Get W9 Resale Certificate

Exemption certificates are a way for a business or organization to attest that you are a tax exempt entity, or that you are purchasing an item with the intent to use it in a way that has been deemed exempt from tax. In other words, sales tax exemption certificates are your proof that you can buy an item tax free.

If your entity is exempt from backup withholding, you'll fill in the first line with your code. This should apply to most entities. However, if your business is not, the company who hired you for your services will need to withhold income tax from your pay at a flat rate of 24% and send it to the IRS.

What Does Exempt Payee Mean? An exempt payee is a company for whom backup withholding is not necessary, even in circumstances where this would typically be required. It should be noted that sole proprietors and individuals are usually not exempt from backup withholding, and therefore are not exempt payees.

The W-9 is a federal form that discloses your employer identification number for tax-reporting purposes. Tax resale certificates are issued by states and contain a resale number, but their primary purpose is to establish that your business doesn't need to pay sales tax.

So what is the big difference? The big difference between the resale and exemption certificate is that the exemption certificate does not require a 11-digit taxpayer identification number. Exemption certificates also require the purchaser to list the reason why the item is exempt from sales and use tax.

In general, W-9s are required only for business-to-business relationships where more than $600 is paid in the calendar year. The $600 rule applies to labor and services. For direct sales, a W-9 is required for total purchases over $5,000.

All payees listed in items 1 through 4 and 6 through 11 are exempt. Also, C corporations are exempt. A person registered under the Investment Advisers Act of 1940 who regularly acts as a broker also is exempt. Barter exchange transactions and patronage dividends.

IRS Form W-9 is most commonly used by individuals when they are working as a freelancer or independent contractor. ... The W-9 is used in a wide range of payment situations, but most commonly, taxpayers fill them out when they are working as a freelancer or independent contractor rather than an employee.

Purchasers submit resale certificates to vendors, who typically initiate the request. The person or company making the payment, rather than the person receiving the payment, typically requests the Form W-9. The W-9 relates to federal income tax, while resale certificates relate to state sales tax.