How to Use and Accept Resale Certificates in Wisconsin

What Is a Resale Certificate?

When a business buys products for resale, they can use a resale certificate to avoid paying sales tax on those purchases. Instead, the tax is collected when the item is sold to the final consumer.

Suppliers rely on the resale certificate to confirm that the buyer is a legitimate reseller. Misuse of the certificate, such as using it for personal purchases, can lead to penalties and tax liabilities. This helps to ensure taxes are collected only once, at the final point of sale.

Who Qualifies for a Resale Certificate in Wisconsin?

To qualify for a resale certificate, a business must:

• Be registered with the Wisconsin 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 use them for personal or operational purposes

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

How to Get a Resale Certificate in Wisconsin

Businesses must follow these steps to obtain a resale certificate:

1. Register for a Sales Tax Account

Businesses must first register for a Sales Tax Permit with the Wisconsin Department of Revenue via their online registration system or by completing relevant registration forms.

Once approved, the business will receive a Wisconsin Tax Account Number.

2. Apply for a Resale Certificate

The resale certificate, known in Wisconsin as a Wisconsin Sales and Use Tax Exemption Certificate (Form S-211), allows businesses to make tax-free purchases for resale.

3. Provide Your Resale Certificate to Suppliers

When purchasing tax-exempt inventory for resale, businesses must present the Wisconsin Sales and Use Tax Exemption Certificate to their suppliers.

4. Ensure Proper Use and Compliance

Businesses must only use the resale certificate for tax-exempt purchases of items intended for resale.

Ensure that the certificate is filled out accurately and kept on file for compliance purposes.

If all of this feels too overwhelming, doola’s expert bookkeeping team can guide you through the process and ease the bureaucratic burden.

What Are Differences from Other States?

• Wisconsin requires a formal resale certificate form (Form S-211) for tax-exempt purchases, unlike some states where a sales tax permit serves both purposes.
• Businesses need to ensure the resale certificate remains valid and is correctly completed for each supplier.

How to Accept a Resale Certificate as a Seller in Wisconsin

When purchasing goods for resale, follow these steps:

1. Provide the supplier with a completed Wisconsin Sales and Use Tax Exemption Certificate before making a tax-exempt purchase.
2. Ensure that the items purchased are intended for resale and not for business use.
3. Keep a record of all resale certificate transactions for tax compliance.
4. Verify that your suppliers accept the Wisconsin resale certificate.

Failing to follow these steps could result in denied exemptions, additional tax payments, or penalties.

Common Mistakes to Avoid

Using a resale certificate improperly can lead to audits, fines, and revoked tax-exempt status. Common mistakes include:

• Purchasing items for business use instead of resale
• Providing an expired or invalid certificate
• Failing to keep proper records of tax-exempt purchases

To stay compliant, businesses should periodically review their resale certificate use and maintain proper documentation.

Sales Tax Rules and Exemptions in Wisconsin

Wisconsin’s resale tax exemption rules specify that some products or services may not qualify for tax exemption under a resale certificate. It is essential for businesses to stay informed about these state-specific regulations to ensure proper compliance. Refer to state regulations for comprehensive 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 enables them to collect and remit sales tax to the state. These two documents are closely linked:

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

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

Both are necessary for tax compliance, and businesses should ensure they are properly registered.

Penalties for Misusing a Resale Certificate in Wisconsin

Misusing a resale certificate in Wisconsin can lead to severe consequences, including fines and tax audits. Businesses have a responsibility to maintain compliance with sales tax laws, ensuring that resale certificates are used correctly and only for legitimate purposes. Violations can result in penalties that affect both the financial standing and reputation of the business.

FAQs About Resale Certificates in Wisconsin

Do resale certificates expire? 

No, in Wisconsin, resale certificates do not typically have an expiration date but should be reviewed periodically for accuracy.

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

Businesses must ensure that out-of-state certificates are valid under Wisconsin regulations; otherwise, they may need a Wisconsin-specific certificate.

Can a resale certificate be used for multiple states?

Generally, resale certificates are state-specific and may not apply to transactions in other states unless reciprocal agreements exist.

How long is a resale certificate valid? 

While they do not expire, resale certificates in Wisconsin should be reviewed periodically to ensure they remain accurate and valid.

Staying Compliant With doola 

Resale certificates play a vital role in facilitating tax-free transactions for resellers, ultimately helping businesses manage their sales tax liability effectively. It is crucial for businesses in Wisconsin to understand how to obtain and use these certificates correctly to avoid penalties and ensure compliance. For comprehensive financial solutions, including expert tax guidance, doola can provide guidance to ensure compliance with resale tax laws in Wisconsin. By leveraging our team’s professional assistance, businesses can focus on what they do best while staying compliant with state regulations.