Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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475.0000 RESALE CERTIFICATES—Regulation 1668

Annotation 475.0175

475.0175 Resales Made Under Predecessor's Resale Certificates. A partnership incorporated using the partnership's business name as its corporate name. The partnership timely informs the Board of its dissolution. The Board cancels the partnership's seller's permit and simultaneously the corporation obtains a new seller's permit from the Board. The partnership during the regular course of business had issued resale certificates that met the requirements of Regulation 1668. The tax consequence of vendors, relying on the resale certificates issued by the partnership, selling extax for resale to the corporation is discussed below.

(1) Since the resale certificates were issued to the vendors by a person other than the current purchaser, those resale certificates would not necessarily relieve the seller of the liability for sales tax. If the corporation resold the purchased property without use and if the vendors could establish this, the vendors would not owe sales tax on these sales to the corporation. (Regulation 1668(c).)

(2) Unless the vendors had knowledge that the partnership that issued the resale certificates was not the same as the corporation making the ex-tax purchases, the integrity of the Sales and Use Tax Law requires the corporation to affirmatively notify the vendors that they may not rely on those resale certificates when making sales to the corporation. Otherwise the corporation will be regarded as having adopted the resale certificates. In such a case, if the corporation uses the purchased property for any purpose other than retention, demonstration or display while holding it for sale in the regular course of business, the corporation will owe tax measured by the purchase price of such property. 2/6/90.