Resale Certificates and Seller’s Permits for Dropshippers, Explained

The first time a wholesale supplier asks for your "resale certificate" or "seller's permit number," it can feel like a test you did not know you had signed up for. The vocabulary is slippery because it changes from state to state, and dropshipping adds a twist that most tax guides skip: the goods are bought from one party, shipped by that party to a third party, and sold on a marketplace that may be collecting tax itself.

This guide sorts out the terms, shows how the paperwork travels between you, your supplier and your customer, and uses real wording from state tax agencies (California, Texas, New York, Washington and Florida) plus eBay's own tax help page. The aim is for you to know what to ask your state, what to ask your supplier, and what you must never do with a certificate. Details were checked in October 2026, and the sources are listed at the end.

1. The terms, untangled

The same ideas go by different names, so start with the concepts.

A seller's permit is not a general license to operate a business. If you are unsure about licensing, read our state-by-state framework for business licenses, and if you have not got a tax ID yet, see how to get an EIN.

2. Why resale certificates exist

Sales tax is meant to land once, on the final sale to the end customer. If you buy a product to resell it, taxing you on that wholesale purchase and again when your customer buys it would tax the item twice. A resale certificate is how the buyer tells the seller that this purchase is for resale, so the seller does not charge tax on it.

California's tax agency says any document can serve as a resale certificate if it contains required items, and it lists them: the purchaser's business name and address, the seller's permit number (or a statement of why none is needed), a description of the property, a statement that it is for resale including the phrase "for resale," a date, and a signature. It says words like "nontaxable" or "exempt" are not acceptable in place of "for resale," and it does not issue certificates itself. Purchasers can download the CDTFA-230 General Resale Certificate. Other states are more form-driven. Texas uses Form 01-339 and says the purchaser issues it under their own Texas taxpayer number.

Worth remembering: both sides keep the certificate. Your supplier needs it to show why it did not charge you tax, and you should keep a copy of what you gave.

3. How five states treat it

California

The California Department of Tax and Fee Administration (CDTFA) says sellers can verify a seller's permit number with the agency's online lookup tool or its automated phone line. It warns that knowingly using a resale certificate for items that will not be resold can lead to tax owed, interest, possible permit revocation and penalties, that giving a completed certificate with intent to evade tax may be a misdemeanor, and that the agency routinely reviews resale certificates in audits.

Texas

The Comptroller's FAQ says a customer's sales tax permit number, or a copy of the permit, is not a substitute for a resale certificate and does not relieve the seller of collecting tax. A certificate is needed for each purchase, except that a customer buying exclusively for resale can give a blanket certificate stating that all purchases will be resold in the regular course of business. It says the seller should retain certificates for four years. Penalties for illegal use range from a Class C misdemeanor, when tax evaded is under $20, to a second-degree felony at $20,000 or more. If you use resale merchandise yourself, you owe tax on it, which is reported on the taxable purchases line of your return.

Washington

Washington issues reseller permits. The Department of Revenue says retailers and wholesalers can use one to buy items for resale without paying sales tax, and that you use it only for items you resell in the regular course of business, collecting Washington state and local sales tax when you resell. Not permitted: personal or household items, items given away, business supplies or equipment, and tools or equipment unless you resell or rent them. Anyone using a permit inappropriately owes the tax plus a 50 percent penalty, even without intent to defraud. Permits are generally valid for four years, but only two if, for example, your business has been open less than 12 months. Sellers making wholesale sales must collect documentation from the buyer, keep it for five years, and without it must collect and remit sales tax.

Florida

Florida's Department of Revenue says that once registered you receive a Certificate of Registration (DR-11) and an Annual Resale Certificate (DR-13), and that the registration certificate must be displayed at the business location. It also says businesses must register each location. The detailed rules for using the DR-13 are in the department's own guidance, which you should read before you hand one to a supplier.

