Resale Exemption

Perhaps the most common sales tax exemption flows from the fact that sales taxes are assessed on retail sales, which essentially are sales to the ultimate user or consumer of the item being sold. In other words, the tax attaches only to the final sale of the subject property. Accordingly, a sale to a purchaser who intends to resell the purchased item prior to making any significant use of it is an exempt sale for resale.

In general, the exemption continues as long as you don't make any use of an item being held for resale other than for display or demonstration purposes. If you do use the item for other business or personal purposes, you become liable for use tax on the item.


Let's assume you operate a small art shop. Among the items you sell are lithographic prints that you purchase from a commercial printer. The printer's sales of the prints to you would be exempt because you plan to sell them to your customers. However, if you took a couple of the prints to hang in your home office, you would be liable for use tax for those prints.

As is the case with most other exemptions, purchasers claiming the resale exemption must furnish their sellers with written proof that they are entitled to the exemption. This proof is usually provided in the form of a resale certificate.