When you buy wholesale products with the intent to re-sell, you most likely qualify for a sales tax exemption. Here’s how to get tax-exempt status in Utah:
Why are wholesale products exempt from sales tax?
Implementing a sales tax exemption for the purchase of wholesale items ensures products purchased for re-sale aren’t subject to double taxation. Double taxation happens when a business-to-business transaction precedes a consumer sale. Here’s how that works:
Traditionally, sales tax is implemented whenever a product is sold. But with wholesale, products are usually sold by manufacturers to smaller businesses that intend to re-sell those items to consumers. Without a tax exemption for re-sale items, sales tax would be charged when the manufacturer sells its product to the small business AND when that business re-sells those products to consumers. Hence: double taxation.
How do I qualify for sales tax exemptions in Utah?
In Utah, you’ll need an Exemption Certificate from the Utah State Tax Commission to qualify for tax-exempt status. In other states, this qualification is known as a: reseller license, reseller permit, resale license, resale certificate, or a sales tax license. Different names, same general purpose.
What do I need to get a Utah Exemption Certificate?
To get tax-exempt status for purchasing wholesale items in Utah, you’ll need to complete a Utah Exemption Certificate (Form TC-721). This form is used by a variety of businesses and projects for different types of tax exemptions. (For example: religious, alternative energy, tourism, etc.) Make sure to check the first box on the top-left side of the form: “Resale or Re-lease.”
When submitting form TC-721, be sure to include your sales tax license number in the header at the top of the form. If you don’t have a sales tax license number yet, you can get one through the Utah State Tax Commission.
Can I use my multi-state resale certificate in Utah?
Yes. The Uniform Sales & Use Tax Exemption/Resale Certificate is currently accepted in 36 states, including Utah. For more information about this multi-state resale certificate—or to apply—visit the Multistate Tax Commission’s website.