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How To Get A North Dakota Certificate of Resale [2023 Guide]

How To Get A North Dakota Certificate of Resale [2023 Guide]

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How To Get A North Dakota Certificate of Resale [2023 Guide]

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.

Is a Certificate of Resale the same as a Sales Tax Permit?

The sales tax permit and certificate of resale 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 North Dakota Sales Tax Permit

After registering, a Sales and Use Tax Permit Number will be provided by the Office of State Tax Commissioner. This number will be listed on the Certificate of Resale.

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

SFN 21950 North Dakota Certificate of Resale Fillable Form

North Dakota Certificate of Resale FAQs

How much does a Certificate of Resale cost in North Dakota?

There is no cost for a Certificate of Resale in North Dakota.

Does a North Dakota Resale Certificate Expire?

A North Dakota Certificate of Resale does not expire.

How often is North Dakota 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.

Where do I file the North Dakota Resale Certificate?

The resale certificate is kept on file by the seller and is not filed with the state.

Are sellers required to accept resale certificates?

Sellers are not required to accept resale certificates for tax exempt purchases, 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 for the sales taxes paid is available when filing the North Dakota sales tax return. 

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 North Dakota 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 North Dakota Sales & Use Tax Permit is valid by running a Sales & Use Tax Permit Inquiry on the State Tax Commissioner’s website.
– 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 wants to purchase office supplies tax-free, the seller should investigate further.  
– Keep a file of resale certificates. 

How To Get A North Dakota Certificate of Resale [2023 Guide]

How To Get A North Dakota Certificate of Resale [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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