Mitigate your audit liabilities by verifying your tax exemption certificates.

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Exemption Certificate Verification Made Easy

1

Importance of Verification

When accepting a resale or tax exemption certificate, it is important to ensure that a buyer provides you with a valid document.

Due diligence can require verification of tax registration numbers, and confirmation that existing validation processes are setup correctly. A holistic process, one that incorporates transacting party information, your company’s nexus footprint, as well as other relevant factors is necessary to reduce your audit risk.

If you fail to verify all necessary data pertaining to your circumstances, an auditor may deem your resale or tax exemption certificate invalid, which in return can lead to back taxes and penalties.

2

The Challenges of Verification

While requirements vary by state and purpose, most resale and tax certificates require certain information to be included in the document for it to be considered valid.

This can include names and addresses of purchasers and sellers, description of goods or services being sold, dates, declarations signed under the penalty of perjury, and external verification with tax departments in respective states.

Knowing and implementing the exact process of resale and tax exemption verification per state is the only way to be audit ready.

3

Verification Simplified

EXEMPTAX stays on top of complex regulations and provides an intuitive way to link state verifications with your resale and tax exemption certificates.

Our platform provides your business with a comprehensive exemption certificate management (ECM) platform, which enables your customers to fill out tax exemption certificates in an intuitive workflow. Your customers will be guided through a step-by-step process to ensure that they provide you the right tax form for the correct purpose.

You will only receive valid and signed tax certificates, which eliminates the painful back and forth with your customers. With EXEMPTAX, you can eliminate the guesswork once and for all!

Not going the last mile and ignoring certificate verification might exponentially increase your audit risk.

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State Verification Resources

Below you will find a collection resources assembled by EXEMPTAX to help you verify tax registration numbers per each state.
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FL TX NM AZ AK CA NV UT CO OR WA ID HI OK MT WY ND SD NE KS MN IA MO AR LA MS AL GA SC IL WI MI IN OH TN KY NC WV VA PA NY ME VT NH RI CT NJ DE MD MA DC

Learn More About Exemptions

Four Corners Standard

The “Four Corners” standard also known as the “Fully Completed Certificate” refers to a set of standards utilized by member states of the Streamlined Sales and Use Tax Agreement to relieve sellers of liability if they accept a fully completed tax exemption certificate.

Under the SSUTA, this standard replaces the long-standing “Good Faith” standard and is utilized by the 24 member states, which include:

Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming.

According to the Streamlined Sales Tax Governing Board, a seller will have obtained a fully completed exemption certificate if the seller “captures the information on the form that is part of SSUTA’s required standard data elements.” LEARN MORE

Good Faith Standard

About half of the states in the US (excluding members of the SSTUA) use varying levels of the “Good Faith” standard to relieve sellers of liability when accepting tax exemption certificates. While definitions of “Good Faith” vary by state, in general the standard involves requiring the seller to conduct due diligence, and not simply accept an exemption certificate and hope that the buyer is telling the truth.

Practically speaking, some of the common reasons why certificates are invalidated under the standard include:

  • Property is unable to be used for the exempt purpose.
  • Purchaser does not sell the type of property in question.
  • Property may be purchased for resale, but the seller suspects that purchaser will not be reselling it.
  • The provided exemption certificate is invalid.

 
In many real-life situations, invalidations may occur with a combination of events as well as other variations specific to each case. At the root of the standard is the principle that it’s the seller’s responsibility to “connect the dots” so to speak. LEARN MORE