Tracking resale and exemption certificates for sales tax clients before they expire
An exempt sale without a valid certificate on file can be treated as a taxable one.
The short answerWhen a client makes a sale without charging sales tax because the buyer is reselling the goods or is exempt, the client generally needs a valid certificate from the buyer on file. If the certificate is missing or expired when an auditor asks, the state may treat the sale as taxable. Keep every certificate per client and customer with its state, type and expiration date, and review those expiring soon each month.
Key facts
| Why it matters | Exempt sales without valid certificates can be assessed as taxable |
|---|---|
| What to record | Client, customer, certificate number, type, state, expiration date |
| Review rhythm | Monthly check of certificates expiring soon or expired |
| Rules vary | Validity periods and accepted forms differ by state |
Why certificates go missing
Certificates arrive by email, by fax or attached to a first order, and end up in a folder nobody checks. Some states set expiration periods, and customers change names or ownership. Years later, an audit asks for them.
What to keep for each certificate
- The client (seller) and the customer (buyer)
- Resale or exemption, and the reason for exemption
- State and certificate number
- Date received and expiration date
- A copy of the certificate itself
A monthly routine
- List certificates expiring in the next 60 days and ask the client to request renewals.
- List expired certificates and flag customers who still buy tax-free.
- File new certificates the day they arrive.
Frequently asked questions
How long are certificates valid?
It depends on the state and the type of certificate; some do not expire, others do. Check each state’s rules.
Is this legal advice?
No. It is general information for planning your firm’s process.