A state-by-state guide to exemption certificates
This blog post has been updated. It was originally published in February 2023.
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 state tax exemption certificate requirements 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 sales tax exemption certificate form 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 must retain 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. State exemption certificate requirements vary by state. 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 in Colorado and Maine, to name a couple.
Some states accept multistate exemption certificates, like the Multistate Tax Commission (MTC) Exemption Certificate or the Streamlined Sales Tax (SST) Exemption Certificate. However, not all states allow all the exemptions listed on these forms, and states can change which forms they accept and requirements related to using those documents at any time. Check with the state to determine current policy.
How long do you need to keep exemption certificates on file?
Exemption certificates are worth every penny of exempted tax 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.
How can I get information for my state?
We worked with Sales Tax Institute to create a State-by-State Exemption Certificate Guide to help you identify which certificates are required for your state. In it, you’ll find information on how often you should renew your documentation and links to the forms you need.
Bear in mind that expiration periods vary by state and exemption certificate, and most states have different certificates for different situations or entities. Check with your state to get the most up-to-date information.
Please consult a sales tax expert who can discuss your specific requirements. And consider exploring how automating exemption certificate management can help you streamline tax compliance.
State exemption certificate rules
Expiration period
Renew annually
Forms
This state takes the MTC multijurisdictional tax form
Reference
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.
Expiration period
Valid until the end of each calendar year
Forms
This state takes the MTC multijurisdictional tax form
Reference
Alaska Remote Seller Sales Tax Commission exemption certificate directory
Expiration period
The end of the period specified on the certificate; up to 48 months if the vendor verifies the purchaser’s tax license each year
The Department of Revenue strongly encourages vendors to limit the specified period to a 12-month calendar
Forms
This state takes the MTC multijurisdictional tax form
References
Expiration period
No stated expiration period; recommended review every four years
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
Reference
Expiration period
Valid until revoked in writing by the issuer unless issued for a specific transaction; in that case, generally valid for one year
Forms
This state takes the MTC multijurisdictional tax form
Reference
Expiration period
Valid until cancelled by the Department of Revenue in writing or revoked by the city or state
Forms
This state takes the MTC multijurisdictional tax form
Reference
Delaware doesn’t have a state sales tax, or similar. Therefore, an exemption certificate is not applicable.
Expiration period
Valid until revoked in writing
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
References
Expiration period
Does not expire
Forms
This state takes the MTC multijurisdictional tax form
Reference
General excise and use tax information
Expiration period
No stated expiration period; recommended review every four years
Forms
This state takes the MTC multijurisdictional tax form
Reference
Expiration period
Validity period varies depending on purchaser
Certificates of resale should be updated at least every three years
Forms
This state takes the MTC multijurisdictional tax form in some situations
References
Expiration period
Does not expire; recommended review every four years
Forms
This state participates in Streamlined Sales Tax
Reference
Expiration period
Three years
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
Reference
Expiration period
Blanket certificate remains valid provided purchaser is making recurring purchases
Tax-exempt entity exemption certificates have an expiration period
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
References
Expiration period
Four years
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
Reference
Expiration period
Five years after date of issuance; may be renewed automatically for qualifying taxpayers
Forms
This state takes the MTC multijurisdictional tax form
Reference
Expiration period
10 years; may be renewed automatically for qualifying taxpayers
Reference
Expiration period
Four years
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
Reference
Expiration period
Does not expire unless information changes; recommended review every three–five years
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
Reference
Expiration period
The state does not issue exemption certificates or accept or use blanket certificates
References
Expiration period
Five years
Forms
This state takes the MTC multijurisdictional tax form
References
Montana doesn’t have a state sales tax, or similar. Therefore, an exemption certificate is not applicable.
Expiration period
Five years
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
References
New Hampshire doesn’t have a state sales tax, or similar. Therefore, an exemption certificate is not applicable.
Expiration period
No stated expiration period; recommended review every four years
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
References
Expiration period
No stated expiration period; recommended review every four years
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
References
Expiration period
No stated expiration period; recommended review every four years
Forms
Different certificates for different industries
References
Expiration period
Blanket certificate remains valid provided purchaser is making recurring purchases
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
References
Expiration period
No stated expiration period; recommended review every four years
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
References
Expiration period
No stated expiration period
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
References
Expiration period
Blanket certificate remains valid provided purchaser is making recurring purchases
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
Reference
Oregon doesn’t have a state sales tax, or similar. Therefore, an exemption certificate is not applicable.
Expiration period
No stated expiration period; recommended review every four years
Forms
This state takes the MTC multijurisdictional tax form
References
Expiration period
Certificates issued on or before July 1, 2017, expired on June 30, 2021
Certificates issued after July 1, 2017, expires four years after issuance
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
References
Expiration period
No stated expiration period; recommended review every four years
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
References
Expiration period
Blanket certificate remains valid until cancelled by the purchaser
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
References
Expiration period
Blanket certificate remains valid provided purchaser is making recurring purchases
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
Reference
Expiration period
No stated expiration period; recommended review every four years
Forms
This state takes the MTC multijurisdictional tax form
References
Expiration period
Certificate remains valid provided purchaser is making recurring purchases
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
References
Expiration period
Valid indefinitely when used as a blanket certificate; otherwise, valid for single purchase
Forms
This state takes the MTC multijurisdictional tax forms
This state participates in Streamlined Sales Tax
Reference
Exemption certificate information
Expiration period
Valid until notice from Department of Taxation that certificate is no longer acceptable
References
Expiration period
Blanket certificate remains valid provided purchaser is making recurring purchases
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
References
Expiration period
Blanket certificate remains valid provided purchaser is making recurring purchases
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
References
Expiration period
No stated expiration period; recommended review every four years
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
References
Expiration period
No stated expiration period; recommended review every four years
Forms
This state takes the MTC multijurisdictional tax form
This state participates in Streamlined Sales Tax
References
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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