A sales tax permit is a document your state requires you to get before you can legally sell taxable goods or services
A sales tax permit (also called a resale certificate, seller's permit, or sales tax license, depending on your state) is an official authorization from your state's tax authority that says you are registered to collect sales tax from customers. Without it, you cannot legally ring up a sale of taxable items. The permit tells the state who you are, what you sell, and where you sell it — so the state can track whether you are actually collecting and sending in the tax money you owe.
You get the permit from your state's Department of Revenue, Department of Taxation, or equivalent agency — not from your city or county, even though you may also need local licenses. The permit itself is usually free or costs a small flat fee (typically under $50). The cost varies by state. Once you have it, you use it to buy inventory without paying sales tax yourself (because you will collect it from your customers instead), and you use it to report and pay the sales tax you collected.
Key Takeaways
- You must obtain a sales tax permit from your state before you legally sell taxable goods or services, even if you work from home or sell online.
- The permit is issued by your state's Department of Revenue or equivalent agency and typically costs nothing or a small one-time fee.
- With a permit, you can buy inventory without paying sales tax upfront, because you will collect it from customers instead.
- You use the permit number to file sales tax returns with your state, usually monthly or quarterly depending on your sales volume.
- Operating without a permit when you are required to have one can result in back taxes, penalties, and interest.
Who needs a sales tax permit
You need a permit if you sell tangible goods (physical items like clothing, food, or electronics) in a state that has sales tax. Most states have sales tax, but a few do not — Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though some allow local sales tax. If you sell services, the answer depends on your state; some states tax services like haircuts or repairs, and some do not.
You also need a permit if you sell online, even if you have no physical location in the state. This rule changed in 2018 when the U.S. Supreme Court ruled that states can require online sellers to collect sales tax. The threshold varies: some states require you to register if you have any sales there; others set a dollar threshold (for example, $100,000 in annual sales or 200 transactions). Check your state's Department of Revenue website to see what applies to you.
If you are a sole proprietor, a partnership, an LLC, or a corporation, you need a permit. The business structure does not matter — the type of sale does.
How to get a sales tax permit
Most states now let you register online through their Department of Revenue website. Go to your state's tax authority website, look for "register for sales tax" or "apply for a sales tax permit," and follow the form. You will need your Social Security Number or Employer Identification Number (EIN), your business name and address, a description of what you sell, and the date you plan to start selling. Some states ask for a phone number and email. The whole process usually takes 15 to 30 minutes.
A few states still require you to mail or hand-deliver a paper form, but this is becoming rare. If your state does, you can download the form from the Department of Revenue website, fill it out, and mail it to the address listed. Processing time for paper applications is usually 1 to 3 weeks.
After you submit, you will receive a permit number — sometimes instantly online, sometimes by mail within a few days. Write this number down and keep it safe. You will need it every time you file a sales tax return and when you buy inventory from wholesalers.
What you can do with a sales tax permit
Once you have the permit, you can buy inventory without paying sales tax. When you buy goods from a wholesaler or distributor to resell, you show them your permit number instead of paying sales tax on that purchase. This is called buying "for resale." The wholesaler does not charge you sales tax because they know you will collect it from your customers instead.
You also use the permit to file sales tax returns. Your state will tell you how often to file — usually monthly if you have high sales volume, or quarterly if you have lower volume. On the return, you report how much taxable sales you made and how much tax you collected, then you send the state the tax money. Some states let you keep a small percentage as a collection allowance, but most do not.
The permit is also proof to customers that you are a legitimate, registered business. Some customers, especially other businesses, may ask to see it before they buy from you.
What happens if you do not have a permit
Operating without a permit when you are required to have one is a violation. Your state can assess back taxes (the sales tax you should have collected), plus penalties and interest. The penalties vary by state but are often 5 to 25 percent of the unpaid tax. If the state discovers you were selling without a permit, they may also audit your records to figure out how much tax you owe going back several years.
You may also face criminal charges in cases of willful evasion, though this is less common for first-time violations. The civil penalties are the real risk: they add up quickly and can be much larger than the original tax owed.
Renewing and updating your permit
Sales tax permits do not expire in most states — once you have one, it stays active as long as you are in business and filing returns on time. However, you must update your permit if your business information changes. If you move to a new address, change your business name, add a new location, or change what you sell, contact your state's Department of Revenue and file an amendment. Some states let you do this online; others require a form.
If you stop selling taxable items or close your business, you should notify the state and request that your permit be cancelled. This stops you from receiving notices to file returns you no longer owe.
Frequently Asked Questions
Do I need a sales tax permit if I sell on eBay or Etsy?
Yes, if you are selling taxable goods and your sales meet your state's threshold. Most states now require online sellers to register for sales tax. The threshold varies — some states require registration at any sales level, others at $100,000 or $200,000 annually. Check your state's Department of Revenue website to see what applies to you.
Can I use someone else's sales tax permit?
No. A permit is issued to a specific business and person. Using someone else's permit is tax fraud. Each business must register separately, even if it is owned by the same person or is part of the same company.
What is the difference between a sales tax permit and a business license?
A business license is a general authorization from your city or county that says you can operate a business there. A sales tax permit is a state authorization that says you can collect sales tax. You may need both. The business license does not let you collect sales tax, and the sales tax permit does not let you operate a business — they serve different purposes.
How long does it take to get a sales tax permit?
Online applications are usually approved instantly or within one business day. Paper applications take 1 to 3 weeks. Some states issue a temporary permit number right away so you can start collecting tax while the full permit is being processed.
Do I have to pay sales tax on items I buy for my own business use?
Yes. The permit only exempts you from sales tax on items you buy for resale to customers. Items you buy for your own business use — office supplies, equipment, furniture — are subject to sales tax. You pay it like any other customer.