Reseller permits are free for businesses that make wholesale purchases, including qualified repair businesses. The permits allow businesses to purchase items or services for resale without paying sales tax. Qualifying businesses are automatically issued a reseller permit; if a business isn’t issued one, you must apply online for a reseller permit.
How long is a reseller permit valid?
Reseller permits are generally valid for four years. However, permits are valid for only two years if the business:
- is a contractor
- has been open for less than 12 months
- has not reported gross income in the last 12 months
- was on active non-reporting status at the time the application was received
- has failed to file tax returns any time during the last 12 months
If your business’s permit is not automatically renewed, you will receive a notice to apply for a new reseller permit about 90 days before your permit expires.
Keep a copy of the permit
The reseller permit must be received at the time of sale. Permits received after the sale may not be accepted during an audit. The seller must receive a reseller permit or charge sales tax on the purchase.
A seller may accept a facsimile copy of a reseller permit.
Account ID/UBI number on invoice
The account ID/UBI number on an invoice is not sufficient. The seller must receive a DOR- issued reseller permit.
Update/how long to keep/retention
Sellers must maintain proper documentation to support wholesale sales for five years after the date of sale. Sellers must retain copies of reseller permits on file for five years after the date of sale.
Misusing reseller permits
Businesses may not use a reseller permit to buy:
- Items for personal or household use
- Items to be given away
- Items used in the business, such as supplies and equipment
- Items used by the business in performing the business activity even if billed to customers
- Tools or equipment, (unless you are in the business of directly reselling or renting out such items)
- Equipment rentals
The Department of Revenue routinely examines purchases made with reseller permits to verify permits are used appropriately. Anyone found using a permit inappropriately will owe the tax due and a 50 percent penalty, even if there was no fraud intended, and may have their permit revoked.
Possible reclassification of sale
During an audit, failure to have a valid, current reseller permit or documentation on file may result in the reclassification of the sale from wholesaling to retailing B&O tax. The business will owe sales tax for that sale.
Special Notice: Reseller Permits to Replace Resale Certificates
Excise Tax Advisory (ETA) 3005.2009