A sales tax exemption is when a purchaser can legally make a tax-free purchase with the help of an exemption certificate. This certificate documents the exemption the purchaser is claiming to make a tax-free purchase.
The purchaser is responsible for determining whether they are making an exempt purchase and properly completing the exemption certificate. Upon purchase, the seller reviews the exemption certificate and if it is properly completed, they accept it in good faith. If there is no exemption certificate provided, the retailer is obligated to charge and remit a sales tax.
It is important to note that in the absence of an exemption certificate, the seller must charge and remit sales tax because they have the burden of proof to support any non-taxed sales upon audit and may be asked to provide copies of exemption certificates.
Some common exemptions are:
- Multiple Points of Use Exemption
- Non-Profit Exemption
- Resale Exemption