If your business sells physical products or certain types of services, you will need to collect and pay sales tax. In Washington, the first step isv ...
How to Get a Resale Certificate in Washington
Written by: Natalie Fell
Natalie is a business writer with experience in operations, HR, and training & development within the software, healthcare, and financial services sectors.
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.
Published on July 6, 2022
Updated on May 22, 2023
If you have recently launched or are planning to launch a business that will sell products or services in Washington, 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 business has a valid resale certificate, you can buy goods from a wholesaler without paying Washington 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 Washington
In Washington, the resale certificate is known as the “certificate of exemption” and you’ll need to obtain the form from the Department of Revenue. The certificate is not filed with the state of Washington, 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 Washington, 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 Washington Certificate of Resale
In Washington, the Department of Revenue handles the issuance of resale certificates. Start by visiting the website, then follow these simple steps:
- From the menu on the right hand side of the webpage, click the Exemption Certificate link to download the form.
NOTE: Washington is part of a group of states who participate in the Streamlined Sales Tax Governing Board who all use the same standardized form.
- In the first section, select whether or not the certificate is for a single purchase. If so, enter the appropriate invoice or purchase order number.
- Next, enter your contact information along with the seller’s
- In the following section, check the box next to the category that best describes your business.
- Under “Reason for exemption”, check the letter that best identifies the reason for the exemption. NOTE: some of the reasons for exemption in other states are unavailable in Washington.
- In the next section, enter the state-appropriate ID number and reasons for exemption.
- Lastly, sign and date the form and keep it on file.
For assistance, contact the Washington Department of Revenue at 360-705-6705.
Does a Washington Resale Certificate Expire?
In general, resale certificates in Washington expire after four years. Certificates are only valid for two years if any of the following apply:
- Your business is less than 12 months old
- You haven’t reported gross income within the last 12 months
- Your business wasn’t active at the time your certificate was received
- You haven’t filed tax returns in the last 12 months
- You are a contractor
It’s best to create calendar reminders so you’re aware when expirations are coming up to ensure you’re able to apply for renewal in time and run your business without interruption.
Resale certificates can be a bit of a hassle, but in Washington 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.
How to Get a Resale Certificate in Washington
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