If you have recently launched or are planning to launch a limited liability company (LLC) that will sell products or services in West Virginia, 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 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 West Virginia
In West Virginia, the resale certificate is known as the “certificate of exemption” and you’ll need to obtain the form from the State Tax Department. The certificate is not filed with the state of West Virginia, 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 West Virginia, 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 West Virginia Certificate of Resale
In West Virginia, the State Tax Department handles the issuance of resale certificates. Start by visiting the website, then follow these simple steps:
- Under the “Documents” heading, click on the F0003 Streamlined Sales and Use Tax Agreement – Certificate of Exemption link and download the form.
NOTE: West Virginia 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.
- In the next section, enter the state-appropriate ID number and reasons for exemption.
- Lastly, sign and date the form and keep on file.
For assistance, contact the West Virginia State Tax Department at (304) 558-3333 or (800) 982-8297.
Does a West Virginia Resale Certificate Expire?
In West Virginia, blanket certificates are good as long as the buyer makes at least one purchase every
12 months. Your certificate will be considered a blanket certificate as long as you don’t check the box on the form indicating it’s for a single purchase.
Resale certificates can be a bit of a hassle, but in West Virginia 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.