When a business purchases inventory to resell, they can do so without paying sales tax. In order to do so, the retailer will need to provide a West Virginia Certificate of Exemption to their vendor.
Learn more about what a Certificate of Exemption is (commonly known as a Resale Certificate), how to get one and more.
What is a Certificate of Exemption?
When retailers purchase products to resell, they often don’t pay sales tax on the purchase. 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 State Tax Department.
For example, when a pet store purchases dog toys to sell in their store, by having a Certificate of Exemption, the pet store owner won’t pay sales tax on the transaction. When a customer purchases the dog toy, the retailer will charge sales tax to the customer based on the full price of the toy. The retailer will collect the sales tax from all of their transactions and periodically (typically at the end of the month) send the sales tax to the state.
The Certificate of Exemption is the seller’s evidence why sales tax was not collected on a transaction. Similar names for a Certificate of Exemption include reseller number, seller’s permit, resale certificate or reseller’s license. In order to prove a buyer intends to resell the product, they must provide a valid Certificate of Exemption to the seller of the goods.
Certificates of Exemption are 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.
Before a business starts selling products or providing taxable services, they must first get a West Virginia Sales Tax Permit from the West Virginia State Tax Department. The Sales Tax Permit is sometimes referred to as a seller’s permit, sales tax number, or sales tax license.
The Sales Tax Permit and Certificate of Exemption 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 Certificate of Exemption allows the retailer to make tax-exempt purchases for products they intend to resell.
Read more about how to register for a West Virginia Sales Tax Permit. After registering, a sales tax number will be provided by the State Tax Department. This number will be listed on the Certificate of Exemption.
Fillable SSTGB FORM F0003 Certificate of Exemption
How to fill out the West Virginia Certificate of Exemption – SSTGB FORM F0003
Filling out SSTGB FORM F0003 is pretty straightforward, but is critical for the seller to gather all of the information.
If audited, the West Virginia State Tax Department requires the seller to have a correctly filled out SSTGB FORM F0003 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 SSTGB FORM F0003 West Virginia Certificate of Exemption
Step 1 – Begin by downloading the West Virginia Certificate of Exemption Form SSTGB FORM F0003
Step 2 – Indicate whether the Multistate Supplemental form is being attached. This is the second page of the exemption form. Several states joined together under the Streamlined Sales Tax Agreement to accept one resale form to make it easier for merchants
Step 3 – Check whether the certificate is for a single purchase. Otherwise the form is considered a blanket certificate which allows a buyer to purchase multiple times from a vendor without having to file a separate certificate.
Step 4 – Include the name, address and State Tax ID Number. If there is no State Tax ID Number, enter the purchaser’s FEIN and Driver’s license number.
Step 5 – Enter the name and address of the seller.
Step 6 – Check the box that corresponds closest to the type of business the buyer is in.
Step 7 – Indicate the reason for exemption. Most retailers are going to check box G for Resale.
Step 8 – The purchaser will certify the property being purchased is for resale, include their title, phone number and email address then sign and date the certificate.
The Certificate of Exemption is kept on file by the seller and is not filed with the state.
Does a West Virginia Certificate of Exemption Expire?
Provided the box for using the certificate as a single purchase isn’t checked, it will be considered a blanket certificate. Blanket certificates are good as long as the buyer makes at least one purchase every 12 months.
Are sellers required to accept Certificates of Exemption?
Sellers are not required to accept Certificate of Exemptions, 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, they will be able to get a credit for the sales taxes paid later on their sales tax filing.
What steps should a business take to accept a Certificate of Exemption?
When a business is presented with a Certificate of Exemption, it is the seller’s responsibility to verify the buyer’s information is correct and maintain records to demonstrate the seller’s due diligence. Failing to verify this information may put the liability of paying West Virginia sales taxes on the seller.
Before accepting a Certificate of Exemption from a buyer, the following steps should be taken.
- Review the Certificate of Exemption to make sure it is completely filled out.
- Verify the purchaser’s West Virginia Sales Tax Permit is valid and active by calling the State Tax Department at 800.982.8297.
- 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 they are wanting to purchase office supplies tax-free, the seller should investigate further.
- Keep a file of all buyer’s Certificates of Exemption.