If you buy products exclusively to resale in the state of Pennsylvania, you can avoid paying sales tax on your purchases by presenting a Pennsylvania resale certificate at checkout. Always keep in mind that you should only use your resale certificate to buy items you intend to resell, rent or that you intend to use as a component part of an item for resale. Any other use of the resale certificate is usually considered unlawful.
Let’s dig in to the rules and regulations for using (and accepting) a resale certificate in Pennsylvania.
How to Use a Pennsylvania Resale Certificate
To use a Pennsylvania resale certificate (sometimes called a reseller’s permit) you generally must already be registered to collect sales tax in the state of Pennsylvania. This registration also allows you to buy items from retailers tax-free if you intend to resale them. However, if your principal place of business is out of state, Pennsylvania is one of the states that will allow retailers to use their out-of-state reseller’s permit number.
If you wish to make a tax free purchase at retail in Pennsylvania, you must completely fill out form REV-1220.
You must present a REV-1220 Pennsylvania resale certificate to each vendor from whom you are making a purchase. You can use a resale certificate a single time, or if you plan to make more than one purchase from that particular vendor you can choose to use this form as a “blanket resale certificate.”
How to Accept a Pennsylvania Resale Certificate
If you are presented with a Pennsylvania resale certificate, you have a few responsibilities:
- Ensure the REV-1220 resale certificate is filled out completely and accurately
- Ensure you have the resale certificate in-hand within 60 days after the tax free purchase was made
- If the purchaser is not registered for a PA sales tax permit but instead gives you a sales tax ID from another state, you must verify it (if available.) You can verify resale certificates from all U.S. states here. If purchaser is not required to hold a resale certificate, make sure they explain why on #7 on the REV-1220 form.
- Keep the document on file for at least 4 years after the purchase date, in case of audit
Unlike in some states, if you receive a resale certificate in good faith in Pennsylvania, you are not required to collect sales tax from the buyer. This is even if the resale certificate later turns out to be expired or fraudulent. This “good faith” doesn’t extend to any retailer who accepts a resale certificate that is “knowingly false.” (And example of a knowingly false resale certificate is that you know your buyer owns a toy store, but she claims that she is buying jewelry from you to resell. Knowing her business, you know that this is false.)
If everything is in order, you’re clear to make the tax-free sale in Pennsylvania!
I hope this answers your questions about using or accepting a Pennsylvania resale certificate. Have questions or something to say? Start the conversation in the comments!