When Do Resale Certificates Expire?

by John Csiszar; Updated September 26, 2017

A resale certificate is essential to the operations of retail merchants or companies that buy goods on the wholesale market. While many companies do not have the need for a resale certificate, those that sell goods to the retail consumer typically need one for tax purposes. Individual state legislature determines the period of time before a resale certificate expires for companies operating in that particular state.

Purpose

A resale certificate grants a company the right to resell goods to the retail public. Perhaps more importantly, by virtue of this ability, a resale certificate allows companies to buy goods at wholesale prices without paying sales tax. Since the appropriate taxing agencies will ultimately receive sales tax when a retail customer or "end-user" buys the goods, there is no need to collect tax at the wholesale level.

Expiration

In some states, including Alaska and Delaware, there is no state-imposed sales tax. As a result, in these and other states without a sales tax, there is no need for a resale certificate. In many other states, including California, Indiana and Maine, resale certificates are valid until revoked. Certain states do impose time limits on the validity of resale certificates. For example, in Louisiana, resale certificates are valid for only three years, while in Washington, you must renew a resale certificate every four years. The taxing authority in each state authorizes the duration of the validity of a resale certificate.

Business Licenses

Unlike resale certificates in many states, businesses do typically have to renew their business licenses at least annually. While a resale certificate allows a business to perform a certain function, specifically the retail resale of wholesale merchandise, a business license grants a company the right to exist as an ongoing entity. While a specific business may or may not actually use a resale certificate from year to year, all businesses need a license to operate, no matter what their function. Some businesses, such as those that retain custody of client funds, often need additional licensing or registration. Common examples of these types of companies include bail bondsmen and financial services companies.

Personal Use

When a company gets a resale certificate, that certificate is meant to be used for company business only. While an individual may be able to use the certificate to buy certain products without paying sales tax, such use of a resale certificate is typically prohibited by law.

About the Author

After receiving a Bachelor of Arts in English from UCLA, John Csiszar earned a Certified Financial Planner designation and served 18 years as an investment adviser. Csiszar has served as a technical writer for various financial firms and has extensive experience writing for online publications.