How to Use an Illinois Resale Certificate?
If you are a business owner in the State of Illinois, you need to know how to use a resale certificate. This document is used to purchase tax-free items for resale. It is a good idea to keep a copy of this document handy in case you are ever asked for it.
One of the most confusing aspects of sales tax compliance is understanding how resale certificates work. In short, resale certificates are documentation that allows businesses to make purchases tax-free, assuming they will be reselling the inventory to customers in their own state. Most states accept resale exemption certificate documentation from other states, but there are some exceptions. For example, some suppliers will require you to register for a state sales tax permit before they will honor an out-of-state resale certificate.
For this reason, knowing the rules and regulations for each state in which you do business is important. We recommend contacting a sales tax expert for help with this process. For Illinois, a resale certificate allows businesses to purchase goods and services tax-free on the condition that they will resell them to other residents of the state. The retailer then collects sales tax from the end customer. The state has created a multi-state form (Form CRT-61) that you can use to document your tax-exempt purchases or create your own resale certificate.
How to File an Illinois Certificate of Resale?
The Illinois Certificate of Resale is a sales tax exemption form that must be completed by businesses purchasing items for resale in Illinois. The form requires information such as the buyer’s name and address, the date of the purchase, and a detailed description of the goods being purchased. The seller must keep a copy of the certificate on file for future reference. If the seller fails to submit the certificate, they may be subject to penalties from the state tax authorities.
The resale exemption is a common exception to sales tax rules, but its specifics vary by state. For example, while most states require businesses to register as resellers, the process varies by type of business. Some states also require a business to display its registration number in a prominent location in the workplace.
While sellers are generally required to honor resale certificates, they must be careful to evaluate each certificate before deciding whether it is valid. If a seller suspects that a buyer is trying to take advantage of the exemption, they can refuse to accept the certificate.
