Misuse of Your Seller’s Permit

Misuse of Your Seller’s Permit
Once you have been issued a resale tax number, it is imperative that you use it only for the
purpose for which it was intended. Many tax numbers have been used to avoid paying sales tax
on business-related purchases as well as tax on personal items. Purposeful misuse of a seller’s
permit has long been a laughing matter with many users. If you get caught, however, it may cease
to be something to brag about. Most states are expanding their efforts to catch offenders. The
penalties for misuse are serious and may involve a heavy fine and/or jail sentence.
The rule of thumb is: If you do not intend to resell your purchase through your business, do not
use your resale number in order to buy it without paying sales tax.
At this point, it is only fair to say that there is some validity to using your resale number to
purchase wholesale. Many wholesalers do ask you to file a resale card with them before they will
sell to you at wholesale prices. However, this does not mean you are not required to pay sales tax
if you are not purchasing for resale. It may only be a means of adding credibility as a business
owner. In fact, if the seller does not collect from you at the time of the sale, you will be required
to include the purchase in you periodic sales tax report and pay the sales tax at that time.