How to get a Certificate of Exemption in Michigan

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 Michigan Certificate of Exemption (commonly known as a Resale Certificate) to their vendor. 

Learn more about what a Resale Certificate is, how to get one, and more.

What is a Certificate of Exemption?

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 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 Michigan Department of Treasury.

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 Michigan Sales Tax License from the Michigan Department of Treasury. The Sales Tax License is sometimes referred to as a seller’s permit, sales tax number, or sales tax permit.

How to fill out the Michigan Sales and Use Tax Certificate of Exemption

A Certificate of Exemption resale certificate is obtained by filling out Form 3372 from the Department of Treasury titled Michigan Sales and Use Tax Certificate of Exemption.

Filling out the 3372 is pretty straightforward but is critical for the seller to gather all the information.

If audited, the Michigan Department of Treasury requires the seller to have a correctly filled out Form 3372.  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 Michigan Sales and Use Tax Certificate Exemption (Form 3372)

Step 1 – Begin by downloading the Michigan Resale Certificate Form 3372 
Step 2 – Indicate whether the transaction is a one-time purchase or a blanket certificate.  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 box should be used. The purchaser can select whether the blanket certificate will be used in the foreseeable future or expires on a certain date. Certificates are only valid for four years.
Step 3 – Check whether the certificate covers all items purchased from the seller or is limited to certain items.
Step 4 – Indicate the reason for sales tax exemption.  If a retailer is purchasing merchandise for resale, check box number 2 and include their Sales Tax License Number.
Step 5 – Fill out the name of the business, address, phone number, signature, title, and date.

Michigan Sales and Use Tax Certificate of Exemption  Fillable Form 3372