Which US States Reject Out-of-State Resale Certificates in 2025?

Expanding your business across state lines? If you’re an e-commerce seller or entrepreneur, you’ve likely encountered the complexities of sales tax compliance.

And there’s one major hurdle. Not all states accept out-of-state resale certificates.

This means that even if you have a valid resale certificate from one state, some states may still require you to register separately before granting tax-exempt purchases.

In this guide, we’ll break down everything you need to know about out-of-state resale certificates, why some states reject them, and how you can navigate compliance challenges seamlessly with doola’s Sales Tax and Reseller Certificate services.

What Is a Resale Certificate & How Does It Work?

A resale certificate allows businesses to purchase goods tax-free if they intend to resell them. Instead of paying sales tax upfront, businesses collect sales tax from their customers and remit it to the state.

Here’s how it works:

Step 1: A business obtains a resale certificate from the state where they are registered.

Step 2: The business presents this certificate to suppliers to purchase inventory tax-free.

Step 3: When the business sells the product to customers, they collect sales tax based on the customer’s location.

Step 4: The collected tax is then remitted to the appropriate state agency.

However, while this process seems straightforward, some states do not accept out-of-state resale certificates, requiring businesses to register separately for a certificate in their state.

Why Some States Reject Out-of-State Resale Certificates

Sales tax laws vary widely across states, and some states choose to reject out-of-state resale certificates for the following reasons:

Prevent Tax Evasion

Some states want to ensure that businesses properly collect and remit sales tax rather than using resale certificates to make tax-free purchases for personal use.

Encourage Business Registration

Requiring a separate resale certificate ensures that out-of-state businesses register within the state, giving tax authorities more oversight.

State-Specific Regulations

Some states have unique sales tax rules that make multi-state compliance challenging, such as different tax rates, exemptions, or industry-specific requirements.

Now, let’s look at which states do not accept out-of-state resale certificates.

10 States That Do Not Accept Out-of-State Resale Certificates

As of the latest tax regulations, the following states require businesses to obtain a resale certificate within their jurisdiction and do not accept out-of-state resale certificates:

These regulations mean that businesses selling in these states must register and obtain a separate resale certificate to avoid sales tax complications.

Below, we present a state-by-state breakdown of resale certificate rules.

1. Alabama: Mandates Alabama Resale Certificate

Alabama does not accept out-of-state resale certificates. Instead, businesses purchasing goods for resale must obtain an Alabama Resale Certificate through the Alabama Department of Revenue (ADOR).

This certificate allows businesses to buy products tax-free if they’re for resale.

To apply, businesses must first register for an Alabama Sales Tax License, which is necessary to issue valid resale certificates.

Alabama resale certificates must be renewed periodically, and businesses are responsible for ensuring their certificate is current to avoid paying unnecessary sales tax.

Example Scenario:

A Georgia-based electronics retailer purchasing inventory from an Alabama supplier cannot use its Georgia resale certificate for tax exemption. Instead, the retailer must apply for an Alabama Resale Certificate.

Without it, the Alabama supplier is required to charge sales tax on all transactions, increasing the retailer’s costs.

2. California: Separate Registration Required

California is one of the strictest states when it comes to resale certificates. If you’re a business looking to purchase inventory tax-free in California, you must register with the California Department of Tax and Fee Administration (CDTFA) and obtain a California-specific resale certificate.

Even if you’re an out-of-state business with no physical presence in California, you still need to register for a resale certificate to make tax-free purchases.

Example Scenario:

If you operate an online boutique based in Texas and source inventory from a California supplier, your Texas resale certificate will not be accepted in California.

You must apply for a California Seller’s Permit and present a California resale certificate to the supplier.

3. Florida: Requires a Florida Resale Certificate

Florida does not accept out-of-state resale certificates for tax-exempt purchases. If you plan to buy goods for resale in Florida, you must register for a Florida Annual Resale Certificate for Sales Tax through the Florida Department of Revenue.

Florida issues new resale certificates every year.

So businesses must ensure they have a current certificate to continue making tax-free purchases.

Example Scenario:

Suppose you run a dropshipping business in Georgia and source products from a Florida-based supplier. Even if your Georgia resale certificate is valid in other states, Florida suppliers will only accept a Florida resale certificate.

4. Hawaii: GET Instead of Sales Tax

Hawaii does not have a traditional sales tax. Instead, it imposes a General Excise Tax (GET) on businesses. Businesses in Hawaii must obtain a GET license from the Hawaii Department of Taxation and cannot use an out-of-state resale certificate.

