What Is the Difference Between a State Sales Tax ID Number and a Wholesale Account Number?

Whether your state uses the federal EIN number as identification for both the authority to charge sales tax and a reseller account varies from state to state. If the number is the same or different, the authority to charge sales tax and the ability to purchase goods without being charged sales tax are two very different things.

Before understanding what state tax ID numbers and wholesale account numbers are, you must understand what an EIN is. An EIN is also known as an FTIN (Federal Tax Identification Number). An EIN number is unique to your business and identifies your business to the IRS when paying business taxes in the same way that your Social Security number identifies you to the IRS when paying personal taxes.

States issue a sales tax ID number to give your business permission to charge sales tax. Some states use the Federal EIN number as the sales tax ID number. Some states issue a number separate from the EIN number.

The sales tax charged to consumers when they purchase goods from you is often, depending on the state, a combined sales tax, with portions going to the state and the city, county or both. As you collect these taxes, you must keep track of them so you can pay your quarterly tax bill to the appropriate authorities who will identify you by your sales tax ID number.

States issue reseller numbers, also known as wholesale account numbers to businesses that purchase merchandise from wholesale businesses and resell the merchandise. Wholesale businesses or wholesale divisions of businesses sell merchandise to resellers at discount prices. The reseller then markups the merchandise and sells it for consumption. States do not charge sales tax twice for the same merchandise. Therefore, when a wholesale business sells the merchandise to a reseller, the wholesale business does not charge the reseller sales tax. The reseller certificate gives the wholesale business the authority to exempt the business from sales tax. Reseller certificates are also often identified by the EIN number, but this varies from state to state.