How to Get a Massachusetts Resale Certificate

How to Get a Massachusetts Resale Certificate

When purchasing goods from a business in the state of Massachusetts, the buyer customarily has to pay a sales tax as part of the total purchase price. There are exceptions to this, however. If a business buys goods from another business on a wholesale basis, the transaction will be exempt from the usual sales tax if the purchaser provides the vendor with a valid resale certificate. 

In this article we dive into the process of obtaining and using resale certificates in Massachusetts. 


What Is a Resale Certificate?

A Massachusetts resale certificate exempts a business from the obligation to pay sales tax when purchasing goods for resale. When a buyer presents a resale certificate during a wholesale transaction, it proves that they are a registered business that intends to resell the items they purchase. 

When reselling, the business is obligated to collect sales tax from the customers at that time. These taxes are passed along to the Massachusetts Department of Revenue. 

Although most states allow the use of out-of-state resale certificates, Massachusetts is not among them. In Massachusetts, a business can use only a Massachusetts-issued resale certificate. Otherwise, the business buying goods on a wholesale basis has to pay sales tax. 

The official name for a Massachusetts resale certificate is “Form ST-4, Sales Tax Resale Certificate.”


Who Needs a Massachusetts Resale Certificate?

Who Needs a Massachusetts Resale Certificate?Anyone operating a business in Massachusetts or selling taxable goods to the residents of Massachusetts is required to use a resale certificate to avoid paying taxes on goods purchased for resale purposes. They must present this certificate to the vendor at the time of the transaction. 



How Do I Get a Resale Certificate in Massachusetts

Before you can legally use an MA resale certificate, you must get a Massachusetts vendor registration. After registering your business, Massachusetts assigns you a sales tax ID number, which you should print on the resale certificate.

To fill out the resale certificate:

  • Download Form ST-4, the Massachusetts resale certificate
  • Enter your business name and address
  • Fill out a description of your business
  • Enter your Federal Employer Identification Number (EIN)
  • Describe the items being purchased
  • Include the name and address of the seller
  • State that you, the buyer, is a registered Massachusetts vendor and will resell the goods being purchased


Is a Resale Certificate the Same as a Sales Tax Permit?

No, a resale certificate is not the same as a sales tax permit. A sales tax permit gives a registered business the legal authorization to collect taxes on taxable goods in Massachusetts. When you have obtained a sales tax permit, you also get an ID number that you can use to fill out the resale certificate. 

Other Names for a Massachusetts Resale Certificate

Although resale certificates in Massachusetts are officially called Sales Tax Resale Certificates, they are sometimes informally referred to by other names, including:

  • Tax exemption certificate
  • Sales and use tax certificate
  • Wholesale certificate
  • Sales tax certification
  • Reseller’s certificate

All these names refer to the same type of certificate and have the same legal status.

Do Massachusetts Resale Certificates Expire?

No, Massachusetts resale certificates do not expire. A vendor that accepts a resale certificate is expected to retain it in their usual tax records and make it available for auditing purposes if necessary. 


What Steps Should a Business Take to Accept a Resale Certificate?

What Steps Should a Business Take to Accept a Resale Certificate?When a business is presented with a resale certificate, they have to verify its authenticity: 

  1. Check to confirm that the sales and use tax number on the resale certificate is valid
  2. Verify that the certificate is filled out correctly
  3. Confirm that the goods are related to the nature of the business

The vendor that accepts the resale certificate is expected to act in good faith and take reasonable steps to ensure that it is accurate—for example, the certificate must not be unsigned. In addition, the vendor has an obligation to reject the certificate if they know that the buyer does not make these kinds of purchases for their business. Resale certificates cannot be used to purchase items for personal use or for non-resale purposes (such as office supplies for employees).

A vendor that fails to exercise good faith in accepting a resale certificate can be held liable for uncollected sales tax. But a vendor that acts correctly in accepting a resale certificate will not be held liable even if the purchaser is later proven to have acted fraudulently. 

Purchasers that fill out a fraudulent resale certificate can be subject to penalties up to a year in prison and $10,000 in fines ($50,000 for corporations).

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  • Projected monthly sales

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