How To Get A Vermont Certificate of Exemption [2023 Guide]

A Vermont Certificate of Exemption is a document that allows a business to purchase goods and services tax-free from suppliers for the purpose of reselling those goods and services. The certificate is also sometimes referred to as a “resale permit” or a “reseller’s permit.”

Check out the rest of this guide to determine who needs a sales tax permit, what products and services are taxable, how to register for a permit, and reporting requirements.

What is a Resale 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 Vermont Department of Taxes.

For instance, when a jewelry store in Vermont acquires a new collection of diamond earrings to sell in their shop, by possessing a resale certificate, the jewelry store owner won’t incur sales tax on the purchase. The sales tax becomes applicable when a retail customer purchases the diamond earrings from the store. The retailer then imposes the sales tax on the total cost of the earrings at this stage.

The jewelry store consolidates the sales tax from all their transactions over a specified duration, typically the end of the month. After the month concludes, the store forwards this compiled sales tax to the state. This mechanism effectively shifts the burden of paying the sales tax from the retailer to the retail customer, with the retailer acting as an intermediary, gathering and delivering 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.

Getting Started

To get a Certificate of Exemption in Vermont, you must first register with the Vermont Department of Taxes. After you have registered, you will be able to request a Certificate of Exemption from the Department.

Fillable Form S-3 Certificate of Exemption

How to fill out the Vermont Certificate of Exemption – Form S-3

Filling out Form S-3 is pretty straightforward, but is critical for the seller to gather all the information.

If audited, the Vermont Department of Taxes requires the seller to have a correctly filled out Form S-3 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 S-3 Vermont Certificate of Exemption

Step 1 – Begin by downloading the Vermont Certificate of Exemption Form S-3 
Step 2 – Check whether the certificate is for a single purchase or multiple purchases.  If the retailer is expected to be purchasing items frequently from the seller, instead of completing a resale certificate for every invoice, the multiple purchase (also known as a blanket certificate) box should be checked
Step 3 – Identify the name, FEIN (Federal Employment Identification Number), address and description of the buyer’s business
Step 4 – Include the name and address of the seller
Step 5 – Describe the merchandise being resold  
Step 6 – Check the box with the reason for claiming an exemption.  Most businesses reselling the merchandise being purchased will check the first box “For resale/wholesale.”  In that case, include the buyer’s Vermont Sales & Use Tax Account Number.
Step 7 – The purchaser will certify the property being purchased is for resale and sign and date the certificate. 

Vermont Sales Tax Exemption Certificate FAQs