If your business sells physical products or certain types of services, you will need to collect and pay sales tax. In Illinois, the first step isvis ...
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How to Get a Resale Certificate in Illinois
Written by: Coralee Bechteler
Coralee is a business writer with experience in administrative services, education, and software testing.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Updated on May 22, 2023
How to Get a Resale Certificate in Illinois
- What is a Certificate of Resale?
- How to Apply for a Certificate of Resale in Illinois
- How to Fill out the Illinois Certificate of Resale
- Does an Illinois Certificate of Resale Expire?
If you have recently launched or are planning to launch a business that will sell products or services in Illinois, you may want to get a certificate of resale, or several of them, before you start doing business, as this can save you a lot of time and money.
It’s a relatively simple process, as detailed in this step-by-step guide.
What is a Certificate of Resale?
If your business has a valid certificate of resale, known as a resale certificate in most other states, you can buy goods from a wholesaler without paying Illinois sales tax, though you may pay a use tax. Depending on the size of your business, this can save you tens of thousands of dollars each year.
The catch is that whenever you do use a certificate of resale to purchase goods, you are legally bound to resell those items and collect sales tax when you do so. If you do not resell those items, or fail to collect sales tax, the punishment could be liability for the sales tax on those items, additional fees, or even legal penalties.
Keep in mind, each certificate of resale, also known as a resale license, applies to a single vendor. This means you’ll need a certificate of resale for each one of your vendors.
You cannot use a certificate of resale to buy items you do not intend to resell, such as a new computer for your business. This would be tax fraud, a felony offense. You are only able to buy items tax-exempt if you are going to collect sales tax on them later.
Not all wholesalers will accept certificates of resale, nor do they have to. They may choose not to because of the risk of expired or false certificates, which would put the wholesaler on the hook for the sales tax.
How to Apply for a Certificate of Resale in Illinois
In Illinois, you can take a few different approaches to apply for a certificate of resale. For simplicity and ease, you can use a copy of the certificate of resale provided by the Illinois Department of Revenue. Alternatively, you can create your own form that meets Illinois’ certificate of resale requirements, and you can also use a purchase order as long as it includes the required details.
In a few states, a seller’s permit, or sales tax permit, also serves as a certificate of resale that applies to all vendors. But in most states, including Illinois, you’ll need a seller’s permit for your business as well as certificates of resale for each of your vendors.
The seller’s permit identifies you with your state as a collector of sales tax. If you sell tangible personal property or goods you are required to have a sales tax permit. In some states, even a service provider like a lawyer is required to have a sales tax permit and collect state sales tax.
The certificate of resale applies to items that you buy for resale, or for parts that you buy to manufacture something for sale.
How to Fill out the Illinois Certificate of Resale
In Illinois, the Department of Revenue handles the issuance of certificates of resale.
If you’re using the state-provided form, start by visiting this website, then follow these simple steps:
- Open the link above and download the document.
- First, fill in the name and address of the business selling you the items.
- As the purchaser, provide your business’s name and address.
- Carefully select the correct box that applies to your business.
- Describe what you’re purchasing for resale.
- Identify if your certificate applies to all purchases from this vendor, or only a percentage.
- Sign and date to complete the form, officially stating your intention to resell the items.
For assistance, you can contact Illinois’ Department of Revenue.
Hours: Monday through Friday, 8:00 AM – 5:00 PM
Remember, this form does not need to be filed with the state. Keep it safely stored in your records so you can easily access and present it to the seller of the goods you’re purchasing.
Does an Illinois Certificate of Resale Expire?
In Illinois, certificates of resale do not expire. However, the Illinois Department of Revenue recommends that you review your certificates of resale at least every three years and verify that the information is up to date. Create calendar reminders to monitor each certificate’s three-year update cycles effectively so you can run your business without interruption.
Certificates of resale can be a bit of a hassle, but in Illinois they are an absolute necessity. So take the time to get certificates for each of your vendors to ensure full compliance with your state’s tax regulations.
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