New York State Resale Certificates: Obtaining Exemption from Sales Taxes

This guide will show you how to obtain a New York State resale certificate. This will allow you to buy merchandise that is purely for resale without having to pay sales tax.

This guide will also look into the options and requirements to register a resale business in the state of New York as well as other legal requirements. Particularly relevant among these is the Certificate of Authority, which is indispensable if you want to apply for a resale certificate.

When you are running a resale business, every penny counts. In the state of New York, certain exemptions enable you to avoid paying taxes when purchasing from a supplier. This exemption comes in the form of a sales tax exemption certificate. This allows you to make tax-free purchases of goods for the purpose of resale that would otherwise be subject to tax. This includes most tangible personal property and some services.

Obtaining and Using a New York State Resale Certificate

As a registered business in the State of New York, creating and using a resale certificate to exempt your purchases which are purely for the purpose of resale from being taxed is a simple process. You must download Form ST-120 and provide it properly filled-in to your supplier when making the purchase. 

According to the Department of Taxation and Finance, the exemption certificate must include all of the following information:

  • the date it was created;
  • the purchaser’s name and address;
  • the seller’s name and address;
  • the identification number on the purchaser’s Certificate of Authority;
  • the purchaser’s signature, or an authorized representative’s signature; and
  • any other information required by that particular certificate.

The Certificate of Authority is an important requirement for conducting business in the state of New York, and is tied to the business registration process, more information about obtaining a Certificate of Authority in New York State can be found here.

The seller is free to decide not to accept your tax exemption certificate. In that case, you may still file for a sales tax refund with the Department of Taxation and Finance by using the Form AU-11.

Additionally, if you are working with one supplier for a while and are making repeat purchases of the same product type, you may use a blanket certificate. This gives you the option to use one tax exemption certificate for all similar purchases. This way, you avoid having to submit a separate sales tax exemption certificate on every purchase.

There is one more thing to note: intentional misuse of exemption certificates will lead to penalties, fines, and a potential jail sentence.

How to Register a New Business in New York State

To streamline the process of registering a business, the New York State government portal has created a guide called New York Business Express. Within it, you will find the Business Wizard, a tool designed to help you find out what you need to do to set up your business. It gives you a list of questions that you have to answer. Questions include:

  • Business Category – choose between starting a new business or expanding an existing business. Provide information on the type of business you will conduct and whether you will have a secondary business.
  • Business Location – choose the NY county where your primary address will be. Answer whether you plan to do your primary business in other counties and whether you already have, or plan to buy, an existing business.
  • Legal structure – choose the legal structure of your business entity. We will discuss this in more detail below.
  • Employees – provide details on potential employees (if any) and whether you would like to receive further information on employer obligations.
  • Business Details – answer a list of questions regarding your business, such as contact details, partners’ details, etc.

Once you have answered the Business Wizard questions, you will be given a checklist of requirements to set up your business. You will need to have a registered business before you can apply for tax exemptions.

Business Registration

One of the requirements during the registration process for a business is registering with the Department of Taxation and Finance. This being an important step, it is advisable to consult a business advisor or an attorney to complete this process without making any mistakes.

Each business structure comes with its own obligations and liabilities but also determines what licenses and permits you need to conduct business in the state of New York. Which option you choose can depend on your business’s size, assets, and the number of people joining you in setting up or running the business. All registered businesses, of any configuration are able to obtain a resale certificate also known as a sales tax exemption certificate, which allows you to make tax-free purchases that would otherwise be subject to tax, an important step to avoid overpaying.

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