How to Get a Kentucky Resale Certificate?

When you operate a business in Kentucky where you resell tangible goods and items, obtaining a Kentucky resale certificate can be beneficial. Not all businesses need one, so it is worth your time to learn more about this type of business certificate to determine whether your business could benefit from having one.

What is a resale certificate?

A resale certificate is a special permit issued by the Kentucky Department of Revenue that allows you to avoid paying sales tax on any goods or items you intend to resell to your customers. Instead, you collect the sales tax from your customers when you resell the products.

For example, you sell handcrafted vintage wooden furniture. Any of the wood and materials you use to produce a piece of furniture could be purchased tax-free from your vendors and suppliers if you had a resale certificate. Then, when you sell the piece of furniture, you collect sales tax from the customer and remit it to the state periodically.

Who needs a Kentucky resale certificate?

As previously mentioned, any type of business structure—sole proprietorship, partnership, LLC, or corporation—that purchases goods and items and resells them to their customers needs a resale certificate in Kentucky.

However, you can only receive the sales tax exemption on items that will be used to manufacture finished goods or be added to your inventory. For instance, printer paper, computers, cash registers, cleaning supplies, and office supplies used for your daily operations do not qualify for the sales tax exemption.

Do Kentucky resale certificates expire?

When the Kentucky Department of Revenue issues resale certificates, they do not have an expiration date. However, they do recommend business owners review their Kentucky resale certificates every four years to verify the information on the certificates is still valid.

If there have been changes, like a change in ownership, location of the business, or business structure, then you should refile for an updated resale certificate.

What are other names for a Kentucky resale certificate?

Resale certificates in Kentucky may be called by other names, including:

Kentucky Resale Permit
Kentucky Resale License
Kentucky Wholesale Permit
Kentucky Wholesale Certificate
Kentucky Wholesale License
Kentucky Sales Tax Exemption Certificate
Kentucky Sales Tax Exemption Permit
Kentucky Sales Tax Exemption License
Kentucky Reseller’s Permit
Kentucky Reseller’s License
Kentucky Reseller’s Certificate

Regardless of what you prefer to call it, it still allows your business to receive a sales tax exemption on goods and items you intend to resell to your customers.

Is a resale certificate the same as a seller’s permit in Kentucky?

It is easy to confuse a Kentucky seller’s permit with a resale certificate since some people also refer to a wholesale license as their seller’s permit. In some states, businesses only need to obtain a seller’s permit to receive a sales tax exemption.

However, the Kentucky Department of Revenue treats these documents as two separate certificates. They do this because not all businesses require a wholesale license. Yet all businesses that sell taxable goods and services need a seller’s permit.

The easiest way to remember the difference is your Kentucky seller’s permit is your sales tax identification number that you need to conduct business when you sell taxable goods or services. In comparison, your resale permit allows you to receive a sales tax exemption.

Can I use my Kentucky resale license out of state?

Most other states will accept your resale license and waive sales tax when they are required to collect taxes on out-of-state sales. However, there are a few states that will not honor your resale certificate, including:

Florida
Louisiana
Alabama
Maryland
Massachusetts
Illinois
Washington
California
Hawaii
District of Columbia

If you have suppliers or vendors in these states that must collect out-of-state sales tax on the inventory goods you purchase, you can apply for and obtain a wholesale license issued by the appropriate state.

For example, you have a vendor you use in Illinois that is required to collect sales tax from you. To get a sales tax exemption, you can obtain an Illinois resale certificate you can use in place of your Kentucky wholesale permit.