How to get a Sales Tax Certificate of Exemption in North Carolina

When a business purchases inventory to resell, it can often do so without paying sales tax.  In order to do so, the retailer will need to provide a North Carolina Certificate of Exemption (commonly known as a Resale Certificate) to their vendor. 

Learn more about what a Sales Tax Certificate of Exemption is, how to get one, and more.

What is a Sales Tax 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 North Carolina 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 North Carolina Sales Tax Permit from the North Carolina Department of Revenue. The Sales Tax Permit is sometimes referred to as a seller’s permit, sales tax number, or sales tax license.

How to fill out the North Carolina Certificate of Exemption

A Resale Certificate is generated by filling out the Certificate of Exemption. Filling out the North Carolina Certificate of Exemption (Form E-595E) is pretty straightforward but is critical for the seller to gather all the information.

If audited, the North Carolina Department of Revenue requires the seller to have a correctly filled out E-595E Certificate of Exemption.  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 E-595E North Carolina Certificate of Exemption

Step 1 – Begin by downloading the North Carolina Certificate of Exemption Form E-595E 
Step 2 – Indicate whether the Multistate Supplemental form is being attached.  This is the second page of the exemption form.  Several states joined together to accept one resale form to make it easier for merchants
Step 3 – Check whether the certificate is for a single purchase. Otherwise, the form is considered a blanket certificate that allows a buyer to purchase multiple times from a vendor without having to file a separate certificate.
Step 4 – Include the name, address, and State Tax ID Number.  If there is no State Tax ID Number, enter the purchaser’s FEIN and Driver’s license number.
Step 5 – Enter the name and address of the seller.
Step 6 – Check the box that corresponds closest to the type of business the buyer is in.
Step 7 – Indicate the reason for exemption.  Most retailers are going to check box G for Resale. 
Step 8 – The purchaser will certify the property being purchased is for resale, including their title, phone number, and email address, then sign and date the certificate. 

E-595E Certificate of Exemption Fillable Form