A New York Resale Certificate is a document issued by the New York Department of Taxation and Finance that allows businesses to buy goods for resale without paying sales tax on those goods.
Learn more about how a New York Resale Certificate works, how to get one, and more.
Related: Guide to starting a business in New York
Table of Contents
What is a New York Resale Certificate?
When retailers purchase products to resell, they often don’t pay sales tax to the supplier on the purchase. The state sales tax will still be paid, but instead of the retailer paying sales tax, the retailer charges sales tax to their customer on the final value of the merchandise. The collected sales tax is then sent by the retailer to the New York Department of Taxation and Finance.
For instance, consider a computer store in New York that buys laptops to sell in its store. With the resale certificate, the store won’t pay sales tax on inventory purchased from the wholesaler. Then, when an individual purchases a laptop, the retailer will apply sales tax based on the full retail price of the laptop.
The computer shop collects state sales tax from all its sales and usually submits the accumulated sales tax to the state once a month.
The sales tax exemption is only intended for inventory that will be resold and is not intended for the tax-free purchase of items used in normal business operations, such as paper, pens, etc.
How to fill out the New York Resale Certificate (Form ST-120)
Before a business starts selling products or providing taxable services, itmust firstget a New York Sales Tax Certificate of Authority (sometimes referred to as a seller’s permit, sales tax permit, or sales tax license) from the New York Department of Taxation and Finance. After registering for the certificate, a Certificate of Authority Number will be provided by the New York Department of Taxation and Finance which will be needed in order to fill out the Resale Certificate.
Step 1:Begin by logging into your NY.gov Business account or downloading Form ST-120.
Step 2:Identify the name and business address of the seller.
Step 3:Identify the name and business address of the buyer.
Step 4:If the retailer is expected to purchase items frequently from the seller, instead of completing a resale certificate for every invoice, the blanket certificate box can be checked. Otherwise, select a single-use certificate.
Step 5:Describe the purchaser’s type of business and the primary products sold.
Step 6:New York-based vendors will enter their Certificate of Authority Number of the vendor (purchaser) in Part 1.
Step 7:New York-based vendors will select whether the purchase being made is:
- Tangible personal property for resale or certain services
- A service for resale; or
- Restaurant-type food, heated food, or heated drink for resale
Step 8:Out-of-state purchasers will enter their state of registration and sales tax ID number in addition to the merchandise being purchased.
Step 9:The purchaser will certify the property being purchased is for resale and sign and date the sales tax exemption form.
Form ST-120 Resale Certificate
New York Resale Certificate FAQs
How much does a New York Resale Certificate cost?
There is no cost for a Certificate of Exemption in New York.
Does a New York Resale Certificate Expire?
If selecting a blanket certificate, the resale certificate does not expire.
How often is New York sales tax due?
Most new businesses are set up to file and pay sales and use tax monthly, but depending on the amount of tax collected, your business may have a quarterly or annual filing frequency instead.
Where do I file the New York Resale Certificate?
In New York, the certificate is not filed with any government agency. Instead, it is kept by the seller (the business selling the merchandise for resale).
Are sellers required to accept resale certificates?
Sellers are not required to accept resale certificates; however, most do. If the vendor doesn’t accept the certificate for tax-exempt purchases, the buyer will have to pay sales tax on the merchandise being purchased. In most cases, a credit for the sales taxes paid is provided when filing the New York sales tax return.
What steps should a business take to accept a resale certificate?
When a business is presented with a resale certificate, the burden of proof is on the seller to verify that the buyer’s information is correct and to keep these records. Failing to verify this information may put the liability of paying New York sales taxes on the seller.
Before accepting a resale certificate, a seller should:
– Review the resale certificate to make sure it is completely filled out.
– Verify the purchaser’s New York Certificate of Authority Number is valid by visiting the Department of Taxation and Finance’sRegistered Sales Tax Vendor Lookupdatabase.
– Sellers are also responsible for examining the certificate and evaluating whether the goods sold are reasonably consistent with the purchaser’s line of business. For example, if the buyer’s business is a car dealership, but they want to purchase office supplies tax-free, the seller should investigate further.
– Keep a file of resale certificates.
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How To Start A Business In New York
How To Fill Out The New York LLC Articles of Organization
Beginners Guide To Start A New York LLC
How To Do A New York Business Name Search
New York DBA / Assumed Name Registration In 5 Easy Steps
Should You Use A New York Registered Agent Service?
How To Register For A New York Sales Tax Certificate Of Authority
Guide To Hiring Employees In In New York
New York Business License Basics
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Popular Business Ideas
Auto Detailing
Graphic Design
Handyman
House Cleaning
Landscaping
Photography
Vending
See more business ideas
Popular Questions
How do I form an LLC?
How do I register my business name?
Do I need a business license?
Should I use an LLC formation service or do it myself?How do I get a sales tax permit?
What is the difference between a trademark, copyright and patent?
Do I need a registered agent or can I be my own?
How do I get an EIN for my business?
How do I find money to start my business?
See more start-up questions
4 Responses
Hi, my name is Lou and I opened a small business as an LLC in the state of NY. I want to go to large, well known,
companies and become a reseller of their products on various sites (amazon, Etsy, Ebay, Shopify)They call it a resellers agreement but in NY, it’s called a resale Certificate and a Sales tax certificate of Authority.
I just wanted to make sure that there are the two documents required in order to be a reseller in NY.Thank you,
LouReply
Hi Louis – every state calls these two things differently, but the Sales Tax Certificate of Authority lets you legally sell and collect sales tax for taxable products and services in New York, while the Resale Certificate lets you purchase merchandise that you are going to resell without paying sales tax (the end-user of the product will pay the sales tax).
Those two will be needed at a minimum, but you may want to double check our steps to starting a business in New York – https://startup101.com/new-york/ to make sure you are fully registered. In particular you will want to be sure your business entity is established (Step 3 & 4), along wiht business licenses – https://startup101.com/what-business-licenses-permits-are-needed-in-new-york/.
The state of New York doesn’t have a business license, but many cities require one, even if operating from home.
Hope this helps. Let me know if you have any other questions.
Thanks!
GregReply
I only have my EIN at the moment and am POD on printify. Do I need my certificate of authority AND a ST-120? Or do I need to COA form to get my ST-120 on the printify site?
Reply
Before you can get a resale certificate in New York, you will need to get the Sales Tax Certificate of Authority first from the NY Department of Taxation and Finance. Then submit the resale certificate to Printify and you won’t be paying the sales tax (your customers will)
Hope that answers your question!
GregReply
