Notice to Retailers Regarding Sales and Use Tax Resale Certificate
This Informational Publication has been superseded by IP 93(4.2)
Introduction: This informational publication is intended as a general guide to retailers concerning the proper use of resale certificates. Unless a purchaser issues a properly completed resale certificate to the retailer at the time of sale, and it is retained in the retailer's records, the gross receipts from any sale will be presumed to be subject to sales tax.
The resale certificate must conform to specifications prescribed by the Commissioner of Revenue Services. A retailer cannot accept the purchaser's tax registration number in lieu of a resale certificate.
Q. WHO CAN PROVIDE A RESALE CERTIFICATE TO A RETAILER?
A. A person who:
1. (a) is engaged in the business of selling goods or services of the type sought to be purchased, or
(b) will resell the service sought to be purchased, which is enumerated as a taxable service in Conn. Gen. Stat. 12-407 (2) (i), as an integral, inseparable component part of a service enumerated in Conn. Gen. Stat. 12-407 (2) (i), and
2. has been issued a seller's permit by the Connecticut Commissioner of Revenue Services, or has been similarly registered by the revenue agency of another state (in which case additional information is requested, see below), and
3. at the time of purchase, intends to sell what is being purchased in the regular course of business.
Q. WHO MAY NOT ISSUE A RESALE CERTIFICATE TO A RETAILER?
A. A person who:
1. is not engaged in the business of selling goods or services of the type purchased from the retailer, or
2. does not intend to sell the goods or services purchased in the regular course of business.
a. A car dealer can not issue a resale certificate when purchasing a computer system. Car dealers are not engaged in the business of selling computers.
b. A contractor who does not sell at retail may not issue a resale certificate for goods consumed in the completion of a construction contract.
Q. WHAT INFORMATION MUST BE INCLUDED ON THE RESALE CERTIFICATE?
A. The resale certificate must:
1. be signed by the issuer,
2. bear the name and address of the issuer,
3. describe the general character of the property or service sold by the issuer in the regular course of business,
4. describe the property or service being purchased by the issuer from the seller,
5. bear the 10-digit Connecticut tax registration number assigned to the issuer (as it appears on the issuer's Connecticut Sales and Use Tax permit).
Q. WHAT ADDITIONAL INFORMATION SHOULD BE INCLUDED WITH THE RESALE CERTIFICATE IF THE ISSUER IS AN OUT-OF-STATE BUSINESS THAT IS NOT REQUIRED TO HAVE A CONNECTICUT SALES AND USE TAX PERMIT?
A. The Connecticut resale certificate should bear the tax identification number from the issuer's state of business, or, if none, the federal employer identification number.
In addition, the issuer must attach to the resale certificate some proof (including a location and phone number) that the issuer is engaged in business. This could include the issuer's:
2. business stationery, or
3. business card.
Finally, the issuer should attach a statement to the resale certificate stating that the issuer is not required to have a Connecticut seller's permit because it is not making sales in Connecticut or making sales that are otherwise subject to Connecticut sales and use taxes.
Q. MUST A PURCHASER ISSUE A NEW RESALE CERTIFICATE FOR EACH PURCHASE FROM THE SAME RETAILER?
A. A resale certificate may be issued for one purchase, or may be issued as a "Blanket Certificate" for a continuing line of purchases that are for resale. For a resale certificate to be used for a continuing line of purchases, the certificate should be marked "Blanket Certificate."
A Blanket Certificate is valid only for:
1. purchases of items or services described in the certificate, and
2. the period in which the issuer is purchasing those items for resale.
Blanket Certificates should be renewed every three years to verify that the information contained on them is still correct.
Q. WHAT IS THE RETAILER'S RESPONSIBILITY IN ACCEPTING A RESALE CERTIFICATE?
A. The retailer may accept a resale certificate if, and only if, it is taken in good faith from the issuer. The property purchased must be similar to or of the same general character as that which the retailer could reasonably assume would be sold by the issuer ,or, if a service, it must either be similar to or of the same general character as that which the retailer could reasonably assume would be sold by the issuer or be resold by the issuer as an integral, inseparable component part of a service also enumerated in Conn. Gen. Stat. §12-407(2)(i). The retailer cannot accept a resale certificate if the retailer has reason to believe that:
1. the issuer does not ordinarily sell the types of goods or services purchased, or
2. the goods or services will not be resold.
a. If an auto repair shop attempts to purchase a computer on a resale certificate, the retailer should not accept the certificate. The retailer would have reason to believe that auto repair shops do not ordinarily sell computers in the regular course of business.
b. If a computer store attempts to purchase a personal computer on a resale certificate and requests that it be delivered to the store owner's home, the retailer should not accept the resale certificate. The retailer would have reason to believe that computer will not be resold.
c. A management company providing taxable services to industrial, commercial or income-producing real property contracts with a protective services company for watchman services (taxable under Conn. Gen. Stat. 12-407 (2) (i)) on an as-needed basis to guard the property it manages. It may purchase the protective services on a resale basis. On the other hand, protective services purchased by the management company to guard its own offices may not be purchased on a resale basis because such services are not being purchased to be resold by the management company as an integral, inseparable component part of its services.
Q. HOW LONG MUST RETAILERS KEEP RESALE CERTIFICATES THAT HAVE BEEN ISSUED TO THEM?
A. Retailers must keep resale certificates that have been issued to them for at least three years. Resale certificates should not be mailed to the Department of Revenue Services.
Q. WHAT PENALTIES ARE IMPOSED FOR THE IMPROPER ISSUANCE OR ACCEPTANCE OF A RESALE CERTIFICATE?
A. Resale certificates are subject to review by the Department of Revenue Services. Audit assessments will be made against those accepting improperly issued certificates. Knowingly false statements made on resale certificates are punishable by a fine not to exceed $1,000 or by imprisonment not in excess of one year, or both.
EFFECT ON OTHER DOCUMENTS: IP 93(4) issued 2/24/93 is revised to clarify department policy and may no longer be relied upon on or after the date of issuance of this informational publication.
For Further Information on Connecticut Taxes: Please call the Department of Revenue Services during business hours, Monday through Friday:
Forms and Publications: Forms and publications are available all day, seven days a week:
- Internet: preview and download forms and publications from the DRS Web site: http://www.ct.gov/drs or;
- Telephone: Call 1-800-382-9463 (toll-free from within Connecticut) or 860-297-5962 (anywhere) and select Option 2 from a touch-tone phone.
Sales and Use Taxes
Replaces: IP 93(4), issued 2/24/93