Sales for Resale (Publication 103)
Valid Resale Certificates

Verifying a seller's permit number on a resale certificate

There are two ways to verify that a customer holds a valid seller's permit:

• Select Verify a permit, license, or account. A seller can also use this search tool to verify that a permit, license, or account is valid for many programs administered by us, including: Certificate of Registration – Use Tax, Cigarette Retailer License number, eWaste account, etc.
• A seller can also call our automated toll-free number at 1-888-225-5263, available 24 hours a day, seven days a week. The seller will need the seller's permit number that they want to verify.

However, a purchaser is not required to hold a seller's permit to issue a valid resale certificate. If the purchaser is not required to hold a permit because of the type of property it sells, instead of a seller's permit number, the purchaser must include on the certificate an explanation stating why it is not required to hold a seller's permit.

Misuse of a resale certificate

If a purchaser knowingly issues a resale certificate when purchasing items that they will not resell, they will owe:

• The amount of tax that would be due had the certificate not been used, and
• Interest on the tax due (computed from the time the item was purchased).

In addition, the purchaser may have their seller's permit revoked and may be required to pay one or both of the following:

• A penalty of 10 percent of the tax or $500, whichever is greater, for each purchase made for personal gain or to evade payment of tax, or
• A 25 percent penalty for fraud or intent to evade the tax.

Purchasers may be found guilty of a misdemeanor under Revenue and Taxation Code section 7153, if they give a completed resale certificate to the seller with the intent to evade reporting or paying tax to the seller. Intent is shown if the purchaser knew at the time of purchase, the item would be used rather than resold. Each offense is punishable by a fine of not less than $1,000 and not more than $5,000, imprisonment not exceeding one year, or both fine and imprisonment.

As part of the audit process, we routinely examine resale certificates to ensure that they support legitimate purchases for resale.

Content of a resale certificate

Any document, including a letter, note, purchase order, or preprinted form, can serve as a resale certificate, provided it contains all of the following information:

• The name and address of the purchaser's business.
• The purchaser's seller's permit number or an explanation stating why the purchaser is not required to hold a seller's permit.
• A description of the property to be purchased. See Repeat customers and customers who use purchase orders.
• A statement that the described property is being purchased for resale. The document must contain the phrase "for resale." Phrases such as "nontaxable" or "exempt" are not acceptable. See Repeat customers and customers who use purchase orders.
• The date of the document (an otherwise valid resale certificate will not be considered invalid solely because it is undated).
• The signature of the purchaser, purchaser's employee, or authorized representative.

Please note: Certain businesses are not required to hold seller's permits. They may, for example, sell only in interstate and foreign commerce or sell only products that are tax-exempt (such as raw fruits and vegetables). Such businesses should note on their resale certificates that they do not hold a permit and state the reason they are not required to hold a seller's permit.

We do not provide resale certificates. However, a purchaser may download CDTFA-230, General Resale Certificate, on our website. Resale certificates for specific industries are available under the Additional Information tab.

Digital signatures

Digitally signed resale certificates provided electronically can be considered valid as long as they contain all the essential elements of a valid resale certificate (as stated above) including the signature of the purchaser, purchaser's employee, or authorized representative. A "digital signature" has the same force and effect as a manual signature and may be used on a resale certificate provided it meets the requirements of California Government Code section 16.5, and its implementing regulations. Specifically, a digital signature can be accepted when it has the following attributes:

1. It is unique to the person using it.
2. It is capable of verification.
3. It is under the sole control of the person using it.
4. It is linked to data in such a manner that if the data are changed, the digital signature is invalidated.
5. It conforms to regulations adopted by the Secretary of State.

The Secretary of State regulations require that the signature be created by one of the acceptable technologies identified in the regulations. For more information, the Secretary of State website, www.sos.ca.gov, contains a FAQ webpage on the use of digital signatures.