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The California Resale Certificate, officially known as CDTFA-230, serves a crucial role for businesses engaged in the sale of tangible personal property. This form allows sellers to purchase items without paying sales tax, provided they intend to resell those items in the normal course of business. To utilize this certificate, a seller must hold a valid seller’s permit number and clearly identify the type of property being purchased for resale. The form requires the vendor's name and a detailed description of the items intended for resale. It also emphasizes the importance of adhering to specific conditions, such as not using the items for purposes other than demonstration or display while holding them for sale. Misuse of the resale certificate can lead to significant penalties, including liability for unpaid taxes and additional fines. Understanding the responsibilities associated with this certificate is essential for any business owner looking to navigate California's tax regulations effectively.

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CDTFA­230 REV. 1 (8­17)

STATE OF CALIFORNIA

GENERAL RESALE CERTIFICATE

CALIFORNIA DEPARTMENT OF TAX AND FEE ADMINISTRATION

CALIFORNIA RESALE CERTIFICATE

I HEREBY CERTIFY:

1.I hold valid seller’s permit number:

2.I am engaged in the business of selling the following type of tangible personal property:

3. This certificate is for the purchase from

 

of the item(s) I have

listed in paragraph 5 below.

[Vendor’s name]

4.I will resell the item(s) listed in paragraph 5, which I am purchasing under this resale certificate in the form of tangible personal property in the regular course of my business operations, and I will do so prior to making any use of the item(s) other than demonstration and display while holding the item(s) for sale in the regular course of my business. I understand that if I use the item(s) purchased under this certificate in any manner other than as just described, I will owe use tax based on each item’s purchase price or as otherwise provided by law.

5.Description of property to be purchased for resale:

6.I have read and understand the following:

FOR YOUR INFORMATION: A person may be guilty of a misdemeanor under Revenue and Taxation Code section 6094.5 if the purchaser knows at the time of purchase that he or she will not resell the purchased item prior to any use (other than retention, demonstration, or display while holding it for resale) and he or she furnishes a resale certificate to avoid payment to the seller of an amount as tax. Additionally, a person misusing a resale certificate for personal gain or to evade the payment of tax is liable, for each purchase, for the tax that would have been due, plus a penalty of 10 percent of the tax or $500, whichever is more.

NAME OF PURCHASER

SIGNATURE OF PURCHASER, PURCHASER’S EMPLOYEE OR AUTHORIZED REPRESENTATIVE

PRINTED NAME OF PERSON SIGNING

TITLE

ADDRESS OF PURCHASER

TELEPHONE NUMBER

()

DATE

➤ PDF File

Form Specifications

Fact Name Details
Purpose The California Resale Certificate allows businesses to purchase goods without paying sales tax, provided they intend to resell those goods in the regular course of business.
Seller’s Permit To use the resale certificate, the purchaser must hold a valid seller’s permit number, which identifies them as a legitimate seller in California.
Usage Restrictions Items purchased under this certificate must be resold without any use other than demonstration or display. Using the items for personal purposes can result in tax liabilities.
Legal Consequences Misuse of the resale certificate can lead to misdemeanor charges under California Revenue and Taxation Code section 6094.5, along with penalties including back taxes and fines.
Form Details The form requires the purchaser to provide their name, signature, and contact information, as well as a description of the property being purchased for resale.

Ca Resale: Usage Guidelines

Filling out the California Resale Certificate is a straightforward process. This form allows you to purchase items for resale without paying sales tax upfront. It’s important to complete it accurately to ensure compliance with tax regulations. Below are the steps to guide you through the process of filling out the form.

  1. Obtain the Form: Download the California Resale Certificate (CDTFA-230) from the California Department of Tax and Fee Administration website or request a physical copy from your local office.
  2. Enter Your Seller’s Permit Number: In the first section of the form, write your valid seller’s permit number. This number is crucial for verifying your eligibility to use the resale certificate.
  3. Describe Your Business: In the second section, specify the type of tangible personal property you sell. Be as detailed as possible to clarify the nature of your business.
  4. Vendor Information: In the third section, fill in the name of the vendor from whom you are purchasing the items. This should be the business or individual selling you the goods.
  5. List Items for Resale: In the fifth section, provide a clear description of the items you are purchasing for resale. Include details such as quantity, model numbers, or any other identifying information.
  6. Understand the Terms: Read the information provided regarding the legal implications of using the resale certificate. This section outlines your responsibilities and the consequences of misuse.
  7. Sign the Form: The purchaser or an authorized representative must sign the form. Include the printed name of the signer, their title, and the date of signing.
  8. Provide Contact Information: Fill in the address and telephone number of the purchaser. This information is necessary for any potential follow-up or verification.

Once you have completed the form, ensure that you keep a copy for your records. Submit the original to the vendor when making your purchase. This will help you avoid paying sales tax on items you intend to resell, as long as you adhere to the conditions outlined in the certificate.

Your Questions, Answered

What is the California Resale Certificate?

