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What You Need to Know About New York Resale Certificates

  • Dec 28, 2016 | Suzanne Kearns

If you own a business in New York State, it’s important to understand the laws regarding resale certificates. These certificates allow sellers to purchase tax-free goods that they intend to resell. Every state has a set of rules that apply to these certificates, and New York is no different. And according to the New York Department of Taxation and Finance, there are some rules you’ll need to follow in order to use or accept a resale certificate.

Applying for a New York Resale Certificate

The first thing you need to do is apply for a Sales Tax Certificate of Authority. This will not only allow you to collect sales tax in the state, but also to issue or accept resale certificates. The state requires you to apply for the Certificate of Authority 20 days before you collect sales tax or use or accept a resale certificate.

Accepting a New York Resale Certificate

When you’re presented a resale certificate from a customer, the state asks that you take certain steps to ensure the tax exemption is valid. If you accept a resale certificate that isn’t valid, or is used for improper purposes, the state can hold you responsible for the taxes that were due. Here’s what you need to do to ensure that the certificate is valid:

  • The buyer must give you the resale certificate within 90 days of the time the sale is made, but the state prefers that you receive it at the time of the sale.
  • The buyer must have a Certificate of Authority unless they are from another state. Exemption certificates from other states aren’t valid in New York, and those buyers will have to pay sales tax.
  • You have the right to refuse a resale certificate, even if it’s properly completed and valid. In that case, you should charge the buyer sales tax. They will have to apply for a refund of the sales tax using the Application for Credit or Refund of Sales or Use Tax.
  • If you suspect the certificate is not being used in good faith, or that it’s fraudulent, you shouldn’t accept it. If you do, you could be held liable for the tax.
  • You must keep the resale certificate for three years from the due date of the sales tax return. The state suggests attaching it to the record of purchase.

Using a New York Resale Certificate

If you present a resale certificate to a New York seller, it’s your responsibility to ensure that it’s properly completed. The certificate should include all of the following information:

  • The date it was prepared
  • Your name and address
  • The seller's name and address
  • Your Certificate of Authority number
  • Either your or your authorized representative’s signature

If you do business with the seller often, it’s possible to provide them with a blanket certificate. For example, if you run a tourist shop and repeatedly purchase goods from a wholesaler, you can issue them a blanket certificate that will cover all similar purchases. To do this, mark the box that says “blanket certificate” instead of the one that says “single purchase certificate.” You must update a blanket certificate if anything changes, such as your address or ID number.

You may also issue a resale certificate electronically by following the state’s guidelines.

Finally, keep in mind that if you knowingly misuse a resale certificate, you could be subject to fines and even a jail sentence.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Suzanne Kearns
Avalara Author Suzanne Kearns