Resale and Interstate Sales Documentation

The State Board of Equalization (BOE) collects sales tax from us that we collected from the customers. Dealers that are buying from us in order to resell the goods to another ends user usually have a resale permit from the State Board of Equalization (BOE) exempting them from paying sales tax on their purchase. It is up to us to prove that the dealer does hold a valid resale permit; otherwise, the BOE can require us to pay the sales tax on the sale. In order to prove it, we must have attached to each RESALE invoice a completely filled out and signed Resale Certificate.

This form asks the dealer to sign that they hold a valid resale permit, ant that the item they are purchasing is intended for resale and not for personal use. A specific description of the merchandise being sold is required, including serial numbers as appropriate. Attach the resale form to the sales slip. It isn’t okay to fill one out and use it for the next five years’ worth of sales, mainly because they expire yearly! So the general rule is, fill one out for EACH sale and attach it to the invoice.

If the dealer doesn’t know their resale number, he must pay the tax due and we’ll refund it to him upon receipt of his completed resale certificate.

For dealers that we sell to often, we can keep a resale form “on file” and not have to fill one out for each sale. In that case, route the resale form to Accounting with a note stating, “Keep on file.” Resale permits expire every year, so Accounting must set reminders and get a new one from those repeat dealers each year.

If the dealer is out-of-state and we are shipping the merchandise to them, then all that is necessary is their out of state address on the invoice. The shipping record will prove that no California State sales tax was due.

For INTERSTATE sales (sales to out-of-state customers)

If we are shipping the merchandise to them and they are purchasing over the phone, then all that is necessary is their out-of-state address on the invoice. If a customer purchases an item in the store but wants it to be shipped out of state, we must have attached to the invoice a completely filled out Interstate Certificate. This form asks them to sign that they are purchasing the item for use outside of the state of California.

See also special rules regarding Mexican resale transactions.

If we don’t have these certificates we will be liable to pay the sales tax ourselves, plus penalties and interest. And we do get audited by the BOE regularly, so it isn’t a “maybe we can get away with it” situation.

An important note: WE DO NOT SHIP EMPTY BOXES TO AN OUT OF STATE ADDRESS! If the person wants to take the item with them out of the store today, they must pay the sales tax.

These forms are kept with the sales invoices. The person who writes the invoice is responsible to see that these items are filled out and attached.