Sales tax glossary
What is a resale certificate?
A resale certificate is a document a buyer gives a seller to buy goods tax-free because the buyer plans to resell them. The buyer then collects sales tax from its own customers. The seller keeps the certificate on file to prove why it didn't charge tax on the sale.
Example
A boutique buys 200 T-shirts from a wholesaler to sell in its store. It gives the wholesaler a resale certificate, so the wholesaler doesn't charge sales tax on the order.
Why it matters for sellers
If you sell wholesale, a valid certificate is your proof in an audit. Without one, the state can assess the uncollected tax against you. Certificates must be complete and accepted by the state involved, and some expire.
Related terms
This definition is general information, not tax or legal advice. Rules vary by jurisdiction and change over time.
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