In this article, you will learn:
Any retailer liable to collect sales tax on retail sales must obtain and apply for sales tax permit or license to undertake sales in a particular state in the U.S.
A sales tax is a consumption tax imposed by state governments on retail sales undertaken by sellers. Since sales tax is a sub-national tax and does not come under the purview of the Federal Government, each state has the authority to levy its own sales and use tax considering the US constitutional restrictions.
Typically, states impose sales tax on retail sales of tangible property such as goods, products and commodities, merchandise, etc. as well as certain services with exceptions unique to each state. Accordingly, retailers are required to collect sales tax at the point of sale as per a state’s taxation laws and remit the same to the State’s Department of Revenue.
Applying for and obtaining a sales tax license gives retailers the right to sell commodities in a particular state. A sales tax license is also called a reseller’s license, vendor’s license, or a resale certificate in some parts of the U.S. Each state has its own requirements for obtaining a seller’s permit.
Further, these state sales tax licenses can be obtained for a license fee which varies from state to state. You must note that retailers in the business of selling certain commodities exempt from the otherwise applicable state-controlled local sales taxes are not required to obtain a sales tax license to sell such commodities.
Additionally, state sales tax licenses are non-transferable. Therefore, you must obtain a new sales tax license each time you start a new retail business or buy an existing retail business.
Don’t know where to start to apply for a sales tax permit? Don’t worry, we’ve got you covered. Although each state has its own requirement for obtaining a seller’s permit, this article provides you with an overview of the steps typically involved in how to apply for sales tax permit.
Things You Require to Apply For Sales Tax Remit
As mentioned earlier, each state has its own requirements to apply for a sales tax license. For instance, different states have different application forms that must be completed and filed with the State Department of Revenue in order to obtain your sales tax license for undertaking retail sales in a particular state.
Retailers seeking to undertake retail sales of tangible property in Colorado must file Form CR 0100 with the Colorado Department of Revenue to apply for a sales permit in Colorado.
The following is the list of things you must keep handy to fill out application forms for obtaining a sales tax license in a particular state.
1. Reason for Filing the Application
You may be starting a retail business and applying for a new sales tax permit for your retail business with the state’s Department of Revenue. Or you may want to add a new physical location to your existing account, change members, partners, or officers of the existing business, or change the ownership of the existing business.
Whatever the reason for your application, you may be asked to clarify as to why you’re filing such an application with the State Department of Revenue.
2. Business Information
a. Taxpayer Identification Number (TIN)
Keep your unique 9-digit TIN handy to fill out the application form for a sales tax license. Your TIN can be the Social Security Number (SSN) issued by the Social Security Administration (SSA) or the Individual Taxpayer Identification Number (ITIN) issued by the IRS.
However, if you’re operating as any other business organization apart from an individual or sole proprietor, you may need to provide your Federal Employer Identification Number (FEIN).
For instance, you may require FEIN if you operate as a general partnership, association, joint venture, government agency, Estate/Trust, non-profit organization, LLC, LLP, LP, LLLP, or Corporation/S Corp.
b. Proof of Identification
You will have to attach a valid proof of identification with your application for a sales tax permit. This would typically include your state driver’s license, United States passport, or any other proof of identification considered valid by the state in which you’re applying for a sales permit.
c. Details of Principal Place of Business
(i) Business Information
You will need to provide the address of your principal place of business within the state. Additionally, you may also be asked to provide contact details such as phone number and email address.
(ii) Mailing Address
In case your mailing address is different from your business address, you may be required to provide a mailing address separately.
(iii) Information About Owner/Partner/Member/Officer
You may also have to provide information about owners, members, partners, or officers involved in the business. This would include details such as the name, job title, SSN, and address of the owner/member/partner/officer.
If there is more than one individual owner, member, partner, or officer involved in the business, you may be asked to provide the same information about each of them in a separate sheet attached to the application.
(iv) Business Acquisition or Purchase
In case you have acquired or bought a retail business, you may be asked to provide details such as the name of the prior business, prior owner’s name, prior owner’s FEIN, business address, and date of acquisition.
3. Sales Tax Account Information
The State’s Department of Revenue may require you to provide information regarding the sales you’re planning to undertake as part of your new business.
For instance, you may have to disclose the type of sales you’ll be involved in. This could include wholesale retail or charitable sales.
Likewise, you may asked to provide information regarding the products or services you sell, list the products or services you provide, and the sales tax filing frequency based on the thresholds set by the state’s Department of Revenue.
4. Withholding Tax Account Information
As an employer, you are liable to deduct withholding tax from the wages of your employees and remit the same to the IRS. On your application for the sales remit, you may be required to provide your withholding tax account information. This may include indicating the type of your withholding such as W2, 1099, W2G, or oil and gas withholding.
Likewise, you may also have to indicate the filing frequency of the withholding tax based on an estimated amount of tax that will be withheld for all employees for the year.
5. An Applicable Amount Towards License Fees
Visit your State’s Department of Revenue website and check the amount of fees required to obtain a sales tax permit in your state. Some states even demand a sales tax deposit which is refunded automatically after you collect and remit some amount in state sales taxes.
Please note that the state sales tax license is valid for a specific period, post which it has to be renewed.
How to Apply For Sales Tax Permit?
There are many ways in which you can apply for and obtain a sales tax license from your state’s Department of Revenue.
1. Apply for a Sales Tax License Online
Visit your state’s online portal that serves as a filing tool to register and obtain a state sales tax license.
For instance, if you are a retail seller seeking a Colorado sales tax license, you can simply visit https://mybiz.colorado.gov/intro to register and receive your Colorado Account Number the same day.
Your license is mailed to you once the license fee is paid. However, it may take a few weeks time for the paper license to be sent to you.
2. Email the Form to the State’s Department of Revenue Email Address
If you’re unable to register online, you can complete your state license application form and email it to the email address provided by your state’s Department of Revenue. In the case of Colorado, the CR 0100 completed application can be emailed to dor_taxapplications@state.co.us.
3. Visit the State’s Taxpayer Service Centre
You can even physically visit the taxpayer service centers listed by your state’s Department of Revenue. Simply carry the completed application form for a state sales tax license along with a valid picture ID and a check or money order for the applicable license fee to the taxpayer service centers listed on the Department’s website.
4. Mail the Application to the State’s Department of Revenue Address
You can download the state license application form from the State’s Department of Revenue website, complete the application, make a copy of the application for your records, and mail the original application along with a check or money order for the fees applicable along with a valid picture ID at the State’s Department of Revenue website provided by the department on its website.
Statewise Department of Revenue Website
Looking for your state’s Department of Revenue website? The following section provides the links to the website of each state’s Department of Revenue website.
Want Help With Taxes and Accounting?
