If you buy products for resale in the state of Rhode Island, you are generally not required to pay sales tax if you can present a valid resale certificate. This post will go over Rhode Island’s rules about using and accepting resale certificates.
How to Use a Rhode Island Resale Certificate
If you wish to purchase items that you intend to resale in the state of Rhode Island, you can provide your vendor with either a Rhode Island Resale Certificate or a Streamlined Sales and Use Tax Agreement Certificate of Exemption.
If you are not required to be registered for a Rhode Island resale certificate, you can note that on your resale certificate before handing it in to your vendor.
Also keep in mind that resale certificates are only to be used to purchase items you truly intend to sell at retail. According to the Rhode Island Department of Revenue, “A certificate may not be used to purchase items for your own use, such as office supplies, furniture and fixtures.”
How to Accept a Rhode Island Resale Certificate
As a Rhode Island vendor, chances are you may be presented with a Rhode Island resale certificate from time to time. Rhode Island allows vendors to accept proof that a purchase is for resale in the form of either:
- A Rhode Island Resale Certificate
- Streamlined Sales and Use Tax Agreement Certificate of Exemption
If presented with one of these certificates, you should:
Ensure that the resale certificate is completely filled out – According to the Rhode Island Department of Revenue, “The resale certificate should be signed by the purchaser, bear the purchaser’s name and address, and indicate the general character of the property sold by the purchaser in the regular course of business.”
Ensure that the resale certificate is valid – You can call the Rhode Island Department of Revenue and verify the validity of a Rhode Island resale certificate here. You can find out how to verify the validity of resale certificates in other states here.
Use good faith judgment that the resale certificate is not fraudulent – For example, if your buyer states on the resale certificate that they sell tropical fish but are buying coffee and printer paper, then chances are they are not truly buying those items to resell in their tropical fish store. That attempt to use a resale certificate to purchase items not intended for resale would be considered fraudulent. Though, according to Rhode Island, if it turns out you unintentionally accepted a fraudulent resale certificate, you are not on the hook to pay the uncollected sales tax unless you participated in fraud or collusion.
Do you have questions or something to say about using or accepting a Rhode Island resale certificate? Start the conversation in the comments!