New York

New York uses Form ST-120, the Resale Certificate. Its drop shipment bulletin (TB-ST-190) says a New York registered primary seller gives Form ST-120 to the third-party seller when both that third-party seller and the customer are in New York. It also sets conditions for a "qualified out-of-state purchaser" to use ST-120, including that the purchaser is not registered or required to be registered in New York.

There is no single national resale certificate rule. For a multistate view, the Multistate Tax Commission publishes a Uniform Sales and Use Tax Resale Certificate and says that 36 states have indicated it can be used as a resale certificate. The page does not say which 36, and tells you to talk to the revenue department of the state to confirm whether it will be accepted. Treat it as a convenience that still needs a state-by-state check.

4. The dropshipping twist: three parties, two sales

In a drop shipment there are two sales. New York's bulletin describes it this way: the first sale is from the third-party seller, usually a manufacturer or wholesaler, to the primary seller (you), and the second is from the primary seller to the customer. The third party ships directly to your customer.

That raises three questions every dropshipper should ask.

1. Does my supplier charge me sales tax on the wholesale purchase? If you give a valid resale certificate, the supplier may not need to. If you cannot, expect tax on the invoice.
2. Who collects tax from my customer? On eBay, this depends on the customer's state and eBay's marketplace responsibility rules, covered below.
3. What does my supplier need from me? Usually a certificate, plus your permit or registration number, and sometimes a certificate specific to the ship-to state.

California's Publication 121 on drop shipments says that when an out-of-state retailer holds a permit, the retailer should issue the drop shipper a resale certificate for the sale, which relieves the drop shipper of reporting and paying the tax. If the true retailer has no permit, the drop shipper must report and pay the tax to the CDTFA, and charges the true retailer tax based on the retail amount. The publication adds a labeling rule: the true retailer cannot call the charge "California tax" or "California sales tax," and may use wording like "California tax paid to California drop shipper."

New York spells out the in-state version: where the primary seller is New York registered and the customer is in New York, the primary seller collects the sales tax from the customer, reports the sale and remits the tax on its return. The bulletin does not explicitly say who collects tax when the primary seller is an out-of-state purchaser, so do not assume it from that page.

The practical lesson is that you cannot work out your own position from one state's rules. The state where your supplier is located, the state where your customer lives, and the state where you are registered all matter. If a supplier asks for a certificate you do not recognize, ask them which state's form they need and why. Then check that state's agency page.

5. How eBay's tax collection fits in

eBay's help page on paying tax says that "marketplace responsibility" refers to states where eBay collects and remits sales tax on behalf of sellers, and that in those jurisdictions, based on applicable tax laws, eBay will calculate, collect and remit the tax for items shipped to customers there, with the tax included in the order total at checkout. For a buyer outside such a state where the seller must still charge tax, the page says eBay provides certain tools for including taxes at checkout, and recommends consulting your tax advisor. It also says that if tax appears at checkout for a state where eBay has not yet started collecting, the tax amount is being charged by the seller, and that where neither eBay nor the seller must collect, you may be required to pay taxes directly to the state or your local tax authority. The list changes as laws change.

• eBay collecting tax on a sale does not by itself remove every state obligation. California's CDTFA, for example, says a permit generally applies even when sales are made through internet auction houses. Florida's page says marketplace providers must register to collect and remit tax on sales they facilitate. Whether you still need your own registration depends on your state's marketplace rules and your other sales, so ask your state agency rather than assuming.
• Your wholesale purchases are a separate matter from eBay's collection on your customer's order. eBay's page deals with tax charged to buyers on eBay orders. Whether your supplier charges you tax on your purchase depends on your resale certificate and the supplier's state.

For the income-tax side of the same business, see our guide to eBay seller taxes in the US and the more specific estimated quarterly taxes guide.

