How to get a Hawaii Resale Certificate [2023 Guide]
When a business purchases inventory to resell, it can do so without paying sales tax. In order to do so, the retailer will need to provide a Hawaii Resale Certificate to their vendor.
Learn more about what a resale certificate is, how to get one, and more.
What is a Resale Certificate?
When retailers purchase products to resell, they often don’t pay sales tax to the supplier on the purchase. The sales tax will still be paid, but instead of the retailer paying the state sales tax, the retailer charges sales tax to their customer on the final value of the merchandise. The collected sales tax is then sent by the retailer to the Hawaii Department of Taxation.
For instance, when a souvenir shop in Hawaii purchases products such as jewelry, crafts, or clothing, to sell in their store, by having a resale certificate, the shop owner won’t pay sales tax on these transactions. When a tourist purchases a souvenir, the retailer will charge sales tax to the customer based on the full price of the item.
Throughout the day, the souvenir shop will accumulate sales tax from all their transactions with customers. Periodically, typically at the end of the month, the shop owner will collect all the sales tax that has been charged to the customers and send it to the state of Hawaii. In this way, the sales tax is effectively paid by the final consumer, not by the businesses involved in the supply chain.
The purpose of the certificate is to provide evidence of why sales tax was not collected on a transaction. Similar names for a resale certificate include reseller number, seller’s permit, exemption certificate, wholesale license, or reseller’s license. In order for the supplier to allow the tax-exempt purchase, the seller needs proof the buyer intends to resell the product by providing a valid resale certificate.
The sales tax exemption is only intended to be used for inventory that will be resold and not intended for the tax-free purchase of tangible personal property used in normal business operations such as paper, pens, etc.
Before a business starts selling products or providing taxable services, it must first get a Hawaii General Excise Tax License from the Hawaii Department of Taxation. The General Excise Tax License is sometimes referred to as a seller’s permit, sales tax number, or sales tax license.
Is a Resale Certificate the same as a General Excise Tax License?
The General Excise Tax License and resale certificate are commonly thought of as the same thing, but they are actually two separate documents. The General Excise Tax License allows a business to sell and collect sales tax from taxable products and services in the state, while the Resale Certificate allows the retailer to make tax-exempt purchases for products they intend to resell.
Related: How to register for a Hawaii General Excise Tax License.
After registering, a sales tax number will be provided by the Department of Taxation. This number will be listed on the certificate of resale.
How to fill out the Hawaii Certificate of Resale
The Department of Taxation has created Form G-17 – Resale Certificate for Goods to document tax-free transactions. Filling out the Hawaii Resale Certificate (Form G-17) is pretty straightforward but is critical for the seller to gather all the information.
If audited, the Hawaii Department of Taxation requires the seller to have a correctly filled out G-17 certificate of resale. Without it correctly filled out, the seller could end up owing sales taxes that should have been collected from the buyer in addition to penalties and interest.
Steps for filling out the G-17 Hawaii Certificate of Resale
Step 1 – Begin by downloading the Hawaii Certificate of Resale Form G-17
Step 2 – Identify the name and of the seller
Step 3 – Enter the date the certificate was prepared
Step 4 – Include the buyer’s Hawaii Tax Identification Number.
Step 5 – Describe the nature and character of the buyer’s business
Step 6 – Indicate whether the purchases are for resale at retail or leases or resale at wholesale
Step 7 – Enter the name, address, title, and signature of the buyer.
If, at any time, the percentage of purchases for resale changes, the certificate should be updated.
Hawaii Resale Certificate FAQs
How much does a Resale Certificate cost in Hawaii?
There is no cost for a Hawaii Resale Certificate.
Does a Hawaii Resale Certificate expire?
Hawaii resale certificates don’t expire, however, if the buyer’s information changes, the buyer should send a new certificate to their vendors.
Where do I file the Hawaii Resale Certificate?
The resale certificate is kept on file by the seller and is not filed with the state.
How often is the Hawaii General Excise Tax due?
Most new businesses are set up to file and pay sales and use tax monthly, but depending on the amount of tax collected, your business may have a different filing frequency.
Are sellers required to accept resale certificates?
Sellers are not required to accept resale certificates, however, most do. If the vendor doesn’t accept the certificate, the buyer will have to pay sales tax on the merchandise being purchased. In most cases, a credit is available when filing the Hawaii sales tax return.
If the seller is out-of-state, Hawaii is one of a few states that don’t recognize out-of-state resale certificates. In order to purchase tax-free from vendors in other states, the buyer will have to register for a sales tax permit in the seller’s state.
What steps should a business take to accept a resale certificate?
When a business is presented with a resale certificate, the burden of proof is on the seller to verify that the buyer’s information is correct and to keep these records. Failing to verify this information may put the liability of paying Hawaii sales taxes on the seller.
Before accepting a resale certificate, a seller should:
– Review the resale certificate to make sure it is completely filled out.
– Verify the purchaser’s Hawaii sales tax license is valid and active by visiting the Hawaii Tax Online page.
– Sellers are also responsible for examining the certificate and evaluating whether the goods sold are reasonably consistent with the purchaser’s line of business. For example, if the buyer’s business is a car dealership, but they want to purchase office supplies tax-free, the seller should investigate further.
– Keep a file of resale certificates.
Alaska (no sales tax)
Delaware (no sales tax)
Montana (no sales tax)
New Hampshire (no sales tax)
Oregon (no sales tax)
Where do I submit my G-17 Certificate of Resale form to?
Hi Jameel – If you are purchasing products for resale, you will give the G-17 certificate for the vendor to keep. If you are selling goods where the buyer is going to resell the merchandise, you will keep the certificate in a file, as the certificate is not sent to the Hawaii Department of Taxation. The Department of Taxation will randomly audit sellers to make sure they have the forms.