If you’re wondering how to fill out a resale certificate in NY, you’re likely looking to save on sales tax when purchasing goods for resale. This certificate is a game-changer for businesses, allowing them to buy inventory without paying upfront sales tax—provided they follow New York’s tax regulations correctly. For retailers, wholesalers, and e-commerce sellers, it’s not just about cost savings; it’s about maintaining compliance and avoiding costly penalties.
At Hands Off Sales Tax (HOST), we simplify the complexities of sales tax compliance, ensuring businesses stay on the right side of tax laws while maximizing their bottom line.
Understanding the New York Resale Certificate (Form ST-120)
The New York Resale Certificate, known as Form ST-120, is a pivotal document that allows businesses to purchase goods intended for resale without incurring sales tax at the point of sale. By presenting this certificate to suppliers, businesses certify that the items procured will be resold in the regular course of their operations, thereby deferring the sales tax obligation to the final consumer.
Eligibility Criteria:
In-State Vendors: Businesses registered in New York State with a valid Certificate of Authority are eligible to use Form ST-120. This includes entities such as retailers, wholesalers, and service providers who sell taxable goods or services within the state.
Out-of-State Vendors: Businesses not registered in New York State may also utilize Form ST-120 under specific conditions:
- The business is registered for sales tax purposes in another state or jurisdiction.
- The purchased goods are for resale and will be delivered directly to a customer or an unaffiliated fulfillment service provider located in New York State.
- Alternatively, the goods will be resold from a business location outside of New York State.
It’s important to note that contractors are prohibited from using Form ST-120 to purchase materials and supplies. Instead, they must use Form ST-120.1, the Contractor Exempt Purchase Certificate, when applicable.
Prerequisites Before Completing the Form
Before completing Form ST-120, it’s essential to ensure your business is properly registered and that you have all necessary information at hand.
Obtaining a Certificate of Authority
To legally collect sales tax in New York State, businesses must obtain a Certificate of Authority from the New York State Department of Taxation and Finance. This certificate authorizes your business to collect sales tax on taxable sales and to issue and accept most New York State sales tax exemption certificates.
Step-by-Step Guide to Registration:
1. Create a NY.gov Business Account:
- Visit the New York Business Express portal.
- If you don’t have an account, select “New Users, Register Here” to create one.
2. Prepare Required Information:
- Legal name of your business and any trade names.
- Business address and contact details.
- Federal Employer Identification Number (EIN).
- Names, addresses, and Social Security numbers of owners, partners, or responsible persons.
- Description of the principal business activities.
- Bank account information for the account where you’ll deposit sales taxes collected.
- Any relevant license or permit numbers.
- Your tax preparer’s information, if you’ll be using one to prepare your sales tax returns.
3. Complete the Application:
- Log in to your NY.gov Business Account.
- Navigate to the application for a Certificate of Authority.
- Fill out the application with the prepared information.
- Submit the application at least 20 days before you begin selling taxable goods or services.
Types of Certificates of Authority:
- Regular Certificate of Authority: Issued to businesses making taxable sales in New York State.
- Temporary Certificate of Authority: Intended for businesses that plan to make taxable sales in New York State for no more than two consecutive sales tax quarters.
Gathering Necessary Information
To accurately complete Form ST-120, ensure you have the following:
• Business Details:
- Legal name and any trade names.
- Business address and contact information.
• Certificate of Authority Number:
- This number is provided upon successful registration with the New York State Department of Taxation and Finance.
• Description of Goods Sold:
- A detailed list of the products or services your business sells, which will be purchased for resale.
Having this information readily available will streamline the completion of Form ST-120 and ensure compliance with New York State tax regulations.
Step-by-Step Instructions to Fill Out Form ST-120
Completing New York’s Form ST-120, the Resale Certificate, is essential for businesses aiming to purchase goods for resale without paying sales tax upfront. Here’s a detailed guide to assist you through each section of the form.
Section-by-Section Breakdown
1. Purchaser’s and Seller’s Information
Seller Information: Enter the seller’s legal name and complete address.
Purchaser Information: Provide your business’s legal name and address.
2. Single-Use or Blanket Certificate
Single-Use Certificate: Check this box if the certificate applies to a one-time purchase.
Blanket Certificate: Select this option if the certificate will cover multiple purchases of the same type over time. Note: Temporary vendors must issue a single-use certificate.
3. Purchaser Information
Business Description: Describe the nature of your business and the primary products you sell. For example, “I am engaged in the business of electronics retail and principally sell consumer electronics.“
4. Part 1 – For Registered New York State Sales Tax Vendors
Certification: Indicate your status:
- New York State Vendor: If you hold a valid Certificate of Authority, provide your certificate number.
- Temporary Vendor: If applicable, provide your temporary certificate number and its expiration date.
Purpose of Purchase: Specify the nature of the purchase:
- Option A: Tangible personal property for resale in its present form or as a component of other tangible personal property.
- Option B: A service for resale, including servicing tangible personal property held for sale.
- Option C: Restaurant-type food, heated food, or heated drink for resale.
5. Part 2 – For Non-New York State Purchasers
Certification: Confirm that you are not registered nor required to be registered as a New York State sales tax vendor.
Registration Details: Provide your sales tax or VAT registration number and the state or jurisdiction where you’re registered.
Purpose of Purchase: Indicate the nature of the purchase:
- Option D: Tangible personal property for resale, delivered directly by the seller to your customer or an unaffiliated fulfillment services provider in New York State.
- Option E: Tangible personal property for resale that will be resold from a business located outside New York State.
6. Certification
Signature: The form must be signed and dated by an authorized individual, such as the owner, partner, or corporate officer.
Title: Include the title of the person signing the form.
Common Mistakes to Avoid
- Incomplete Information: Ensure all required fields are filled out accurately. Missing details can invalidate the certificate.
