My business routinely sells products or services to customers that refuse to pay sales tax by claiming that: • the purchase is “exempt” from sales tax, or • the purchase is a nontaxable “purchase-for-resale.” Do I need to get an exemption certificate (o

Yes. For sales to customers in “streamlined” states (check the respective state to confirm whether it is a member of the Streamlined Sales and Use Tax Agreement), you should get the exemption or resale certificate within 90 days of the sale. If you have an ongoing relationship with the customer and make many sales throughout the year, a “blanket” certificate is sufficient. Otherwise, in many states, the law assumes that all sales are taxable retail sales. As such, the seller has the burden to show that a sale is not a retail sale and not subject to sales tax. Taking a properly-completed resale/exemption certificate from the purchaser, however, in most instances and absent fraud or collusion with the purchaser, relieves the seller of this burden to prove that the sale is not a retail sale subject to sales tax. Trying to get the resale/exemption certificate after-the-fact, such as during an audit, can prove to be difficult, especially if the customer is no longer in business. You then must turn to other ways to prove that the sale is not a taxable retail sale.

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