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Is That Exemption Certificate Valid?


 Be sure exemption certificates are valid.

When legislation alters sales tax exemptions, previously valid exemption certificates can suddenly become invalid. Keeping abreast of changing sales tax laws is essential, as is having a system in place to manage and vet existing exemption certificates and reseller permits.

For example, the Connecticut exemption for purchases of tangible personal property or services by water companies was repealed effective July 1, 2015. As a result, CERT-130, Sales and Use Tax Exemption for Purchases by Water Companies is no longer a valid exemption certificate (Special Notice 2015-05).

Businesses that accept this exemption certificate after July 1, 2015, could be held liable for any erroneously exempted sales tax. Businesses that present this exemption certificate to purchase goods tax-free could face more serious consequences. This is true even when the certificate is presented or accepted in error.

Managing exemption certificates in the cloud facilitates the creation, validation, and storage of exemption and resale certificates. Learn more.

photo credit: Papers Please [Explored Apr 28, 2010 #43] via photopin (license)


Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.