If you purchase a product for resale in the state of Michigan you can often avoid paying sales tax on your purchases by presenting a Michigan resale certificate at checkout. Always keep in mind that you should only use your resale certificate to buy items you intend to resell or that you intend to use as a component part of an item for resale or incorporated into a service that will be taxed when it is sold. Any other use of a Michigan resale certificate (such as buying office supplies or personal items) is usually considered unlawful.
Here are the rules and regulations for using (and accepting) a resale certificate in Michigan.
How to Use a Michigan Resale Certificate
Retailers who wish to buy items tax free for resale in the state of Michigan must present a Michigan resale certificate to the seller when making the purchase. For this purpose, Michigan provides Michigan Sales and Use Tax Certificate of Exemption form 3372 for resellers who wish to buy items tax free at retail.
In Michigan, it is the purchaser’s responsibility to ensure that they are using the resale certificate lawfully to buy products they truly intend to resell. Using a resale certificate incorrectly can result in tax, statutory penalty and interest.
While Michigan provides form 3372, this is not the only form that resellers can present when buying items tax free at retail. The Michigan Department of Treasury also allows the Uniform Sales and Use Tax Certificate approved by the
Multistate Tax Commission, the Streamlined Sales and Use Tax Agreement Certificate of Exemption, or the same information as found on the Form 3372 in another format from the purchaser.
Also keep in mind that vendors are not required to accept your resale certificate. If your vendor does not allow you to purchase items tax free you may have recourse to recover the sales tax you paid on items you intended to resell.
How to Accept a Michigan Resale Certificate
If you are a Michigan retailer and your buyer presents you with a resale certificate, you should:
- Ensure the resale certificate is properly filled out – Ensure that the buyer has completely filled out a valid resale certificate form, and signed and dated it. Also keep in mind that the resale certificate or an alternative (the Uniform Sales and Use Tax Certificate approved by the Multistate Tax Commission, the Streamlined Sales and Use Tax Agreement Certificate of Exemption, or the same information in another format from the purchaser) is required. Just a Michigan tax ID number minus other information is not sufficient for your buyer to make purchases tax free.
- Verify that your buyer’s sales tax ID is valid – Michigan does not have online resale certificate verification, but you can call in to the Michigan Department of Treasury to verify that your buyer’s resale certificate is valid. If your buyer’s sales tax ID is from another state, use this list of online links to verify sales tax IDs in all U.S. states.
- Keep the resale certificate on file – The Michigan Department of Treasury instructs retailers to keep all sales tax exemption certificates on file for four years.
I hope this post has helped you determine how to use and accept a Michigan resale certificate. If you have questions or something to say, please start the conversation in the comments below!