Connecticut Resale Certificate: How to Get, Use, and Accept One

TL;DR

• A Connecticut resale certificate lets a buyer purchase taxable goods or services without sales tax when the buyer intends to resell them.

• Connecticut-based buyers register for a Sales and Use Tax Permit through myconneCT, which costs $100, before issuing a certificate.

• Buyers issue the Connecticut Sales and Use Tax Resale Certificate, or a certificate that substantially resembles it, and must hold a Connecticut Sales and Use Tax Permit or a similar registration in another state.

• Sellers may accept a certificate in good faith only when the purchase matches what the buyer would reasonably resell.

• A blanket certificate must be renewed at least every three years from the date it is issued.

• Sellers should keep resale certificates for at least six years.

• The Department of Revenue Services can assess the seller, the buyer, or both when a certificate is improperly issued or accepted.

What is a Connecticut resale certificate?

A Connecticut resale certificate documents that a buyer is purchasing taxable goods or services for resale, not for its own use. Under Department of Revenue Services guidance, a seller that accepts a valid certificate in good faith can treat the transaction as a resale and avoid collecting sales tax. The certificate must carry the buyer's Connecticut Tax Registration Number exactly as it appears on the buyer's Sales and Use Tax Permit. A seller cannot accept the registration number by itself in place of a certificate.

Connecticut calls the document the Connecticut Sales and Use Tax Resale Certificate. The certificate applies to purchases that the buyer will resell in the regular course of business. If the buyer consumes or otherwise uses the purchased item instead, DRS can assess the buyer for the tax.

How do I get a Connecticut resale certificate?

Register for a Connecticut Sales and Use Tax Permit, then complete the Connecticut Sales and Use Tax Resale Certificate and give it to each supplier. A new retailer buying its first round of inventory needs the permit first, because the certificate must carry the Connecticut Tax Registration Number printed on the permit. An out-of-state buyer not required to register in Connecticut can use its home-state tax ID number, or its FEIN if it has none, and attach a statement explaining why it needs no Connecticut permit.

Register online through myconneCT. Under Business Registration, select New Business/Need a CT Registration Number? Registration costs $100. The permit is available to print on myconneCT the next day, DRS also mails it, and it must be displayed where customers can see it.

Each business location needs its own permit, and a buyer of an existing business cannot use the previous owner's permit. The permit expires every two years, and DRS sends a replacement at no charge when the business has no outstanding liabilities or unfiled returns. A business that operates without a valid permit faces a civil penalty of $250 for the first day and $100 for each day after that.

The resale certificate itself is a DRS form with no filing step. Download it from DRS, complete it, and give it to the seller. The seller keeps it on file.

Which Connecticut resale certificate form do you need?

Connecticut buyers should use the Connecticut Sales and Use Tax Resale Certificate, a DRS form with no form number. A buyer gives the completed certificate to the seller when purchasing taxable goods or services for resale in the regular course of business.

A buyer may issue the certificate for one transaction or as a blanket certificate for recurring purchases of the same general type. A blanket certificate must be renewed at least every three years from the date it is issued, and it covers only the items or services it describes.

Connecticut also accepts the Multistate Tax Commission's multijurisdiction certificate as a valid resale certificate. DRS does not accept the MTC form for any other exemption. A seller may accept a faxed copy of a properly completed resale certificate when the order is taken, with no signed original required afterward.

Who can issue a Connecticut resale certificate?

A buyer may issue a Connecticut resale certificate when it sells goods or services of the type being purchased, holds a Connecticut Sales and Use Tax Permit or a similar registration in another state, and intends at the time of purchase to resell the item in the regular course of business. A buyer that purchases a taxable service may also issue a certificate when it will resell that service as an integral, inseparable part of another service enumerated in Conn. Gen. Stat. §12-407(a)(2)(I).

The certificate must be signed and must show the buyer's name and address, the general character of what the buyer sells, a description of what it is buying, and its Connecticut Tax Registration Number. A contractor that does not sell at retail cannot issue a resale certificate for goods consumed in completing a construction contract.

The claimed resale must fit the buyer's business. For example, a car dealer cannot issue a resale certificate to buy a computer system, because car dealers are not in the business of selling computers.

Who can accept a Connecticut resale certificate?

A Connecticut seller may accept the Connecticut Sales and Use Tax Resale Certificate when it receives a complete certificate and accepts it in good faith. Before treating the sale as tax-free, confirm the buyer’s identity and sales tax permit information. You should also check that the purchased goods or taxable services reasonably match the buyer’s stated resale business.

A seller should refuse a certificate when it has reason to believe the buyer does not ordinarily sell the item or will not resell it. An auto repair shop that tries to buy a computer on a resale certificate fails the first test. A computer store that buys a computer on a resale certificate and asks for delivery to the owner's home fails the second.

A certificate with missing information, an invalid permit number, or a purchase inconsistent with the buyer’s business does not provide reliable support for an untaxed sale. You should request a corrected certificate or charge Connecticut sales tax when the buyer cannot resolve the defect. Keep the completed certificate with the related customer and transaction records so you can show why you treated the sale as exempt during an audit.

When does a Connecticut resale certificate expire?

A Connecticut blanket resale certificate must be renewed at least every three years from the date it is issued. A seller should obtain the renewed certificate before making another untaxed sale to that buyer after the three-year mark.

When a certificate expires during an ongoing customer relationship, the seller should stop applying the resale exemption until the buyer provides a current certificate. The seller should retain the expired certificate to support eligible sales made while it remained valid and associate the replacement certificate with later transactions.

How long must sellers retain Connecticut resale certificates?

Sellers should keep Connecticut resale certificates for at least six years. Sellers keep the certificates on file and do not mail them to the Department of Revenue Services. Store each certificate with the customer and transaction records it supports so it can be produced for any sale DRS reviews in an audit.

What happens if a Connecticut resale certificate is missing or invalid?

A seller that accepts an improperly issued certificate can be assessed for the tax on the sale, which is $6,350 for every $100,000 of unsupported sales at Connecticut's general 6.35% rate. Computer and data processing services and business-use electronically delivered software are taxed at 1% in Connecticut, so the exposure depends on what was sold. DRS can make audit assessments against the retailer, the purchaser, or both. A buyer that knowingly makes a false statement on a resale certificate faces a fine of up to $5,000, imprisonment of up to five years, or both. The exposure grows with every blanket certificate that lapses past its three-year renewal while untaxed sales continue.

When a certificate review turns up prior periods where Connecticut tax went uncollected, Taxwire runs voluntary disclosure agreements, which typically cover a lookback of three to four years. Buyers that paid Connecticut tax on inventory they later resold can use Taxwire's tax recovery service to reclaim the overpayment.

Frequently asked questions

Does Connecticut accept an out-of-state resale certificate?

Yes. Connecticut accepts the MTC multijurisdiction certificate, or an out-of-state buyer can complete the Connecticut certificate using its home-state tax ID number, or its FEIN if it has none. A buyer not required to hold a Connecticut permit should attach a statement explaining that it makes no sales in Connecticut that are subject to Connecticut sales and use tax.

How long can a blanket resale certificate remain valid?

Three years. The buyer must renew a blanket certificate at least every three years from the date it is issued, and it covers only the items or services it describes.

How long should a seller keep the certificate?

A seller should keep each resale certificate for at least six years. The certificate stays with the seller's records and is not mailed to DRS.

Can a seller accept a faxed resale certificate?

Yes. A seller may accept a faxed copy of a properly completed certificate when the order is taken. DRS does not require the seller to collect a signed original afterward.