The California Resale Certificate is a document that allows a business to purchase items without paying sales tax, provided those items are intended for resale. This certificate is issued by the California Department of Tax and Fee Administration (CDTFA) and is used to certify that the purchaser holds a valid seller's permit and is engaged in selling tangible personal property.

Who needs to use the California Resale Certificate?

Any business that sells tangible personal property and holds a valid seller's permit should use the California Resale Certificate when purchasing items for resale. This includes retailers, wholesalers, and other entities involved in the sale of goods.

How do I fill out the California Resale Certificate?

To complete the certificate, you must provide your valid seller’s permit number, describe the type of tangible personal property you sell, and list the vendor's name from whom you are purchasing the items. You also need to specify the items you intend to resell. Make sure to sign and date the certificate before submitting it to the vendor.

What happens if I use the items purchased under the resale certificate?

If you use the items for any purpose other than resale, such as personal use, you will be liable for use tax. This tax is calculated based on the purchase price of the items. The law requires that you pay this tax if you do not resell the items as intended.

What are the penalties for misusing the resale certificate?

Misusing the resale certificate can lead to serious consequences. If you knowingly provide the certificate while intending to use the items for personal gain, you could face a misdemeanor charge. Additionally, you may owe the tax that would have been due, along with a penalty of 10% of the tax or $500, whichever is greater.

Can I use the resale certificate for all types of purchases?

No, the resale certificate is specifically for tangible personal property that you intend to resell. It cannot be used for items that you plan to use in your business operations or for personal use. Always ensure that the items purchased are strictly for resale.

How long is the resale certificate valid?

The California Resale Certificate does not have an expiration date. However, it is essential to keep your seller’s permit active and up-to-date. If your business status changes or if you cease operations, you should no longer use the resale certificate.

Do I need to provide a copy of the resale certificate to the vendor?

Yes, you must provide a copy of the completed resale certificate to the vendor from whom you are purchasing the items. The vendor will keep this certificate on file to document the tax-exempt sale.

What if I am a new business without a seller's permit?

If you do not have a seller's permit, you cannot use the California Resale Certificate. You must first apply for and obtain a seller's permit from the CDTFA before making tax-exempt purchases for resale.

Where can I find the California Resale Certificate form?

The California Resale Certificate form, known as CDTFA-230, can be obtained from the California Department of Tax and Fee Administration's website. It is available for download and can be printed for use.

Common mistakes

  1. Missing Seller's Permit Number: Failing to include a valid seller’s permit number can invalidate the entire resale certificate. Ensure this number is accurate and current.

  2. Incorrect Type of Tangible Personal Property: Not specifying the correct type of property being sold can lead to confusion and potential legal issues. Clearly state the type of goods you sell.

  3. Vendor’s Name Omission: Leaving out the vendor's name from whom the items are being purchased is a common mistake. Always include this information to avoid complications.

  4. Improper Use of Items: Misunderstanding the terms of resale can result in unintended use tax. Remember, items must be resold in their original form, except for display purposes.

  5. Incomplete Description of Property: Not providing a detailed description of the items for resale can create ambiguity. Be specific about what you are purchasing.

  6. Ignoring Legal Consequences: Underestimating the seriousness of misusing a resale certificate can lead to legal trouble. Be aware of the penalties associated with misuse.

  7. Signature Issues: Forgetting to sign the certificate or having an unauthorized person sign can render the form invalid. Ensure the correct individual signs and dates the form.

Documents used along the form

The California Resale Certificate is a vital document for businesses engaged in the resale of tangible personal property. It allows sellers to purchase items without paying sales tax, provided they intend to resell those items in their regular business operations. Alongside the California Resale Certificate, several other forms and documents are commonly used in conjunction with it. Understanding these documents can help streamline business transactions and ensure compliance with state regulations.

  • Seller's Permit: This document is issued by the California Department of Tax and Fee Administration (CDTFA) and allows businesses to collect sales tax from customers. It is essential for any entity that sells tangible goods in California.
  • Purchase Order: A purchase order is a document created by a buyer to authorize a purchase transaction. It outlines the items being purchased, quantities, and agreed prices, serving as a formal agreement between the buyer and seller.
  • Invoice: An invoice is a detailed bill sent by the seller to the buyer, listing the products or services provided, their prices, and the total amount due. It serves as a record of the transaction and can be used for tax purposes.
  • Sales Tax Return: This form is filed by businesses to report sales tax collected during a specific period. It provides a summary of sales and tax liabilities, ensuring that businesses comply with tax regulations.
  • Exemption Certificate: This document allows certain buyers to purchase items tax-free for specific reasons, such as resale or use in manufacturing. It is crucial for businesses that qualify for tax exemptions to present this certificate to sellers.

Utilizing these documents correctly can facilitate smoother business operations and ensure adherence to California tax laws. Familiarity with each form enhances a business's ability to manage transactions effectively while minimizing potential legal complications.

