I am out of state (AZ), why am I being charged sales tax?
The US Supreme Court effectively ruled in June of 2018 that internet sales are taxable. As a result, states across the US quickly began enacting their own laws to tax internet sales, which made Bullet Proof Diesel’s products subject to tax across most states, unless a valid exemption certificate exists.
What is an exemption certificate?
Exemption certificates are a way for a business or organization to attest that you are a tax-exempt entity, or that you are purchasing an item with the intent to use it in a way that has been deemed exempt from tax. In other words, sales tax exemption certificates are your proof that you can buy an item tax free.
There are two main types of exemption certificates – Usage based (i.e. - Resale certificates, used when buying something at retail you intend to resell), or Entity based (i.e. - where some government or non-profit entities are allowed to buy items tax free for their own use, depending on the state and their status).
What is a resale certificate?
A resale certificate is a document that allows registered retailers to buy items for resale without paying sales tax on those items. If you buy Bullet Proof Diesel products for resale, rather than personal use or consumption, you may qualify for sales tax exemption through a valid resale certificate.
Every state has its own acceptable documents, which can be complex and confusing. We use Avalara’s CertCapture™ to help automate and simplify this process for our customers. Simply tell us which state(s) you believe you qualify for resale exemption in and we can automatically email you the correct form for completion online. Fast, easy, done!
What can I buy with a resale certificate?
Resale certificates are only to be used to buy items you intend to resale or component parts of items you intend to resale (i.e. - the wood used to make a table to sell). Using a resale certificate to buy items tax free when you do not intend to sell them at retail is considered fraud – and nobody wants to deal with that!
Why didn't you accept my exemption certificate?
Bullet Proof Diesel is required to perform a good faith validation of your certificate and cannot accept certificates that don’t meet certain criteria. We will be happy to accept your certificate as soon as it meets these criteria, which primarily include having a certified exemption document that is complete and accurate, signed by an authorized party, with a verified tax ID, and that the transaction in question legitimately meets the standards for exemption as defined by the state.
I’m a government agency, am I exempt?
Unfortunately, the answer is “it depends”. In many states, sales to federal, state and local governments are exempt from sales tax, but there are often restrictions, such as a) the purchase must be made directly by the agency, on the agency's PO, received by the agency and paid by the agency, or b) the purchase must be used by the agency in a way that is within its normal scope of activity. Variations on item (a) are common; item (b) are less so. But in some states, sales to state and local governments are taxable and in one state (AZ), even sales to the federal government are taxable. The point is that sales to government agencies are not automatically exempt. Certificates that claim exemption by virtue of being a government agency will need to be reviewed on a case by case basis
What is the difference between exemption certificate “validation” and “verification”?
Validation is the process within Avalara CertCapture through which BPD staff will determine whether an exemption certificate is “valid”. To be valid, the [state-specific] document must include, at a minimum, the following information:
- the date, which should predate or be dated the date of the sale
- the signature of the buyer or the buyer's agent or employee
- both the buyer's and seller's names and addresses
- the buyer's business license or tax registration number
- a description of the property being purchased
- the basis of the claimed exemption
Verification, on the other hand, is an additional step outside Avalara CertCapture through which BPD staff will “verify” that the buyer’s permit number is accurate and/or that it is not expired by querying the buyer’s tax ID at the appropriate state agency website. Below are links to useful information, as well as state by state instructions/resources: