A Georgia Sales Tax Exemption Certificate (also referred to as a Resale Certificate) is a document that allows a business to purchase goods and services tax-free from suppliers for the purpose of reselling them.
Learn how the Georgia Certificate of Exemption works, how to get one, and more.
Table of ContentsWhen retailers purchase products to resell, the small business owner doesn’t often pay sales tax to the supplier on the purchase. The sales tax will still be paid, but instead of the retailer paying the state sales tax, the retailer charges sales tax to their customer on the final value of the merchandise.
For instance, when a bookstore in Georgia purchases books from a distributor to sell in their store, by having a Sales Tax Certificate of Exemption, the bookstore owner won’t usually pay sales tax on this transaction. When a customer purchases a book, the retailer will charge sales tax to the customer based on the full price of the book. Then, typically at the end of the month, the bookstore owner will take all of the state sales taxes that were collected and send them to the Georgia Department of Revenue.
It’s important to know that the sales tax exemption is only intended to be used for inventory that will be resold and not intended for the tax-free purchase of items used in normal business operations such as paper, pens, etc.
Before a business starts selling products or providing taxable services, it must first get a Georgia Sales Tax Number from the Georgia Department of Revenue. After registering, this number will be used when filling out the Georgia Sales Tax Certificate of Exemption.
Begin by downloading the Georgia Sales Tax Certificate of Exemption Form ST-5
Certify the type of exemption being claimed (Most resellers are going to select the first checkbox (Purchases or leases of tangible personal property or services for resale only under O.C.G.A. § 48-8-30)
Fill out the seller’s name and address.
The information needed from the buyer includes:
– Business Name (Refers to the legal name of the business)
– Sales tax number
– Type of business
– Address
– Printed name and signature
– Title
– Telephone number
– Email
There is no cost for a Certificate of Exemption in Georgia.
The Georgia exemption certificate is valid until revoked in writing.
Most new businesses are set up to file and pay sales and use tax monthly, but depending on the amount of tax collected, your business may have a different filing frequency.
In Georgia, the certificate is not filed with any government agency. Instead, it is kept by the seller (the business selling the merchandise to the reseller).
No – The Sales Tax Number and Certificate of Exemption are commonly thought of as the same thing, but they are actually two separate documents. The Sales Tax Number allows a business to sell and collect sales tax from taxable products and services in the state, while the Certificate of Exemption allows the retailer to make tax-exempt purchases for products they intend to resell.
Also, in addition to these, your business may need to register for additional items. For more information, check out our guide to Georgia business licenses.
When a business is presented with a resale certificate, it is the seller’s responsibility to verify the buyer’s information and maintain records to demonstrate the seller’s due diligence. Failing to verify this information may result in the seller being liable for Georgia sales taxes.
Before accepting a resale certificate, a seller should:
– Review the resale certificate to make sure it is completely filled out.
– Verify that the purchaser’s Georgia Sales Tax ID is valid with the Department of Revenue’s Verification Tool.
– Sellers are also responsible for considering whether the goods and services sold are consistent with their type of business. For example, if the buyer’s business is a car dealership, but they want to purchase office supplies tax-free, the seller should investigate further.
– Keep a file of resale certificates.
