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Under many state laws, which vary by state, when you purchase tangible personal property for resale, the transaction is not subject to sales or use tax, provided the sale is properly documented. A resale certificate is a form allowing a purchaser the right to make a non-taxable purchase for resale of the taxable items described in the certificate from a seller.
It is a criminal offense to give a resale certificate to the seller for taxable items that the purchaser knows, at the time of purchase, are purchased for use rather than for the purpose of resale, lease, or rental. Depending on the amount of tax evaded, the offense may range from a misdemeanor to a felony.