Sales tax exemptions
Sales tax exemption certificate checklist
An exempt sale is only as good as the certificate behind it. A missing certificate, a certificate from the wrong state or one that expired can turn an exempt sale into tax the business owes, plus penalty and interest. This checklist covers what to collect for each exemption certificate, how to check it, and how to keep the records ready for a sales tax audit.
Who sends itSent by the firm to a business client that sells taxable goods or services and accepts resale or exemption certificates from customers.
0 of 24 ticked
01Certificate types
02What the certificate must show
03Checking the certificate
04Recordkeeping
05Filing and review
What firms get wrong
- Accepting a certificate from another state when the sale is taxable in the state where it shipped.
- Treating a customer as exempt because it is a nonprofit, without checking the state's exemption and the type of purchase.
- Keeping the certificate but not the invoice that shows what was sold.
- Using a certificate for office supplies when the exemption is limited to inventory for resale.
- Missing the expiration date and using an old certificate in an audit.
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Questions about this checklist
What is a resale certificate?
A resale certificate is a form a customer signs to buy goods without sales tax because the customer will resell them. The customer gives its sales tax permit or registration number, and the seller keeps the certificate with the sale records.
Does a business need a separate certificate for each state?
Often yes. Some states accept a multi-state or Streamlined certificate, and some require their own form. Check the rules for each state where the business has nexus and the customer claims an exemption.
Do exemption certificates expire?
Some states set an expiration date and some do not. Even when a certificate does not expire, the seller should review it when the customer's name, address, tax ID or exemption status changes.
What if the customer cannot provide a certificate?
The sale should generally be treated as taxable. The business can ask the customer for a certificate before the next sale, but it should not treat the past sale as exempt without one.
What records should a business keep for exempt sales?
Keep the certificate, the invoice, the date, the amount and the items sold, and a report that links each exempt sale to its certificate. Keep the records for as long as the state's sales tax statute requires.
Sources
Checked November 3, 2026. Tax rules, forms and thresholds change; confirm them with the IRS or your tax software before relying on them.
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