Purpose of a Seller’s Permit

Purpose of a Seller’s Permit
A sales tax is imposed upon retailers for the privilege of selling tangible personal property at
retail within a state. The retailer, not the customer, is the person liable and responsible for paying
the sales tax. Consequently, every seller engaged in the business of selling a tangible product or
providing a taxable service in a state where sales tax is collected is required to hold a seller’s
permit for the purpose of reporting and paying their sales and use tax liability. The seller’s permit
is more commonly referred to as a resale tax number.
Because of the complications involved in the sales tax process, it may be difficult to determine
which of your products and services will be taxable. You may request information sheets from the
State Department of Revenue or your local State Board of Equalization that will explain the sales
tax regulations on your particular type of business. You may also request a ruling to determine
whether or not your product or service is taxable under a particular circumstance. Later, you must
be sure to keep abreast of any changes that are made regarding the taxing of sales for your
particular industry.
Your request must be on the basis that your business will be selling taxable items to your
customers or providing a taxable service. Any other reason for your request will be grounds for
denial. For example, many food services are not taxable unless they are provided at an event that
charges admission. Therefore, a resale tax number would not be warranted.
Warning! Do not use the word “buy” when you are applying for a seller’s permit. Even though
you may gain some purchasing advantages by having a seller’s permit, this is not a valid reason
for getting one. In fact, the mention of your intent to use it for the purchase of goods may
prejudice the interviewer against you.