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Sales Tax in the Reselling Industries

April 13, 2006

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As a reseller, you're in the business of buying goods and reselling the same goods - all hopefully for a profit. You share an industry which includes, but is not limited to, department stores, grocery stores, restaurants, mail-order catalogue sellers, and automobile showrooms.

While these businesses are all very different, an element they all have in common is that each type of business buys products and then resells them in the same form in which they were acquired. For example, if you buy wheels from a wholesaler and then turn around and sell these same wheels, you are a reseller because there is no difference between what you bought and what you sold. However, if you buy these wheels and then attach them to wheelbarrows, you'll probably be treated as a manufacturer rather than a reseller because the wheels you bought are an entirely different product as a component of the wheelbarrow.

While this distinction may seem to be splitting hairs, it becomes important for purposes of claiming either a resale or manufacturing exemption from sales or use taxes.

Our discussion of sales tax issues is divided into two parts:

• sales tax on your sales
• sales tax on your purchases

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