If you buy products at retail in order to resell them, you can often avoid paying sales tax when making the purchase.
In Utah, this process is fairly simple. You just need to prove that you are registered to collect sales tax. And if your customer wants to buy items for resale, you just need to ask them for a Utah TC-721 Exemption certificate. Let’s look at the specifics.
How to Use a Utah Resale Certificate
If you wish to buy items for resale in the state of Utah, present your vendor with Utah Form TC-721 – Exemption Certificate.
Keep in mind that a resale certificate is only to be used to buy products you truly intend to resell. The “Resale or Re-lease” section on the Utah Exemption Form TC-721 requires that they confirm this. If you buy products without paying sales tax using a resale certificate and then end up consuming them or not reselling them, you are required to pay sales tax on that purchase directly to the Utah Tax Commission.
How to Accept a Utah Resale Certificate
If you make retail sales in Utah, chances are you will be presented with a resale certificate at some point. Here’s what to do if that happens:
Ensure the resale certificate is completely and accurately filled out – The Utah resale certificate should include the business name, the buyer’s name, their address and phone number, signature and sales tax license number. All fields must be filled in for the resale certificate to be valid.
Accept the resale certificate if you can do so “in good faith” – Utah does not require vendors to verify a resale certificate. Instead, they allow vendors to accept resale certificates if you make a “good faith” effort to ensure that the buyer is truly a reseller. (Your buyer is asked to assert this when signing the resale certificate.) Other states are different, so use these resources if you need to verify a resale certificate from another U.S. state.
Keep the resale certificate for three years – Utah law requires that you keep the resale certificate for 3 years after the non-taxable sale in the case of an audit.
For more about Utah resale certificates, you can contact the Utah State Tax Commission. Have questions or something to say? Start the conversation in the comments!