How to Get a Resale Exemption Certificate in Kansas

If you have recently launched or are planning to launch a business that will sell products or services in Kansas, you may want to get a resale exemption certificate, 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 Resale Exemption Certificate?

If your business has a valid resale exemption certificate, often referred to as a resale certificate in other states, you can buy goods from a wholesaler without paying Kansas 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 resale exemption certificate 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 of those items, a misdemeanor, or additional fines.

Keep in mind, each resale exemption certificate, also known as a resale license, applies to a single vendor. This means you’ll need a resale exemption certificate for each one of your vendors. 

You cannot use a resale exemption certificate 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 resale exemption certificates, 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 Resale Exemption Certificate in Kansas

You will need to obtain a resale exemption certificate from Kansas’s Department of Revenue. Resale exemption certificates aren’t filed with the state, but they’re still vital for your business’s records– especially if your business is ever audited.

In a few states, a seller’s permit, or sales tax permit, serves as a resale exemption certificate that applies to all vendors. But in most states, including Kansas, you’ll need a seller’s permit for your business and resale exemption certificates 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 resale exemption certificate applies to items that you buy for resale, or for parts that you buy to manufacture something for sale. 

How to Fill out the Kansas Resale Exemption Certificate

In Kansas, the Department of Revenue handles the issuance of resale exemption certificates. Start by visiting the website, then follow these simple steps:

1. Open the link above and download the form. 

2. Fill in the name and address of the business selling you the items.

3. Provide your tax registration number and a brief description of what your business sells.

4. Describe what you’re purchasing for resale.

5. As the purchaser, provide your business’s name and address. 

6. Sign and date the form and place it in your records. 

For assistance, you can contact Kansas’s Department of Revenue.

Phone: 785.296.3081
Hours: Monday through Friday, 8:00 AM – 4:45 PM 

Remember, this form is not filed with Kansas’s revenue department. Keep it safely filed with your LLC’s records so you can easily access and present it to the seller of the goods you’re purchasing.

Does a Kansas Resale Exemption Certificate Expire?

In Kansas, a resale exemption certificate only needs to be renewed if more than one year takes place between transactions. It’s best to create calendar notes and reminders to know when your last purchase with a vendor occurred and its correlated expiration date. This way, you have time to assess your business relationship and decide if you want to schedule another purchase with the seller before the twelve-month mark.

Conclusion 

Resale exemption certificates can be a bit of a hassle, but in Kansas 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.