While both the Certificate of Authority and the Resale Certificate are essential sales tax documents issued by the New York State Department of Taxation and Finance (DTF), they serve completely different purposes within a sales transaction.
Simply put, the Certificate of Authority is a business license to collect tax, and the Resale Certificate is a transaction document to claim a tax exemption.
What is the Certificate of Authority?
The Sales Tax Certificate of Authority (formally referred to by the public display copy, Form DTF-175) is your business’s master license to conduct taxable sales in New York State.
This document grants you the legal right to:
- Act as a Tax Collector: Legally collect state and local sales tax from your customers.
- Handle Sales Tax: Register your business with the DTF for filing and remitting the collected sales tax revenue to the state.
Think of it as the prerequisite. You must have a Certificate of Authority before you can legally make any taxable sales or issue/accept a Resale Certificate.
What is a Resale Certificate?
A Resale Certificate (most commonly the single-use Form ST-120 or the blanket Form ST-120.1) is a transactional form that allows a buyer to purchase goods or services without paying sales tax at the time of purchase.
This exemption is granted only if the buyer meets two conditions:
- They have a valid Sales Tax Certificate of Authority (meaning they are a registered vendor).
- The items being purchased are intended exclusively for resale or will become a physical part of a product that is ultimately sold to an end consumer.
Example: A shoe store owner buys sneakers wholesale. They present a Resale Certificate to the distributor to avoid paying tax on the purchase, as they will later collect sales tax when they sell those shoes to a retail customer.
Key Differences at a Glance
| Feature | Certificate of Authority | Resale Certificate (Form ST-120) |
| Document Type | Business License/Permit | Tax Exemption Form |
| Primary Function | Authorizes the business to collect and remit tax. | Authorizes a buyer to skip paying tax on a specific transaction. |
| Who Issues It | DTF (Issued to the vendor) | The Buyer (Issued by the vendor to the seller) |
| Prerequisite | Required for all taxable sales in NY. | Requires the buyer to have a Certificate of Authority number. |
The Certificate of Authority is the status that confirms you are a registered sales tax vendor; the Resale Certificate is the tool you use to utilize your status for a tax-free purchase.
Need expert help ensuring proper compliance, including the correct use of your Sales Tax Certificate of Authority and Resale Certificates? Contact Dimov NYC CPA today for tax advisory services.
