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How To Get A Mississippi Resale Certificate [2023 Guide]

How To Get A Mississippi Resale Certificate [2023 Guide]

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How To Get A Mississippi Resale Certificate [2023 Guide]

How To Get A Mississippi Resale Certificate [2023 Guide]

A resale certificate, also known as a resale license or reseller’s permit, is a document that allows businesses to avoid paying sales tax on products that are purchased from wholesalers or manufacturers for the purpose of reselling them to customers.

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 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 Mississippi Department of Revenue.

For instance, when a clothing boutique in Mississippi purchases a new line of dresses to sell in their shop, by having a resale certificate, the boutique owner won’t pay sales tax on this transaction. This is because these dresses are not a final purchase for the boutique, but are inventory intended to be sold to the end-user, who is the customer that will wear the dress.

When a customer decides to buy one of these dresses from the boutique, the retailer will charge sales tax to the customer based on the full price of the dress. This additional cost is the sales tax that Mississippi imposes on retail transactions.

The clothing boutique, as the retailer, is obligated to collect this sales tax from all their transactions. Then, usually at the end of each month, the boutique sends the gathered sales tax to the state’s tax department.

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.

Is a Resale Certificate 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.

Related: How to register for a Mississippi Sales Tax Permit.

The Process

Most states provide a form the retailer fills out and provides to the vendor, however, Mississippi does not have a form.  Instead, the state only requires the retailer to provide their Sales Tax Permit Number to the vendor.

Mississippi Resale Certificate FAQs

What steps should a business take to accept an order for resale?

When a business receives an order for resale to be made tax-free, it is the seller’s responsibility to follow a few steps and verify the buyer’s information.

– Verify the purchaser’s Sales Tax Permit is valid and active by visiting the Mississippi Taxpayer Access Point and clicking on “Verify a Permit Number.”
– Sellers have some responsibility for considering 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.   Also, if the seller willingly sells merchandise tax-free and knows the buyer isn’t purchasing merchandise to resell, the seller may be liable for paying the sales taxes.
– Keep a copy of the certificates

How often is Mississippi 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 instead.

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 for a tax exempt purchase, the buyer will have to pay state sales tax on the merchandise being purchased.  In most cases, a credit is available when filing the Mississippi sales tax return. 

How To Get A Mississippi Resale Certificate [2023 Guide]

How To Get A Mississippi Resale Certificate [2023 Guide]

Greg Bouhl

Greg Bouhl

Welcome! My name is Greg Bouhl, and I am a serial entrepreneur, educator, business advisor, and investor.

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