For those of us who purchase items at retailers for resale on marketplaces such as Amazon and eBay, becoming tax-exempt could mean substantial profit increase. With some cities and states charging up to 10% for sales tax, that money could be sheer profit for resellers if we are able to get tax exempt.
In this article, we will walk through, step-by-step, how to get tax exempt at a few of the major retailers online including Walmart, Wayfair, and Home Depot.
Unfortunately, not all online retailers allow for tax-exempt or allow for it easily. Bed Bath and Beyond (and Buy Buy Baby), for example, says this in their Terms of Service:
If you own a resale shop, you must provide a resale certificate and permits (where applicable) for each state in which you conduct business once you are approved. Resale certificates must be updated periodically as required by State law. Certificates of Authority do not expire in the State of New Jersey. Tax-free shopping is only available by calling the 1-800 number or in-store and cannot be used on website transactions.
Before Getting Started with Tax-Exempt Step
Before you get started, you will need to have the following things:
- An official business such as a LLC, S-Corp, C-Corp, etc.
- A Federal Tax ID number
- Proper sales tax licensing so that you can remit taxes to your state
- Marketplace settings set correctly (on Amazon, eBay, etc.) to collect taxes where you have nexus
- A good book keeper and accountant (highly recommended)
In summary, before you can become tax exempt, you will need to have an official company and you will need to have that company set up to both collect and remit taxes to any state where you have nexus (fancy way of saying “operations” though the term is defined differently by different states). One of the best resources I have found for whether or not you need to be collecting sales tax for your ecommerce business in a state is this page on taxjar.com.
Generally speaking, sales tax is supposed to be charged to the end customer meaning that if you are purchasing items for resale, you do not have to pay sales tax on the items which you are purchasing for the purpose of reselling. Sales-tax is considered “pass-through” tax meaning that companies collect it from the end customers and pass it through to the states. Since your company is selling items to the end customer, you typically will be required to collect the sales tax and then give it to the states where you have nexus. You will want to make sure that your all of your sales channels (Amazon, eBay, Walmart, Shopify, Magento, Etsy, Rakuten, and anywhere else you sell are configured correctly to collect sales tax for remittance.
Again, this is our understanding of the process and we are not claiming it to be 100% accurate. Please check with your legal and tax professionals to get advice on what you should do in your business.
Once you’re done with the above steps (or as you start working on them), you can start working on getting approved for tax-exempt status on retailer sites following the steps that we’ve outlined below.
How to Get Walmart Tax Exempt
We found Walmart’s company address to be:
702 Sw 8th St.
We didn’t initially realize that some states require you to have a business inside of the in order to be tax exempt nor that some states require additional. forms. We had sent in the same certificate for every state initially, but fortunately, Walmart’s support was helpful. Here was their response:
————————————————— Walmart Response —————————————————
Here is more information on the drop-ship states.
- NY and VA require additional documentation to be exempt with those states. NY requires a competed ST-120 and VA requires a completed ST-14. You can add these states to your account and upload to your online application.
- CA, CT, FL, HI, MA, MD, MS, TN and DC require that you are registered for resale with that state. You must contact their DOR office to create the registration. You will need to provide a copy of their sales tax license as proof if you add them to your account.
- AK, DE, MT and NH do not charge state sales tax so no need to apply for exemption
If you are still interested/eligible, please follow the instructions below on how to add Drop-Ship states to your account.
- Go back into your application and click EDIT. Move to the state section.
- For the selected states, type NO NEXUS and put the expiration date as 3 years from today.
- If you have sales tax licenses for a state, then you can input that license information. You will have to provide a copy of those licenses for the drop-ship states.
- Once you complete the online portion, please send the required forms/licenses to email@example.com.
- Once we get these forms, we can approve your application.
- After you receive the approval email, you will no longer be charged sales tax on all orders shipped to eligible states and items (Not Apple products).
- Please note that the tax removal will happen at the final review page, after you input your payment information.
————————————————— End Walmart Response —————————————————
They also provided us with examples of the ST-120 from New York and the ST-14 from Virginia to fill out and resubmit. They also sent a “Streamlined with Multi-State” form as well.
How to Get Home Depot Tax Exempt
How to Get Wayfair Tax Exempt
Step 1) Sign Up for a Business Account (aka Wayfair Professional Account)
Step 2) Sign up for tax exemption: https://www.wayfair.com/v/account/business_account/tax_exemption?&experiencetype=2&selectedvertical=3
Before you can register for tax-exempt status, you will need to apply for a business account