New York – Resale and Exemption Certificates

SALT Report 3264 – Resale and exemption certificates are one of the most (if not the most) impacting errors found during sales and use tax audits.  As technology has progressed the expectation to produce timely, valid documentation has escalated.  Be mindful of this obligation and do your best to ensure proper contemporaneous compliance.  Errors are more easily solved at the time of the transaction as opposed to years later when the questions are asked all at once with short timelines for delivery.

“As long as the purchaser gives you the appropriate certificate, properly completed, within 90 days of the date of the purchase, you do not have to charge the purchaser sales tax.”

“You must accept the certificate in good faith, which simply means that you had no prior knowledge that the certificate was false or fraudulent.”

“You must exercise ordinary care when accepting a certificate. You could be held liable for the sales tax you didn’t collect if you knew that the purchase was not for an exempt purpose, or you knew that the certificate was false or fraudulent.”

“You have the right to refuse to accept an exemption certificate, even if it is correct and properly completed. However, if you refuse a certificate, you must charge the purchaser sales tax.”

“You must attach the exemption certificate to the record of the purchase or have some other method of associating the exemption certificate with a particular sale. You must keep the exemption certificate for at least three years from the due date of the sales tax return on which the last sale using the exemption certificate was reported.”

For Further Information:

TB-ST 240 Exemption Certificates for Sales Tax (March 2010)