- Incorrect Certificate Type: Choose between single-use and blanket certificates appropriately. Remember, temporary vendors cannot issue blanket certificates.
- Unauthorized Use: Only use Form ST-120 for purchases intended for resale. Using it for items not meant for resale can lead to penalties.
- Timely Submission: Provide the completed certificate to the seller within 90 days of the purchase to ensure it’s valid.
By meticulously completing Form ST-120 and avoiding these common pitfalls, businesses can effectively manage their tax obligations and maintain compliance with New York State regulations.
Proper Usage of the Resale Certificate
A New York Resale Certificate (Form ST-120) is a valuable tool for businesses, but it’s crucial to understand when its use is appropriate and the limitations involved.
When to Use the Certificate
Present Form ST-120 to suppliers when purchasing tangible personal property or services that you intend to resell in the normal course of your business. This allows you to acquire these items without paying sales tax at the point of purchase. For example, a retailer buying inventory to sell to customers can use the resale certificate to avoid upfront sales tax.
Limitations and Prohibited Uses
It’s important to note that the resale certificate has specific limitations:
- Personal Use: You cannot use the certificate to purchase items or services for personal consumption. If you do, you’re required to report and pay the appropriate use tax directly to the state.
- Non-Resale Purposes: Purchases of goods or services not intended for resale are not covered by the certificate. For instance, if a business buys office supplies for internal use, the resale certificate is not applicable, and sales tax should be paid at the time of purchase.
- Specific Restricted Goods: Certain items, such as cigarettes and motor fuel, are excluded from resale certificate exemptions. Attempting to use the certificate for these purchases is prohibited.
Misuse of Form ST-120 can lead to significant penalties, including fines and interest charges. Therefore, it’s essential to use the resale certificate strictly for qualifying purchases intended for resale and to maintain accurate records of all transactions where the certificate is utilized.
Responsibilities After Issuing the Certificate
Once you’ve issued Form ST-120, the New York Resale Certificate, it’s crucial to adhere to specific responsibilities to maintain compliance with state tax regulations.
Record-Keeping Requirements
Maintaining accurate records is essential. You must keep all relevant documents for at least three years from the due date of the return to which they relate, or the date the return is filed, if later. These records should include copies of all sales slips, invoices, receipts, contracts, and any other memoranda of sale. Ensure these records are readily available for review by the New York State Department of Taxation and Finance upon request.
Sales Tax Collection and Remittance
As a registered vendor with a Certificate of Authority, you’re obligated to collect sales tax from your customers on taxable sales. This includes both state and local sales taxes. The collected taxes must be remitted to the New York State Department of Taxation and Finance through timely filed sales tax returns. Failure to collect or remit the appropriate sales tax can result in penalties and interest charges.
By diligently maintaining records and ensuring the proper collection and remittance of sales taxes, your business will remain compliant with New York State tax laws.
Penalties for Misuse or Non-Compliance
Misusing New York’s Resale Certificate (Form ST-120) or failing to adhere to state tax regulations can lead to significant penalties.
Civil Penalties:
- Fraudulent Use: Issuing a false or fraudulent resale certificate can result in a penalty of $50 per misuse, plus 100% of the tax due had there been no misuse.
- Unregistered Sales: Engaging in taxable sales without a valid Certificate of Authority may incur penalties up to $500 for the first day of violation and up to $200 for each subsequent day, capped at $10,000.
Criminal Penalties:
- Misdemeanor Charges: Knowingly providing false information on tax documents, including resale certificates, is a misdemeanor under New York Tax Law Section 1817(a), potentially leading to fines and imprisonment.
tax.ny.gov
In 2024, Sotheby’s settled a lawsuit with the New York Attorney General, agreeing to pay $6.25 million for allegedly assisting clients in evading sales taxes by accepting false resale certificates.
To avoid such penalties, ensure that Form ST-120 is used strictly for legitimate resale purposes and that all sales tax obligations are met in accordance with New York State regulations.
How Hands Off Sales Tax (HOST) Simplifies Compliance
Navigating New York’s resale certificate process can be complex, and mistakes can lead to penalties. Hands Off Sales Tax (HOST) ensures businesses remain compliant while maximizing tax-saving opportunities.
Effortless Registration & Compliance
- HOST assists businesses in obtaining a New York Certificate of Authority, ensuring proper registration before issuing resale certificates.
- They guide businesses in correctly filling out Form ST-120, reducing the risk of errors that could invalidate tax exemptions.
Audit Protection & Record-Keeping
- HOST helps maintain detailed resale certificate records, ensuring businesses are prepared for audits.
- If a tax audit occurs, HOST provides expert support to defend against penalties and verify certificate validity.
End-to-End Sales Tax Management
Beyond resale certificates, HOST provides:
✔ Tax Nexus Determination – Identify where your business is required to collect and remit sales tax.
✔ Exemption Certificate Management – Maintain valid certificates to avoid tax penalties.
✔ Sales Tax Filing & Remittance – Accurate, on-time tax filings to keep you compliant.
✔ Audit Defense – Expert support if your business faces a state tax audit.
With HOST, businesses can focus on growth while leaving the complexities of sales tax compliance to the experts.
Stay Compliant and Save on Sales Tax
Mastering how to fill out a resale certificate in NY is essential for businesses looking to save on upfront sales tax while staying compliant with state regulations. From proper registration to correct usage and record-keeping, every step matters. But navigating the complexities of sales tax laws can be overwhelming.
That’s where Hands Off Sales Tax (HOST) comes in. HOST simplifies the process, ensuring accuracy, compliance, and peace of mind. Whether you need help registering, filing, or defending against audits, HOST is your expert partner. Reach out today for a consultation and take sales tax compliance off your plate.
