How to Get an Illinois Resale Certificate [2023 Guide]
A resale certificate allows a business to purchase merchandise tax-free from suppliers for the purpose of reselling the merchandise. In order to not pay sales tax, the retailer will need to provide an Illinois Certificate of Resale to their vendor.
Learn more about what a Certificate of Resale is, how to get one, and more.
What is a Certificate of Resale?
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 Illinois Department of Revenue.
For example, when an auto parts store in Illinois purchases components, such as tires, batteries, or brake pads from a manufacturer to sell in their store, by having a resale certificate, the store owner won’t pay sales tax on these transactions. When a customer purchases an auto part, the retailer will charge sales tax to the customer based on the full price of the item.
Throughout the course of business, the auto parts store will accumulate sales tax from all their transactions with customers. Periodically, typically at the end of the month, the store owner will collect all the sales tax that has been charged to the customers and send it to the state of Illinois. 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 items used in normal business operations such as paper, pens, etc.
Before a business starts selling products or providing taxable services, they must first get an Illinois Sales Tax Permit from the Illinois Department of Revenue. The Sales Tax Permit is sometimes referred to as a seller’s permit, sales tax number, or sales tax license.
Is a Certificate of Resale the same as a Sales Tax Permit?
The Sales Tax Permit and Resale Certificate are commonly thought of as the same thing but they are actually two separate documents. The Sales Tax Permit 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.
After registering, a sales tax number will be provided by the Department of Revenue. This number will be listed on the certificate of resale.
How to fill out the Illinois Certificate of Resale
Filling out the Illinois Certificate of Resale (Form CRT-61) is pretty straightforward, but is critical for the seller to gather all the information.
If audited, the Illinois Department of Revenue requires the seller to have a correctly filled out CRT-61 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 CRT-61 Illinois Certificate of Resale
Step 1 – Begin by downloading the Illinois Certificate of Resale Form CRT-61
Step 2 – Identify the name and business address of the seller
Step 3 – Identify the name and business address of the buyer
Step 4 – Complete information about the buyer by selecting one of the three boxes:
- The purchaser is registered as a retailer with the state of Illinois (Enter the Account ID number)
- The purchaser is registered as a reseller with the state of Illinois (Enter the resale number)
- The purchaser is authorized to do business out-of-state and will resell and deliver property only to purchasers located outside the state of Illinois
Step 5 – Describe the tangible personal property being resold or list the invoice number and date of purchase.
Step 6 – If the retailer is expected to be purchasing items frequently from the seller, instead of completing a resale certificate for every invoice, the blanket certificate section should be used. In this section, one of the boxes needs to be selected which indicates whether all purchases are for resale or a certain percentage will be for resale.
If at any time, the percentage of purchases for resale changes, the certificate should be updated.
Step 7 – The purchaser will certify the property being purchased is for resale and sign and date the certificate.
Illinois Resale Certificate FAQs
How much does a Certificate of Resale cost in Illinois?
There is no cost for a Certificate of Exemption in Illinois.
Does an Illinois Resale Certificate Expire?
While sales tax numbers can become inactive or revoked if not used, resale certificates will not expire. To ensure the buyer’s information is up-to-date, it is recommended that certificates be updated at least every three years.
Where do I file the Illinois sales tax exemption certificate?
The resale certificate is kept on file by the seller and is not filed with the state.
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, they will be able to get a credit for the sales taxes paid later when filing their Illinois sales tax return.
If the seller is out-of-state, Illinois 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 Illinois 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 Illinois account ID or Illinois resale number is valid and active by visiting MyTax Illinois and using the Verify a Registered Business tool.
– 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 are wanting to purchase office supplies tax-free, the seller should investigate further.
– Keep a file of resale certificates.
How often is Illinois sales 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.
Alaska (no sales tax)
Delaware (no sales tax)
Montana (no sales tax)
New Hampshire (no sales tax)
Oregon (no sales tax)