Similar forms

The California Resale Certificate is an important document for businesses engaged in selling tangible personal property. It shares similarities with several other documents. Here is a list of ten documents that are comparable to the California Resale Certificate:

  • Sales Tax Exemption Certificate: This document allows a buyer to purchase goods without paying sales tax, similar to how the resale certificate is used to certify that the items will be resold.
  • Vendor's License: A vendor's license permits a business to sell goods. Like the resale certificate, it confirms that the seller is authorized to conduct sales.
  • Purchase Order: A purchase order is a document issued by a buyer to a seller, indicating the details of products being purchased. It often accompanies resale certificates for clarity in transactions.
  • Wholesale License: This license allows businesses to buy goods at wholesale prices for resale. It serves a similar purpose as the resale certificate by verifying the buyer's intent to resell.
  • Tax Exempt Certificate: This certificate is used by organizations that qualify for tax-exempt status, allowing them to purchase goods without paying sales tax, much like the resale certificate.
  • Form ST-3 (Massachusetts Sales Tax Resale Certificate): This form is used in Massachusetts to certify that items purchased will be resold, similar to the California Resale Certificate.
  • Form ST-120 (New York Resale Certificate): This document serves the same purpose in New York, allowing businesses to purchase items for resale without paying sales tax.
  • Sales Tax Resale Certificate (Florida): In Florida, this certificate allows businesses to buy goods for resale without incurring sales tax, paralleling the function of the California form.
  • Form CRT-61 (Michigan Sales and Use Tax Certificate of Exemption): This form is used in Michigan for tax-exempt purchases, similar to the California Resale Certificate.
  • Form ST-4 (Illinois Resale Certificate): This certificate allows Illinois businesses to purchase goods for resale without paying sales tax, akin to the California Resale Certificate.

Each of these documents serves to confirm the buyer's intent to resell items, helping to streamline the purchasing process while ensuring compliance with tax regulations.

Dos and Don'ts

When filling out the California Resale Certificate (CDTFA-230), it is essential to follow specific guidelines to ensure compliance and avoid penalties. Below are four key actions to take and avoid:

  • Do: Provide a valid seller’s permit number. This is crucial for the legitimacy of the resale certificate.
  • Do: Clearly describe the type of tangible personal property you intend to resell. Accurate descriptions help prevent misunderstandings.
  • Don't: Use the resale certificate for items you do not plan to resell. Misuse can lead to serious penalties.
  • Don't: Forget to sign and print your name on the form. An unsigned certificate is invalid and may cause issues with your transactions.

Adhering to these guidelines will help ensure a smooth process when utilizing the California Resale Certificate.

Misconceptions

Misconceptions about the California Resale Certificate can lead to confusion and potential legal issues. Here are eight common misconceptions clarified:

  • Anyone can use the Resale Certificate. Only businesses with a valid seller’s permit can utilize this certificate. Individuals or businesses without a seller's permit are not authorized to use it.
  • It allows for personal use of purchased items. The certificate is strictly for items intended for resale. Using these items for personal purposes can lead to tax liabilities.
  • All purchases can be made tax-free with the certificate. The certificate is only valid for tangible personal property that will be resold. It does not apply to services or items used for business operations.
  • Once the certificate is filled out, it never expires. The validity of the certificate is tied to the seller’s permit. If the permit is revoked or not renewed, the resale certificate becomes invalid.
  • Misuse of the certificate has no consequences. Misusing the resale certificate can result in serious penalties, including fines and tax liabilities. Understanding the proper use is crucial.
  • All vendors accept the Resale Certificate. Vendors are not obligated to accept a resale certificate. They may require additional documentation or proof of the seller’s permit.
  • It covers all types of property. The resale certificate only applies to tangible personal property. Intangible assets or services are excluded from this exemption.
  • There’s no need to keep records of purchases made with the certificate. Proper record-keeping is essential. Businesses should maintain detailed records of all transactions involving the resale certificate to ensure compliance with tax regulations.

Key takeaways

Filling out and using the California Resale Certificate (CDTFA-230) is an important process for businesses engaged in the resale of tangible personal property. Here are key takeaways to consider:

  • Valid Seller's Permit: Ensure that you hold a valid seller’s permit number before completing the form. This is a requirement for the resale certificate to be valid.
  • Business Type: Clearly state the type of tangible personal property you are engaged in selling. This helps establish the context of your resale activities.
  • Vendor Information: Include the name of the vendor from whom you are purchasing the items. This information is crucial for tracking and accountability.
  • Resale Intent: Confirm that you will resell the items in the regular course of business. Any use of the items beyond demonstration or display may result in tax liabilities.
  • Description of Property: Provide a detailed description of the property you intend to purchase for resale. This specificity aids in compliance and reduces ambiguity.
  • Legal Awareness: Understand the legal implications of misusing the resale certificate. Know that misuse can lead to penalties and potential misdemeanor charges.
  • Signature Requirement: The form must be signed by the purchaser or an authorized representative. This signature validates the certificate and affirms the purchaser's commitment to comply with tax laws.

Being aware of these key points can help ensure compliance with California tax regulations and facilitate smoother transactions in your business operations.