Thursday, February 12, 2009

Watch those numbers

Beware of the numbers you receive from your customers on those exemption certificates. The most common mistake they make is to put their Federal Employer Identification Number (FEIN) on the forms. That is usually NOT the number. But it's the number they give because most accounting folks know their FEIN by heart. It's the first thing that comes to mind when anyone seems to need a longish ID number.

Most states assign their own numbering sequence and don't use the FEIN (which is assigned by the IRS*). The number on the resale certificate provided by your customer should usually be the number they received from the state when they registered as a retailer/dealer/reseller. And, except for a couple of states (MI and NY for example), it ISN'T the FEIN.

And if the state assigns other numbers, such as for non-profit organizations, again they are rarely use the FEIN.

If you're not familiar with the numbers used by the state you're getting the certificate for, then ask your customer to give you the number off of their license or permit, off of the sales tax return, or off the document they received from the state.

Picture note - I found a random number generator on Google and pasted it into an old picture I had. Cool, huh?

Sales Tax Guy

*I like to think of the FEIN as a company's "social security number". It's used in the same way for tax filing purposes and to identify the company, and has the same number of digits. And just like the SS number, it's become a more universal ID number for other purposes besides those of the IRS.

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