How to get a Kentucky Resale Certificate [2023 Guide]

A Kentucky Resale Certificate is a document that allows a business to purchase goods and services tax-free from suppliers for the purpose of reselling those goods and services. In order to use one, the retailer will need to provide a Kentucky 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 Kentucky Department of Revenue.

For example, when a pet store purchases dog toys from their supplier to sell in the store, the pet store owner won’t typically have to pay sales tax to their supplier. When a customer (or end-user) purchases the dog toy, the retailer will charge sales tax to the customer based on the full price of the toy. The retailer will collect the sales tax from all their transactions and periodically (typically at the end of the month) send the sales tax to the state.

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.

Getting Started

Before a business starts selling products or providing taxable services, it must first get a Kentucky Sales Tax Permit from the Kentucky Department of Revenue. The Sales Tax Permit is sometimes referred to as a seller’s permit, sales tax number, or sales tax license.

Related: Do I need a business license?

How to fill out the Kentucky Resale Certificate

Filling out the Kentucky Resale Certificate (Form 51A105) is pretty straightforward but is critical for the seller to gather all the information.

If audited, the Kentucky Department of Revenue requires the seller to have a correctly filled out 51A105 Resale Certificate.  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 51A105 Kentucky Resale Certificate

Step 1 – Begin by downloading the Kentucky Resale Certificate Form 51A105 
Step 2 – If the retailer is expected to be purchasing items frequently from the seller, instead of completing a resale certificate for every invoice, check the blanket box.
Step 3 – Identify the name, business address, and Sales & Use Tax Permit Number of the buyer
Step 4 – Identify the name and business address of the seller
Step 5 – Describe the products that will be purchased
Step 6 – The purchaser will sign, list their title, and date the certificate. 

Kentucky Resale Certificate FAQs