How To Get A Utah Sales Tax Exemption Certificate [2023 Guide]

Sales tax exemption certificates allow businesses to make tax-free purchases on items that will be resold. In order to do so, the retailer will need to provide a Utah Exemption Certificate (commonly known as a Resale Certificate) to their vendor. 

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

What is a Sales Tax Exemption Certificate?

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 Utah State Tax Commission.

For example, when a gourmet kitchenware shop in Utah orders a selection of high-end pots and pans to sell in their store, by having a resale certificate, the shop owner will not pay sales tax on that purchase. The sales tax comes into play when a retail customer buys the high-end cookware from the shop. The retailer adds the sales tax to the total price of the cookware at this point.

The gourmet kitchenware shop accumulates the sales tax from all their transactions throughout a specified period, usually at the end of the month. At the conclusion of the month, this gathered sales tax is transmitted to the state. This process effectively transitions the duty of paying the sales tax from the retailer to the retail customer, while the retailer serves as a bridge, amassing and passing on the 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.

How to Obtain a Sales Tax Exemption Certificate in Utah

Before a business starts selling products or providing taxable services, it must first get a Utah Sales Tax License from the Utah State Tax Commission. The Sales Tax License is sometimes referred to as a seller’s permit, sales tax number, or sales tax permit.

Fillable Form TC-721 Exemption Certificate

How to fill out the Utah Resale Exemption Certificate – Form TC-721

Filling out Form TC-721 is pretty straightforward, but is critical for the seller to gather all the information.

If audited, the Utah State Tax Commission requires the seller to have a correctly filled out Form TC-721 Resale Exemption Certificate.  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 TC-721 Utah Resale Certificate

Step 1 – Begin by downloading the Utah Exemption Certificate Form TC-721 
Step 2 – Identify the name, address, phone number, name title and signature of the purchaser
Step 3 – Enter the name of the supplier
Step 4 – For businesses requesting a sales tax exemption because of reselling goods, enter the buyer’s sales tax license number
Step 5 – If reselling goods, check the first box, Resale or Release

Utah Sales Tax Exemption FAQs