Illinois Is Booming
There are more than 1.2 million small businesses operating in the state of Illinois. These businesses employ 2.5 million people, which is 45.1% of the state’s workforce and nearly 20% of the whole population. Small businesses account for 99.6% of the state’s private enterprise, making them an important part of Illinois’s economy.
Great Universities And Research
There are more federal research dollars flowing into the universities here than any other region in the U.S. So if you just look at the federal funding–and this is just for Illinois, Michigan, Wisconsin, those three alone receive over $2 billion a year in U.S. federal funding. And it depends on the year, but they’re number three, four and five within the U.S. in research funding.
What is A Tax Resale Certificate?
It is critical that you understand that tax resale certificates can also be used on items that will be resold. Office supplies, such as new computers for your employees, would not fall under the category of retail. It would be considered fraud not to pay sales tax on these items.
If this is confusing for you, just think of tax resale certificates as state tax exemption certificates. Some states actually call them exemption certificates or reseller’s permits.
Is The Tax Resale Certificate The Same As A Seller’s Permit?
Even though tax resale certificates are called reseller’s permits in some states, it is important not to confuse them with seller’s permits. A seller’s permit allows a retailer to charge tax on items that they are going to sell to a customer. A tax resale certificate allows you to buy items that are intended for resale without paying a sales tax on those items.
Does A Vendor Have To Accept My Tax Resale Certificate?
It is extremely important to a retailer’s bottom line that they do not pay sales taxes on goods if there is a possibility that the tax can be exempted on a state level. However, it is also crucial to understand that a wholesaler is not required to accept your tax resale certificate in some states.
What If A Customer Presents Me With A Tax Resale Certificate?
A customer can also present a tax resale certificate to you as a retailer and it is your discretion of whether or not you want to exempt them from the required sales tax. It is always a good idea to check on the certificate because you will be held responsible, if the certificate is expired or fraudulent, for the unpaid state sales tax. Verification is key in making sure that the correct due diligence has been completed to authenticate the tax resale certificate.
The Various State Tax Laws Can Be Confusing
Each state has its own unique tax laws related to retail sales tax that are constantly changing. There are many different definitions of what is nexus and what manner of tax resale certificates are acceptable. Some states accept resale documentation from other states, while many do not.
Third-party fulfillment companies make this even more difficult to comprehend. A large company like Amazon can have one shipment travel through a dozen states, which can often trigger nexus.
Illinois
Before you’ll use a resale certificate, you want to register your business with the state. This process varies depending on what type of company you have. For more detailed information on how to register your business in Illinois, see the Department of Revenue’s instructions. Note that you simply could also be liable for filling out other tax forms also.
After registering your business, you will receive an Illinois Certificate of Registration, which allows you to conduct business responsible for remitting sales taxes to the state. You must then display the certificate prominently in your home or business. Certificates of Registration are renewed automatically so long as you are up-to-date on filing and payment obligations.
The instructions for a way to use for a resale certificate in Illinois are fairly straightforward since you do not even need to send anything to the state. You are in charge of keeping track of your purchases, as described in more detail below.
How to Use a Resale Certificate
Once your business is registered as a reseller with the Illinois Department of Revenue, you want to keep track of your tax-exempt purchases on a resale certificate. Certificate of Resale (Form CRT-61) provides an easy way for you to do this, although you may use your own form so long as it contains all of the required information. No matter which format you employ, you want to provide the retailer with a replica.
On the form, you must include the name and business addresses of both the seller and purchaser. You must also include your retailer account ID number and/or your reseller number.
What could be tricky is making sure your purchases actually qualify as exempt from sales, so be sure to read the Department of Revenue’s definitions regarding sales and use taxes carefully.
Expiration of Illinois Resale Certificates
The Illinois Department of Revenue notes that resale certificates documenting tax-exempt purchases must be updated a minimum of once every three years.
If you’d like to have some peace of mind that you’re complying with all applicable tax rules, you might consider working with an attorney or legal document preparation service, which can guide you through the process.
Do Not Get Frustrated.
We understand that this is a whirlwind of information that can be very frustrating. There are great differences between states and you do not have the time to sort this out and properly run your business. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our other blogs in this series so you can learn even more valuable information about tax resale certificates.