How to Get a Resale Certificate in New York

If you have recently launched or are planning to launch a limited liability company (LLC) that will sell products or services in New York, 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 costly fines or potential jail time.

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 New York

In New York, you’ll need to obtain the form from the Department of Taxation and Finance. The certificate is not filed with the state of New York, it’s simply kept on file by the seller.

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 New York, 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 New York Resale Certificate

In New York, the Department of Taxation and Finance handles the issuance of resale certificates. Start by visiting the website, then follow these simple steps:

1. On the Sales Tax Exemption Documents page, click on the ST-120 link to download the form. 
2. At the top of the form, enter your contact information as well as the seller’s.

3. Next, decide if the form is single-use or a blanket certificate and check the appropriate box. 

4. In the following section, enter your business information.

5. In Part 1, if the information applies, check the appropriate boxes.

6. Part 2 is reserved for non-New York State purchasers. Review and complete this section if it applies to you.

7. Lastly, print and sign your name, enter the date, and keep a copy for your records.

For assistance, contact the New York Department of Taxation and Finance at 518-485-2889. 

Does a New York Resale Certificate Expire?

In New York, resale certificates do not expire.

Conclusion 

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