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When purchasing items for resale, registered sellers may avoid the sales tax by giving their supplier adequate documentation in the form of a resale certificate. A resale certificate indicates the item was in good faith that the purchaser would resell the item and report tax on the final sale.
Additionally, a person misusing a resale certificate for personal gain or to evade the payment of tax is liable, for each purchase, for the tax that would have been due, plus a penalty of 10 percent of the tax or $500, whichever is more.
Who must obtain a seller's permit?, You must obtain a seller's permit if you: Are engaged in business in California and Intend to sell or lease tangible personal property that would ordinarily be subject to sales tax if sold at retail.
When a seller accepts a valid resale certificate in good faith and in a timely manner, the seller does not owe tax on that sale. A form CDTFA-230, General Resale Certificate, can be issued by purchasers when purchasing goods they will resell in the regular course of their business operations.
Basic Forms. State, Local, and District Sales and Use Tax Return (CDTFA-401-A) (PDF) General Resale Certificate (CDTFA-230) (PDF)
Printable California General Sales Tax Resale Certificate (Form BOE-230), for making sales tax free purchases in California.
A resale certificate allows a business to purchase goods or services for resale without paying sales tax. In order to do so, the retailer will need to provide a California Resale Certificate to their vendor. Learn how the California Resale Certificate works, how to get one, and more. Related: Guide to starting a business in California.
Additionally, a person misusing a resale certificate for personal gain or to evade the payment of tax is liable, for each purchase, for the tax that would have been due, plus a penalty of 10 percent of the tax or $500, whichever is more.
What Is a California Resale Certificate? The California Board of Equalization (BOE) requires sales tax be collected on nearly every tangible personal property item sold, but the tax isn’t always collected on every sale.
In California, this involves presenting a California Resale Certificate to the merchant from whom you’re buying the products. This quick guide will explain what you need to know about buying products in California for resale.