Paying your taxes is an important part of civic contribution, but nobody and no business wants to pay more taxes than they are actually responsible for.
If you work as a reseller or do business with others who resell your products, it's important to understand what a certificate of resale is to ensure you aren't paying taxes that you don't actually owe.
Under Illinois state tax laws, if you are buying products in order to then sell them on to a third party, there is no sales tax collected on this middle purchase because the tax will instead be collected at the point of the final sale. Taking advantage of an Illinois CRT-61 certificate of resale ensures that no undue payments are made to help keep your bottom line as healthy as possible while still following all state tax laws.
Have a question about the Illinois CRT-61 Certificate?
What Is a Certificate of Resale?
A certificate of resale is a document that certifies that a buyer is not making a purchase for personal use, and instead intends to sell the products being purchased to their own customers. In the absence of a valid certificate of resale, a seller is expected to charge sales tax as they would to any other direct-use customer, even if the buyer is claiming the purchase is being made for resale purposes.
Who Needs to Have a Certificate of Resale?
The short answer is that both parties in a sale benefit from an Illinois reseller certificate. The retailer making the sale to the reseller is responsible for ensuring that a valid certificate of resale is presented and recorded for any sale. If you sell products to a purchaser who does not provide a valid certificate of resale, you may be responsible for paying sales tax on the sale, even if you did not collect any at the time of sale, resulting in a loss. Any sale to a reseller should only be completed tax-free if an acceptable certificate of resale is provided.
Although the buyer does not need to keep a copy of any certificate, the possession of a valid Illinois CRT-61 certificate or comparable analog is still a priority since you should always have documentation of a tax-free sale or purchase for your records.
What Information Is Required on a Certificate of Resale?
In order for a certificate of resale to be accepted, it is important that it contains all the necessary information to verify its validity. A CRT-61 certificate of resale for Illinois must include:
- The name and address of the seller.
- The name and address of the purchaser.
- A description of the items that are being purchased for resale.
- A statement affirming that any items being purchased are being acquired exclusively for resale.
- A dated signature from the purchaser or an authorized employee of the purchaser.
- One of the following: the purchaser's registration number with the Illinois Department of Revenue, the purchaser's resale number with the Illinois Department of Revenue, or a statement that the purchaser's business is out of state and will only sell to out-of-state buyers.
What Is a CRT-61 Certificate of Resale Form?
The CRT-61 certificate of resale form is a template that ensures that any sale to a reseller is in compliance with reseller regulations and that all necessary information is provided and accounted for. Although you can use other templates to create your certificate for resale in Illinois, the best way to ensure that a certificate is in compliance is to use the CRT-61 form Illinois provides for free.
In addition to providing a template to ensure that all of the required information is accounted for, the CRT-61 certificate of resale form also includes instructions and frequently asked questions to help you fill out the form correctly and reduce the chance of any errors when completing the certificate. As a state-provided form, it is the best option when creating a certificate of resale and should always be used when available to avoid any mistakes that could affect your tax filings or prevent you from making a tax-free purchase.
What Should You Do When Presented With an Illinois Reseller Certificate?
Although creating a certificate of resale is a responsibility that falls on the buyer, if you are selling products without charging a sales tax, then it is your responsibility as the seller to confirm that the buyer has a valid certificate of resale. When a purchaser requests to make a purchase as a reseller, there are three important steps you should take with every sale to ensure you are covered on your own taxes:
- Check that the information contained on the certificate is accurate. Any mistakes on the information about your company, the company making the purchase, and the intended use can harm your ability to use the certificate.
- Ensure that the document is a valid certificate of resale. In order to be valid, the certificate of resale must contain all of the information listed above.
- Keep a copy of the certificate of resale for your accounting records. When preparing your taxes, it is important to have a certificate of resale for every sale that you did not charge sales tax to a reseller in order to prove you were correct to not include tax.
The opportunity to make purchases without paying a sales tax is critical for a reseller's bottom line, and the resale certificate is a crucial component in ensuring that such purchases can take place. Whether you're the buyer or the seller in a reseller transaction, it's important to have a thorough understanding of resale certification to make sure that your business's best interest is being taken into account. If you're unsure about your needs when it comes to an Illinois resale certificate, business consulting professionals can help you to make sure that all boxes are checked.
If you have tax preparation or bookkeeping concerns for your business, you need accounting professionals you can rely on. Pasquesi Sheppard has a proven track record that lets you know you're in good hands.
Get in touch today for a consultation to see what Pasquesi Sheppard can do for you and your business.