Please Upload a Completed and Signed Copy of the Uniform Sales and Use Tax Certificate.
The multijurisdiction resale certificate explained
Update 7/24/2014:The Exemption Certificate Survival Guide has the latest data on resale certificates, including multijurisidiction certificates.
"Multijurisdiction" resale certificates, or compatible sales taxation certificates, tin be a boon for multi-country companies by eliminating the demand to upshot dozens of certificates to a unmarried vendor. But they are also ane of the most abused and misunderstood of all certificates.
What are the risks of using these forms incorrectly?
Incorrectly issuing a multijurisdictional class can event in your vendor delaying your shipment or revenue enhancement being charged.
Equally a seller, accepting a these forms when not appropriate puts you at hazard of audit liability that can potentially be extrapolated, with penalty and involvement.
This post volition explain how to avoid these risks when using the most pop multijurisdictional exemption document: the Uniform Sales & Utilize Taxation Certificate—Multijurisdictional, published past the MultiState Tax Committee (MTC MJ for brusk).
What is the MTC MJ?
The MTC MJ is the standard form to which virtually people refer when discussing the "MultiJurisdiction" form (also sometimes called the MTC MJ, Multi-J or just Multi). Many companies apply it, even for documenting exemptions in only one state, mostly because it is and so widely bachelor.
Is it a practiced thought?
If used properly, it is a perfectly fine form to issue or accept. The problem is that using it properly is not equally clear-cutting as it should exist. Confusion, leading to liability, oftentimes arises when working with this familiar certificate.
How to use it correctly
These guidelines will be relevant to both the entity issuing and the entity accepting the MTC MJ. In both cases, the key is to know when the grade is appropriate to use.
- Use or accept equally a RESALE certificate only. A fundamental thing to remember is that the MTC MJ is, according to www.mtc.gov, ONLY "acceptable for use every bit a "blanket" resale certificate and for similar purposes." This means that other exemption types – agricultural, government, exempt organizations, manufacturing, etc – CANNOT be documented using this form.
- Double cheque whether states are accepting the class. The MTC site makes articulate that they are not guaranteeing that this form is still accustomed by any of u.s.a., "States listed on the certificate accustomed this document equally of July, 2000. States may alter their policies for acceptance of the document without notifying the Multistate Tax Commission. You may check with the relevant state to decide the current status of the country's acceptance policy."
- Read the fine impress. With three pages of instructions and conditions, many taxpayers over look footling details, and there are lots of details. In the fine print, you will find all sorts of caveats for when the form is not appropriate.
For instance, the instructions circumspection that New Mexico will only accept the form for tertiary party drop shipments and any other transactions must use a valid New Mexico resale certificate. This ways, you can only use the form if you lot are NOT registered in NM. So to use it properly, you lot cannot put a NM registration number next to the NM section of the certificate. ME and WA take the same requirements; just for use if the buyer is Not registered in their state. Clear as mud? The list of caveats and conditions goes on. These may seem piffling, only missing a detail can mean that y'all have accepted an invalid document.
With so many variables to lookout for, it'southward buyer beware with this form unless you are very familiar with the rules. The best policy is either practice extensive research or select another grade. Each state on the MTC MJ besides publishes a country specific certificate that can be used for resale exemptions with far fewer caveats. Also, the Streamlined certificate covers many of the same states AND adds a level of liability protection for sellers accepting a fully completed certificate.
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Avalara Avalara Writer
Source: https://www.avalara.com/blog/en/north-america/2013/11/the-multijurisdiction-resale-certificate-explained.html
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