Navigating Sales Tax Exemption Certificates

If you don’t collect sales tax on a taxable sale, you need to validate the exemption by collecting an exemption certificate or resale certificate from your customer. Otherwise, you could be liable for the uncollected tax, associated penalties, and interest.

 What is an Exemption Certificate? An exemption or resale certificate is a document that identifies the business or individual making the exempt purchase and the reason for the exemption.

Your Responsibilities as a Seller:

  1. Request Certificates: Ensure you obtain the necessary certificate from your customers.
  2. Verify Validity: Check that the certificate is accurate and valid.
  3. Store Securely: Keep these documents stored safely and accessible.
  4. Renew and Update: Keep certificates up-to-date, renewing them as required.

The consequences of not managing exemption certificates can be severe. Inaccurate, invalid, or missing certificates can lead to negative audit outcomes, potentially exposing your business to significant liabilities. You can protect your business from such risks by staying diligent and proactive in managing these certificates.

About Davis Davis & Harmon LLC – Sales Tax Experts: Headquartered in Dallas, Texas, Davis Davis & Harmon LLC – Sales Tax Experts specializes in sales/use tax refund recovery and audit defense. Our team of consultants is comprised of former Big 4 sales tax consultants and state sales tax auditors. Each of our consultants has 15 to 20 years of experience, providing our clients with access to a highly specialized team of sales/use tax professionals. At Davis Davis & Harmon, LLC, we are committed to maintaining the highest standards in our talent pool. We work hard to meet our clients’ needs by ensuring that you view our firm as an extension of your company and a member of your team.

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