How to Use and Accept Resale Certificates in Nebraska

What Is a Resale Certificate?

When a business purchases products for resale, they can utilize a resale certificate to avoid paying sales tax on those purchases. The tax is then collected when the item is eventually sold to the final consumer.

Suppliers use the resale certificate to verify that the buyer is a legitimate reseller. Any misuse of the certificate, such as using it for personal purchases, can lead to penalties and additional tax liabilities. This mechanism ensures that taxes are collected only once, at the final point of sale.

Who Qualifies for a Resale Certificate in Nebraska?

To qualify for a resale certificate, a business must:

• Be registered with the Nebraska Department of Revenue for sales tax purposes
• Sell tangible goods that are subject to sales tax when sold to consumers
• Intend to resell the items rather than using them for personal or operational purposes

If your business meets these criteria, you can apply for and use a resale certificate to acquire goods tax-free.

How to Get a Resale Certificate in Nebraska

Businesses must follow these steps to obtain a resale certificate:

1. Register for a Sales Tax Account

You must first register for a Sales Tax Permit with the Nebraska Department of Revenue via their online Nebraska Tax Application system.

Following approval, you will receive a Sales Tax Permit, which includes your Sales Tax ID number.

2. Familiarize Yourself with Nebraska Resale Certificate Rules

Nebraska requires businesses to use the Nebraska Resale or Exempt Sale Certificate, Form 13, to claim tax-exempt purchases for resale.

3. Provide Your Resale or Exempt Sale Certificate to Suppliers

When purchasing inventory tax-free for resale, businesses must provide a completed Form 13 to their suppliers.

Suppliers may also accept a Uniform Sales & Use Tax Certificate from the Multistate Tax Commission, depending on their practices.

4. Ensure Proper Use and Compliance

Resale certificates should only be used for items intended for resale, and businesses must ensure compliance with all Nebraska sales tax laws.

The Nebraska Department of Revenue provides a database for suppliers to verify the validity of your resale certificate.

Misusing a resale certificate can lead to penalties, back taxes, and revocation of tax exemptions.

For assistance navigating the process, doola’s expert bookkeeping team can offer guidance and lighten your administrative load.

What Are Differences from Other States?

• Nebraska requires a specific resale certificate form, Form 13, for tax-exempt purchases, unlike some states that may allow use of a sales tax permit as a resale certificate.
• Each state may have unique verification processes and requirements for demonstrating tax-exempt status.

How to Accept a Resale Certificate as a Seller in Nebraska

Follow these steps when buying goods for resale:

1. Complete and provide the appropriate resale certificate, such as Form 13, before making a tax-exempt purchase.
2. Confirm that the purchased items are intended for resale and not for business use.
3. Maintain records of all resale certificate transactions to ensure tax compliance.
4. Verify if your suppliers acknowledge Nebraska’s resale certificate.

Failure to adhere to these steps may result in denied exemptions, extra tax charges, or penalties.

Common Mistakes to Avoid

Improper use of a resale certificate risks audits, fines, and revoked tax-exempt status. Frequent errors include:

• Purchasing items for business use rather than for resale
• Using an expired or invalid certificate
• Neglecting to keep proper records of tax-exempt purchases

To remain compliant, businesses should periodically review their resale certificate usage and keep robust documentation.

Sales Tax Rules and Exemptions in Nebraska

Nebraska’s resale tax exemption rules specify which products or services may not qualify for tax exemption under a resale certificate. It’s crucial for businesses to stay informed about these state-specific regulations to guarantee compliance. Consult state regulations for thorough guidance on taxable versus non-taxable resale items.

Resale Certificate vs. Sales Tax Permit

While a resale certificate allows businesses to make tax-exempt purchases, a sales tax permit allows them to collect and remit sales tax to the state. These two documents are closely related:

Resale Certificate:
Used to acquire inventory tax-free from suppliers

Sales Tax Permit:
Required to charge and collect sales tax from customers

Both are essential for tax compliance, and businesses must ensure proper registration.

Penalties for Misusing a Resale Certificate in Nebraska

Misusing a resale certificate in Nebraska can lead to significant repercussions, including fines and tax audits. Businesses bear the responsibility to comply with sales tax laws and ensure that resale certificates are used correctly and solely for legitimate purposes. Any violation can incur penalties that could impact both the financial standing and reputation of the business.

FAQs About Resale Certificates in Nebraska

Do Nebraska resale certificates expire? 

Nebraska resale certificates generally remain valid unless there is a significant change in business operation or structure, but it’s wise to periodically confirm their accuracy and validity.

Can out-of-state resale certificates be used in Nebraska? 

Businesses must ensure out-of-state certificates comply with Nebraska regulations; otherwise, they may need a Nebraska-specific certificate.

Can a resale certificate be used for multiple states?

Typically, resale certificates are specific to a state and may not be recognized in transactions in other states unless there are existing reciprocal agreements.

How long is a resale certificate valid? 

Nebraska’s resale certificates do not generally expire, but businesses should review them periodically to ensure their accuracy.

Staying Compliant With doola 

Resale certificates are crucial for enabling tax-free transactions for resellers, ultimately helping businesses manage their sales tax liabilities efficiently. It’s vital for businesses in Nebraska to understand how to obtain and use these certificates properly to avoid penalties and ensure regulatory compliance. For full-spectrum financial solutions, including expert tax guidance, doola can offer assistance to support compliance with resale tax laws in Nebraska. By leveraging our team’s professional support, businesses can concentrate on their core operations while maintaining compliance with state regulations.