How to Get a Resale Certificate in Maryland

If you have recently launched or are planning to launch a limited liability company (LLC) that will sell products or services in Maryland, you may want to get a resale 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 Certificate?

If your LLC has a valid resale certificate, you can buy goods from a wholesaler without paying 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 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 sales and use tax, additional interest fines, or even penalties.

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

You cannot use a resale 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.

Maryland is different from other states and the Comptroller’s Office has established some constraints for businesses using resale certificates. Carefully review them and their associated exceptions below. 

• A business cannot use a resale certificate for transactions less than $200 that are paid with a check, cash, or credit card.
  • Exception: a resale certificate may be used if the seller delivers the bought items directly to the buyer’s business site.
• A business can use a resale certificate for transactions less than $200 if:
  • The items are bought on credit with the seller.

Not all wholesalers will accept resale 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 Certificate in Maryland

In Maryland, you can take a few different approaches to apply for a resale certificate. 

Though the state doesn’t have an official form, the Comptroller’s Office of Maryland offers an easy online service that verifies a business’s registration number and then generates a resale certificate. Maryland’s Comptroller also provides a sample blanket resale certificate. You can print it out or use it as a model for your own blanket certificates. 

Alternatively, you can write up a resale certificate as long as it includes the following information and satisfies Maryland’s requirements:

• Purchaser’s name and address
• Purchaser’s Marland sales and use tax registration number
• Blanket certificates must indicate the intent of resale regarding all vendor purchases 
• A signed declaration of intention that the purchased items are for resale

In a few states, a seller’s permit, or sales tax permit, also serves as a resale certificate that applies to all vendors. But in most states, including Maryland, you’ll need a seller’s permit as well as resale 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 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 Maryland Resale Certificate 

In Maryland, the Comptroller’s Office handles the issuance of resale certificates. Remember, many purchases under $200 cannot legally utilize a resale certificate, so be sure to review Maryland’s resale certificate regulations listed above carefully. 

If you prefer to utilize Maryland’s tool to obtain a resale certificate, start by visiting the Comptroller’s Office of Maryland’s online verification service, and then follow these simple steps:

1. Enter your business’s sales and use tax registration number.

2. Check the status. 

3. Print out the generated resale certificate for your records.

To access the Comptroller’s sample blanket resale certificate, follow these steps:

1. Open the link above and download the template.

2. To use this sample certificate, first fill in the seller’s name.

3. As the buyer, provide your name and address.

4. Identify your business’s sales and use tax registration number.

5. Lastly, sign and date the certificate and keep a file in your records. 

If you decide to write up your own resale certificate, doublecheck that you’ve included each requirement:

• Buyer’s name and business address
• Buyer’s Marland sales and use tax registration number
• Blanket certificates must indicate the intent of resale regarding all vendor purchases
• A signed declaration of intention that the purchased items are for resale 

For assistance, you can contact Maryland’s Office of the Comptroller.

Phone: 410.260.7980
Hours: Monday through Friday, 8:00 AM – 4:30 PM

Remember, resale certificates aren’t filed with Maryland’s Office of the Comptroller. Keep it safely filed in your records so you can easily access and present it to the seller of the goods you’re purchasing.

Does a Maryland Resale Certificate Expire?

In Maryland, resale certificates don’t ever officially expire. However, it’s recommended that you review your business’s certificates at least every three years and verify that the information is up to date.

It’s best to create calendar notes and reminders so you can monitor the age of each certificate. This allows you to schedule a time to review your certificates and run your business without interruption.

Conclusion 

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