6. Getting and using the paperwork, step by step

1. Register first. A resale certificate rests on being a registered seller. In Texas, certificates are issued by the purchaser under their own Texas taxpayer number. In Washington, the Department of Revenue says applicants need the appropriate business licenses and endorsements first. In Florida you get the Annual Resale Certificate with registration.
2. Ask what the supplier needs. Some suppliers have their own form. Ask whether they accept your state's form or the multistate certificate, and whether they need a blanket or a per-order certificate. Texas allows a blanket certificate for a customer buying exclusively for resale.
3. Fill in the certificate fully. Business name and address, permit number, a description of the property, the statement that it is for resale, the date and a signature. California says an undated certificate is not invalid for that reason alone, but do not rely on omissions.
4. Describe only what you will resell. For mixed purchases, Texas says to tell the vendor clearly which items are for resale.
5. Keep copies and renewal dates. Washington permits expire, with the last two digits of the permit number showing the expiration year, and Florida's Annual Resale Certificate is issued each year. Note the dates in a calendar.
6. Check your own tax account for use tax. Texas says items you use yourself must be reported and taxed. Keep a record of anything you take out of resale stock.

7. A walk-through (illustrative, no real numbers)

Imagine a seller registered in State A who lists a product on eBay, buying from a supplier in State B who ships directly to a customer in State C. This is an illustration, not a real case, and the result depends on the three states' rules.

• Your purchase from the supplier: you offer a resale certificate. The supplier decides whether State B's rules let it accept it for a shipment to State C. California and New York both publish drop-shipment guidance showing the answer depends on where the parties are located and registered.
• Your sale to the customer: if State C is a marketplace responsibility state per eBay's page, eBay calculates, collects and remits the sales tax on the order. If it is not, eBay's page says the seller may be charging it or the tax may be due directly to the state.
• Your records: you keep the certificate you gave, the supplier's invoice, the order, and the tax collected, for as long as the relevant state requires (Texas says four years for sellers' certificates; Washington says five years for wholesale documentation).

The walk-through has no figures on purpose, because any sum would depend on the tax rates that states and localities set.

8. Common mistakes

1. Using a permit number as the certificate. Texas says it is not a substitute.
2. Using a certificate for items you will not resell. Washington's penalty is the tax plus 50 percent even without intent to defraud, and California says knowing misuse can lead to tax, interest, penalties and permit revocation.
3. Writing "exempt" instead of "for resale" on a California certificate. California says it must contain the phrase.
4. Assuming eBay collecting tax removes all duties. The CDTFA says a permit generally applies even through internet auction sales. Ask your state.
5. Assuming one state's rules apply everywhere. The five states above differ in names, forms and durations.
6. Letting a permit lapse. Washington permits have an expiration year, and Florida's certificate is issued yearly.
7. Skipping supplier verification. If you ever sell wholesale yourself, Texas says not to accept a certificate if you know or have reason to believe the property is not for resale.

When you have the paperwork sorted, pricing is the next job: the US eBay fee calculator shows what a sale leaves after eBay's fees, and Sellhelm, the eBay dropshipping software this blog belongs to, prices every listing from your real fees. This is general information, not legal or tax advice. For anything involving several states, ask your state agency or a tax professional.

Sources and how we checked

Facts in this guide were checked against these official pages in October 2026. Rules and figures change, so confirm anything that affects a decision. This is general information, not legal or tax advice.

• Valid Resale Certificates, Publication 103 (California Department of Tax and Fee Administration)
• Drop shippers and resale certificates, Publication 121 (California Department of Tax and Fee Administration)
• Publication 107, Do You Need a California Seller's Permit? (California Department of Tax and Fee Administration)
• Sales and use tax FAQs: resale certificates (Texas Comptroller of Public Accounts)
• Reseller permits (Washington Department of Revenue)
• Florida Sales and Use Tax (Florida Department of Revenue)
• Drop shipments, TB-ST-190 (New York State Department of Taxation and Finance)
• Uniform Sales and Use Tax Resale Certificate, multijurisdiction (Multistate Tax Commission)
• Paying tax on eBay purchases (eBay)

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