Friday, July 01, 2005

FAQ: Picking up goods in remote states for resale

FAQ: Picking up goods in remote states for resale

What if you are a reseller in your state, and you send a truck or use your common carrier to pick up goods for resale in a remote state? The title transfer is now probably happening in that remote state. Therefore, the seller in the remote state rightly needs something from you indicating the purchase is for resale, otherwise he'll have to charge you tax.

And your resale certificate from your home state may not work. It is, after all, not from the state where the sale is taking place.

But most states have a mechanism for allowing out-of-state dealers buying for resale but picking up in the state to be able to still buy without tax. Often the state will have a special form to be completed, or an affidavit. Or they may simply specify their usual resale certificate, but with some sort of explanation as to why you're not providing the remote state's registration number. Or maybe you can use the multijurisdiction form.

This sounds like an opportunity to email the remote state's tax department. Here's a way of phrasing the question:

We are a registered reseller in (pick your state). We have determined that we do not have nexus in your state and therefore do not wish to register in your state. But we do occasionally pick up products from your state that we resell. Since title transfer is happening in your state, please tell us what documentation to provide to the seller so that he can prove his sale was for resale? Do we:

1. Provide your state's resale certificate (with our state's number and an explanation)
2. Provide a simple affidavit?

3. Use another form?

4. Use the multjurisdiction form?

5. Use our own state's form?

If possible, please provide any additional reference material that may be helpful.


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