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.
Is a Sales Tax Exemption Certificate the same as a Sales Tax License?
The Sales Tax License and Resale Certificate are commonly thought of as the same thing but they are actually two separate documents. The Sales Tax License 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 Utah Sales Tax License
After registering, a sales tax number will be provided by the State Tax Commission. This number will be listed on the Resale Exemption Certificate.
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
How much does a Sales Tax Exemption Certificate cost in Utah?
There is no cost for a Certificate of Exemption in Utah.
Does a Utah Resale Exemption Certificate Expire?
A Utah Resale Exemption Certificate does not expire provided the buyer purchases from the seller at least once every 12 months.
How often is Utah sales tax due?
Most new businesses in Utah 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 semi-monthly, quarterly, semi-annual, or annual basis filing frequency instead.
Where do I file the Utah Exemption 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 free 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 can be provided when filing the Utah sales tax filing.
Alaska (no sales tax)
Delaware (no sales tax)
Montana (no sales tax)
New Hampshire (no sales tax)
Oregon (no sales tax)