How to Get a Resale Certificate in Massachusetts

If you have recently launched or are planning to launch a limited liability company (LLC) that will sell products or services in Massachusetts, 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 the sales or use tax on those items as well as costly fines.  

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.

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 Massachusetts

Even though resale certificates are not filed with the state of Massachusetts, they’re still vital for your business’s records, especially if your company is ever audited. You’ll need to obtain a sales tax resale form from Massachusetts’ Department of Revenue. 

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 Massachusetts, you’ll need a seller’s permit for your business and 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 Massachusetts Certificate of Resale

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

1. Open the link above and download the sales tax resale form. 

2. As the purchaser, fill in your name and provide either your business’s account ID or federal ID number.

3. Fill in your business address. 

4. Describe your business and detail what you’re purchasing.

5. Identify the name and address of the vendor.

6. Sign to certify that you have a valid Massachusetts vendor registration.

7. Lastly, specify if your resale certificate applies to one or all purchases from this vendor, and file away the form. 

For assistance, you can contact the Massachusetts Department of Revenue. 

Phone: 617.8876367
Hours: Monday through Friday, 9:00 AM – 4:00 PM

Remember, this form does not need to be filed with Massachusetts’ revenue department. 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 a Massachusetts Resale Certificate Expire?

In Massachusetts, resale certificates do not expire.

Conclusion 

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