Get South Dakota Resale Certificate
HOW TO GET A SOUTH DAKOTA RESALE CERTIFICATE?
A South Dakota resale certificate is a tax-exempt document that allows businesses to purchase goods without paying sales tax, provided those goods are intended for resale. It ensures that sales tax is only collected at the final point of sale to the end consumer, preventing double taxation within the supply chain.
To obtain a South Dakota Resale Certificate, businesses must follow these three steps.
✔ STEP 1 : Obtain a South Dakota Sales Tax License
✔ STEP 2 : Fill out the South Dakota certificate of exemption form
✔ STEP 3 : Present a copy of this certificate to suppliers when you wish to purchase items for resale
WHAT IS A SOUTH DAKOTA RESALE CERTIFICATE?
A South Dakota resale certificate is an official tax-exempt document issued under South Dakota tax law, allowing businesses with a South Dakota sales tax permit to purchase taxable goods for resale without paying state sales tax at the time of purchase. This certificate serves as a critical component of South Dakota’s sales and use tax framework, preventing double taxation by exempting interim business-to-business transactions, ensuring that sales tax is ultimately collected at the point of final consumer sale. Businesses must provide a properly completed exemption certificate to vendors, including their South Dakota Tax ID number, and sellers must verify compliance by accepting certificates in good faith and maintaining records for audit purposes.
A South Dakota resale certificate is also referred to as a reseller permit, reseller license, tax exemption certificate, or resale license.
This resale certificate allows suppliers to know that you are legally allowed to purchase the goods without them having to charge you sales tax, since you will be reselling the goods and collecting sales tax from the consumer (end user). There is no limitation on where a reseller permit can be used as long as the seller accepts it. Also, any items can be purchased using the permit assuming that the items will be resold.
WHAT INFORMATION IS INCLUDED ON A SOUTH DAKOTA RESALE CERTIFICATE?
The information included on the South Dakota resale certificate include the name (company or individual) and address of the buyer, a descriptive detail of the goods being purchased, a reference that this merchandise is intended to be resold and the accurate South Dakota sales tax number. It is important that you follow the correct procedure and protocol involved in the resale certificate process. Any errors occurring during this process could cause delays or penalties to be incurred by either party.
IS A SOUTH DAKOTA RESALE CERTIFICATE THE SAME AS A SOUTH DAKOTA SALES TAX PERMIT?
No, a South Dakota resale certificate is not the same as a South Dakota sales tax permit. The South Dakota resale certificate allows a buyer (such as a retailer) to purchase goods from a supplier (such as a wholesaler) without having to pay sales tax on the goods that would otherwise be taxable. The South Dakota sales tax permit allows a company to make sales inside a state and collect/remit sales tax for those sales.
It is the responsibility of the supplier to keep a copy of the resale certificate for compliance purposes and the responsibility of the retailer to collect sales tax when the goods are sold.
In order to have a South Dakota resale certificate, you must first apply for a South Dakota sales tax permit. This permit will provide you with a South Dakota Tax ID number (sales tax number) which will be a necessary field on the South Dakota resale certificate.
DO I NEED A RESALE CERTIFICATE IN SOUTH DAKOTA?
Yes, you need a resale certificate in South Dakota if your business is a retail or wholesale operation that does not want to be responsible for collecting sales tax on resold items and wants to avoid any future tax liability exposure.
Since sales tax is only supposed to be paid one time on a taxable good or service, then you want to make sure you are compliant at your phase of the product’s sales life. Even though sales tax is usually paid by the end user, the only way to ensure this is with a South Dakota resale certificate that is properly filled out.
DOES SOUTH DAKOTA ACCEPT OUT OF STATE RESALE CERTIFICATES?
Yes, South Dakota accepts out-of-state resale certificates, provided they are properly completed and comply with South Dakota’s requirements. Acceptable forms include the Streamlined Sales and Use Tax Agreement Certificate of Exemption. However, it is advisable to confirm acceptance with the specific seller, as they have the discretion to accept or reject out-of-state certificates.
HOW LONG DOES IT TAKE TO GET A SOUTH DAKOTA RESALE CERTIFICATE?
After registering for a South Dakota Sales Tax License, you can immediately complete and use the Certificate of Exemption (Form EFORM-1932) for tax-exempt purchases. The registration process for the Sales Tax License can typically be completed online within a few business days.
HOW LONG IS A SOUTH DAKOTA CERTIFICATE GOOD FOR?
A South Dakota resale certificate remains valid as long as the associated Sales Tax License is active and compliant. If the certificate is issued for a single purchase, it is valid only for that transaction. For blanket certificates covering multiple purchases, it is recommended to review and update them periodically to ensure the information remains accurate and up to date.
HOW TO USE OR ACCEPT A SOUTH DAKOTA RESALE CERTIFICATE
To use or accept a South Dakota resale certificate, the buyer must provide the seller with a fully completed resale certificate before or at the time of purchase. The certificate must include the buyer’s business name, address, South Dakota sales tax license number, a description of the purchased goods, and a statement that the items are for resale. The buyer must sign and date the certificate.
If the buyer does not have a South Dakota sales tax license, they may provide a valid out-of-state resale certificate along with proof that they are registered in another state. The seller must verify that the resale certificate is properly completed, retain it in their records, and ensure that the purchased goods qualify for tax-exempt resale.
The seller should not charge sales tax if the resale certificate is valid. If the resale certificate is incomplete, invalid, or the goods are not intended for resale, the seller must collect and remit sales tax. The seller is responsible for keeping resale certificates for at least three years as proof of tax-exempt sales in case of an audit by the South Dakota Department of Revenue.