If you plan to do business in Hawaii, budget for the General Excise Tax, as you cannot avoid it with a resale certificate.

Example Scenario:

A retailer from Oregon (which has no sales tax) might assume they can purchase goods tax-free in Hawaii with their Oregon resale certificate.

However, Hawaii does not recognize resale certificates at all. Instead, businesses must pay the GET when purchasing inventory.

5. Illinois: Requires In-State Resale Certificate

Illinois requires businesses to register for a Sales Tax Registration Certificate (ST-1) before making tax-free purchases. It does not honor out-of-state resale certificates.

The state mandates every business making tax-exempt purchases in the state to register, even if they have no physical presence there.

Example Scenario:

A New York-based wholesaler looking to buy bulk apparel in Illinois cannot use their New York resale certificate. They must apply for an Illinois resale certificate before making tax-exempt purchases.

6. Louisiana: In-State Registration Required

Louisiana has a complex sales tax structure, requiring businesses to obtain a Louisiana Resale Certificate through the Louisiana Department of Revenue. Out-of-state resale certificates are not accepted.

Louisiana resale certificates must be renewed regularly.

So businesses must track expiration dates to maintain compliance.

Example Scenario:

A Texas-based furniture retailer purchasing inventory from a Louisiana distributor must apply for a Louisiana resale certificate. Without it, they’ll have to pay Louisiana sales tax upfront and then seek reimbursement, an unnecessary administrative burden.

7. Maryland: Requires Maryland Sales Tax License

Maryland does not accept out-of-state resale certificates. To claim tax-exempt purchases, businesses must register for a Maryland Sales and Use Tax License.

The state enforces strict compliance rules, so failure to register can result in sales tax penalties and fines.

Example Scenario:

If you own a pet supply business in Virginia and want to buy tax-free products from a Maryland distributor, your Virginia resale certificate will not be valid. You must register for a Maryland-specific resale certificate.

8. Massachusetts: Does Not Accept Out-of-State Resale Certificates

Massachusetts requires all businesses to register for a Massachusetts Sales Tax Permit and obtain a Massachusetts resale certificate for tax-free purchases.

The state follows a zero-tolerance policy. So suppliers will reject out-of-state resale certificates without exception.

Example Scenario:

A Florida-based electronics company sourcing inventory from Massachusetts must register in Massachusetts before making tax-exempt purchases.

Even if their Florida resale certificate is valid in other states, Massachusetts requires separate registration.

9. Washington: Requires Washington Reseller Permit

Washington does not accept out-of-state resale certificates. Instead, businesses must apply for a Washington Reseller Permit through the Washington Department of Revenue.

Washington’s reseller permit is free but must be renewed every four years.

Businesses, therefore, need to monitor expiration dates.

Example Scenario:

A Nevada-based automotive parts company purchasing from a Washington supplier must apply for a Washington reseller permit. Without it, the supplier is legally required to charge sales tax on all transactions.

10. Washington, D.C.: Requires a D.C. Resale Certificate

Washington, D.C. does not accept out-of-state resale certificates. Instead, businesses operating in the district must obtain a D.C. Resale Certificate from the Office of Tax and Revenue (OTR).

This certificate allows businesses to purchase goods tax-free for resale purposes.

To apply, businesses must first register for a D.C. Sales and Use Tax Permit, which is a prerequisite for obtaining the resale certificate. The certificate must be renewed periodically, and businesses are responsible for tracking expiration dates to maintain compliance.

Example Scenario:

A Maryland-based event decor company sourcing bulk supplies from a vendor in Washington, D.C., cannot use its Maryland resale certificate for tax exemption. Instead, the company must apply for a D.C. Resale Certificate.

Without it, the D.C. vendor is legally required to charge sales tax on all purchases, adding unnecessary costs.

That wraps up our list of 10 states that do not accept out-of-state resale certificates. Sign up for doola’s Sales Tax and Reseller Certificate services if you need help staying compliant in your state of business operation.

Strategies to Stay Compliant Across Multiple States

If you operate in multiple states, navigating varying sales tax regulations can be tricky. Here are some key strategies to help you avoid unnecessary tax headaches and stay compliant:

✔️ Register for a Sales Tax Permit in Each Required State

If a state doesn’t accept out-of-state resale certificates, the best way to remain compliant is to register for a sales tax permit there. This allows you to legally make tax-free purchases for resale within that state.

