How To Get A North Dakota Certificate of Resale [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 Certificate of Resale (also referred to as a Sales Tax Exemption Certificate or Resale Certificate) is, how to get one, and more.

What is a Certificate of Resale?

When retailers purchase products to resell, they often don’t pay state 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 Dakota Office of State Tax Commissioner.

For instance, when a furniture store in North Dakota orders a new line of sofas to sell in their showroom, by possessing a resale certificate, the furniture store owner isn’t required to pay sales tax on that purchase. When a homeowner decides to buy one of the sofas, the furniture store will apply sales tax to the final user based on the full retail price of the sofa.

The furniture store gathers the sales tax from all their transactions and, generally, at the end of each month, submits the total sales tax to the state. This process enables the tax obligation to be smoothly transferred to the end user while the furniture store performs the role of tax collector for 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 Dakota Sales Tax Permit from the North Dakota Office of State Tax Commissioner. 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 Dakota Certificate of Resale

Filling out Form SFN 21950 is pretty straightforward but it is critical for the seller to gather all the information.

If audited, the North Dakota Office of State Tax Commissioner requires the seller to correctly fill out Form SFN 21950 Certificate of Resale.  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 SFN 21950 North Dakota Certificate of Resale

Step 1 – Begin by downloading the North Dakota Certificate of Resale Form SFN 21950 
Step 2 – Enter the purchaser’s State of origin and State and Use Tax Permit number
Step 3 – Identify what the purchaser’s business sells, leases, or rents
Step 4 – Include the name of the seller
Step 5 – Enter the purchaser’s business name and address, then sign the certificate

SFN 21950 Certificate of Resale Fillable Form

North Dakota Certificate of Resale FAQs