV-F1306901
- Government exemption certificates | Form RV-F1301301
- Tennessee accepts specialized certificates for qualified industry exemptions
- SST Certificate of Exemption
Statute of limitations
- 3 years from the end of the year in which filing was due
- No statute of limitations if a return is not filed or if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
- Federal exemption | Form AP-204
- Charitable organization exemption | Form AP-205
- Homeowners' associations exemption | Form AP-206
- Educational organization exemption | Form AP-207
- Religious organization exemption | Form AP-209
- Primarily charitable organizations | Form AP-199
Statute of limitations
- 4 years from the due date or filing date, whichever is later
- No statute of limitations if no return is filed, a fraudulent return is filed with intent to evade taxes, or there’s an underpayment of more than 25%
Reference
Accepted exemption forms
- Religious or charitable organization | Form TC-160
- Exemption certificate | Form TC-721
- Direct payment permit exemption certificate | Form TC-721DP
- Governments and schools exemption certificate | Form TC-721G
- Non-Utah retailers exemption certificate | Form TC-721NR
- Contractor’s exemption certificate | Form TC-73
- Interstate carriers exemption affidavit | Form TC-719
- SST Certificate of Exemption
Statute of limitations
- 3 years from the filing date
- No statute of limitations if a return is not filed or if a fraudulent return is filed with intent to evade taxes
Reference
Exemption certificate information
Accepted exemption forms
- Resale and exempt organizations exemption certificate | Form S-3
- Vermont accepts specialized certificates for qualified industry exemptions
- SST Certificate of Exemption
Statute of limitations
- 3 years from the filing date
- No statute of limitations if no return is filed, a fraudulent return is filed with intent to evade taxes, or there’s an underpayment of more than 20%
Reference
Accepted exemption forms
- Nonprofit organizations | Form NP-1
- Religious organizations | Form ST-13A
- Government certificates | Form ST-12
- Virginia accepts specialized certificates for qualified industry exemptions
Statute of limitations
- 3 years from the filing date
- 6 years if a return is not filed or if a fraudulent return is filed with intent to evade taxes
Reference
Reseller guides for qualified industries
Accepted exemption forms
- Washington accepts specialized certificates for qualified industry exemptions
- SST Certificate of Exemption
Statute of limitations
- 4 years from the end of the year in which filing was due
- No statute of limitations if a business is not registered or if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
- Qualified High Technology Company certificate | Form FP-337
- Utility exemption | Form OTR-308
- Contractor’s exemption certificate | Form OTR-553
- Tax exempt organization | Form FR-164
Statute of limitations
- 4 years from the filing date
- No statute of limitations if a return is not filed or if a fraudulent return is filed with intent to evade taxes
Reference
Accepted exemption forms
- West Virginia accepts certificates for qualified industry exemptions
- Contractor’s exemption certificate | Form CST-286
- Capital improvement certificate | Form CST-290
- SST Certificate of Exemption
Statute of limitations
- 3 years from the filing date
- 6 years if a listed transaction is not disclosed
- No statute of limitations if a return is not filed or if a fraudulent return is filed with intent to evade taxes
Reference
Publication 201, Part 11: What is Exempt?
Accepted exemption forms
- Exemption and resale certificate | Form S-211
- Electronic exemption and resale certificate | Form S-211E
- SST Certificate of Exemption
Statute of limitations
- 4 years from the last day of the year in which the return was filed
- No statute of limitations if a return is not filed or if a fraudulent return is filed with intent to evade taxes
Reference
Exemption certificate bulletin
Religious and charitable organization exemption bulletin
Accepted exemption forms
Statute of limitations
3 years following the delinquency
Managing exemption certificates for your business
Whether you’re making exempt purchases or managing documents from exempt customers, it’s important to supply or collect valid exemption certificates. Not doing so can create liability with state auditors.
If you’re buying or selling in more than a couple of states, keeping track of which forms are required for which sales and when they expire is challenging.
Automating certificate management can go a long way toward peace of mind and reduced risk.
- Avalara Exemption Certificate Management can help businesses large or small with collecting, validating, storing, and accessing exemption and resale certificates.
- Avalara Vendor Exemption Management can help you obtain and supply the right documents to support your exemption requests.
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