How to get a Louisiana Resale Certificate [2023 Guide]
A Louisiana 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 Louisiana 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 Louisiana Department of Revenue.
For instance, when a seafood market in Louisiana purchases items like shrimp, crawfish, or oysters from local fishermen or seafood distributors to sell in their market, by having a resale certificate, the market owner won’t pay sales tax on these transactions. When a customer purchases seafood to make dinner at home, the retailer will charge sales tax to the customer based on the full price of the items.
Throughout the course of the business day, the seafood market will accumulate sales tax from all their transactions with customers. Periodically, typically at the end of the month, the market owner will collect all the sales tax that has been charged to the customers and send it to the state of Louisiana.
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, sales tax 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, it must first get a Louisiana Sales Tax License from the Louisiana Department of Revenue. The Sales Tax License is sometimes referred to as a seller’s permit, sales tax number, or sales tax permit.
Is a Resale certificate the same as a Sales Tax License?
The Sales Tax License and Resale Certificate are commonly thought of as the same thing, but they are actually two separate documents. The Sales 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: Do I need a business license?
Applying for a Louisiana Resale Certificate
Assuming the buyer’s Sales Tax License application was registered using a NAICS code that indicates the business sells tangible personal property, the Resale Certificate will be issued automatically by the Department of Revenue.
Otherwise, you will apply online through the Louisiana Department of Revenue’s LaTAP system.
The following information will be needed to begin the application process:
- Account numbers for all locations
- Locations and mailing addresses for all business locations
- Current NAICS code
- A valid e-mail address
- Last 2 years of resale inventory purchase amounts (for consolidated filers, purchase amounts should consist of the combined purchases of all members of the consolidation)
Louisiana Resale Certificate FAQs
How much does a Resale Certificate cost in Louisiana?
There is no cost for a Louisiana Resale Certificate.
Does a Louisiana Resale Certificate Expire?
As long as the business reports sales activities in the state and is current on all tax payments, the Louisiana Resale Certificate is automatically renewed.
How often is Louisiana 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 quarterly 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 Louisiana sales tax return.
If the seller is out-of-state, Louisiana 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 License 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 Louisiana 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 resale certificate is valid and active by visiting the Louisiana Department of Revenue’s website and look for the “Resale Certificate Validation” section.
– 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)