While it may seem tedious, registering in multiple states ensures you avoid costly tax penalties and maintain smooth operations.

✔️ Use Multi-Jurisdictional Certificates Where Applicable

Some states simplify compliance by accepting multi-jurisdictional certificates, such as the Streamlined Sales Tax (SST) Exemption Certificate or the Multistate Tax Commission (MTC) Uniform Sales & Use Tax Certificate.

These certificates allow out-of-state sellers to claim tax exemptions in multiple participating states using a single document, reducing paperwork and streamlining compliance.

✔️ Automate Your Sales Tax Compliance

Juggling different state tax requirements manually can be overwhelming and error-prone. Automating the process with doola’s Sales Tax & Reseller Certificate services ensures you stay compliant effortlessly.

doola handles everything—managing your tax filings, keeping track of regulation changes, and helping you obtain the right certificates—so you can focus on growing your business.

Want to simplify your multi-state tax compliance? Book a free consultation with doola today and keep your business on the right track!

How to Obtain a Reseller Certificate That Works Nationwide

To streamline tax-exempt purchases across multiple states, businesses should:

1. Determine Where You Need to Register: Check which states require a separate resale certificate.

2. Apply for State-Specific Resale Certificates: Some states have online applications, while others require paper submissions.

3. Consider the Streamlined Sales Tax Program: The SST initiative helps businesses register in multiple states with a single application.

4. Use a Compliance Service Like doola: doola’s experts handle the paperwork, ensuring your resale certificates are accepted where needed.

Explore doola’s Sales Tax & Reseller Certificate services to simplify your tax compliance and obtain a resale certificate that works across the US.

Pitfalls to Avoid

Even with a resale certificate, businesses can still face tax troubles if they overlook key compliance factors. Here are some common pitfalls to watch out for:

Using an Out-of-State Certificate in a Restricted State

Presenting an out-of-state resale certificate in a state that doesn’t accept it could lead to tax penalties and compliance issues.

Failing to Collect and Remit Sales Tax Properly

Even with a valid resale certificate, businesses are still required to collect and remit sales tax on taxable sales. Failing to do so can result in fines and back taxes.

Not Keeping Resale Certificates Updated

Many states require periodic renewal of resale certificates. Missing renewal deadlines could leave your business out of compliance.

Ignoring Changing Tax Regulations

Tax laws are frequently updated. Failing to stay on top of these changes could lead to unexpected tax liabilities and costly errors.

By avoiding the above pitfalls, you can safeguard your business from unnecessary tax risks and maintain compliance.

Simplify Sales Tax Compliance With doola

Managing resale certificates and staying compliant across multiple states can be complex and time-consuming. With different rules, renewal requirements, and tax regulations, it’s easy for businesses to fall into compliance traps.

That’s where doola’s Sales Tax and Reseller Certificate services help.

Whether you need help registering in multiple states, obtaining valid resale certificates, or managing compliance, doola has your back.

✔️ Reseller Certificate Services: Get the right certificates for each state where you operate, ensuring you can make tax-free purchases for resale without the hassle.

✔️ Sales Tax Registration & Filing: Let doola handle your multi-state sales tax registration and filing, keeping you compliant with ever-changing regulations.

✔️ Ongoing Compliance Support: Stay on top of certificate renewals, filing deadlines, and regulation changes with expert-managed services.

Check out doola’s Sales Tax & Reseller Certificate Services today and focus on growing your business with confidence.

Book a free consultation with doola to get expert guidance on tax compliance!

FAQs: Out-of-state Resale certificate

Which states allow multi-jurisdiction resale certificates?

Several states, including those in the Streamlined Sales Tax (SST) program, accept the SST Exemption Certificate. However, always verify specific state requirements.

How do I obtain a resale certificate in a state that does not accept out-of-state certificates?

You’ll need to register for a sales tax permit in that state and apply for an in-state resale certificate. doola can help streamline the process!

Are there penalties for using an out-of-state resale certificate in a state that doesn’t accept it?

Yes. You could face tax liability, fines, or even revocation of your sales tax privileges if caught using an invalid resale certificate.

How often do states change their policies on resale certificates?

Tax laws frequently change, so it’s crucial to stay updated or use a tax compliance service like doola to remain compliant.

What alternatives exist for businesses that sell in multiple states?

Businesses can register in each required state, use multi-jurisdiction resale certificates where applicable, and leverage doola’s compliance solutions to automate the process.