The Wayfair Decision – Sales Tax Exemption Certificates

Picture of the supreme court building

Seller Beware, What you don’t have could hurt you

Hello again,

This post is for companies that may be affected by the Supreme Court’s Wayfair Decision.

The following was written by Passport Software’s President, John Miller, to help businesses understand the effects of the new ruling.  We hope you find it useful:

The Wayfair Decision

I had a nice conversation yesterday, catching up with a long-time customer of about thirty years. Diane is Controller of a wholesale distributor in Michigan. I asked her about the impact the Wayfair Decision is having on her business and how she is preparing.

Like many customers I have spoken with, Diane was aware of Wayfair but had not really determined the impact on the company.  She reminded me that most of their sales are to resellers, most of whom are out-of-state.

Because their sales had never been subject to sales tax collection outside of Michigan, she had not been too concerned about resale certificates from out-of-state resellers.

I shared a story with her that I recently heard from a former state sales tax auditor.  He told me that most of the big dollars collected when he audited companies were not from mis-calculated retail sales tax.

He said that most companies use computers so, generally, retail customers were usually taxed correctly and most companies dutifully pay those taxes.  But resellers?


That was another story, he said.  He found that many distributors do not do a good job of administering the resale exemption certificates issued by the state that the reseller’s customers reside in.

And if that certificate was not properly filled out and signed, he would then disallow the exemption and all that revenue would be declared taxable. In addition, penalties and interest would be added on top of the uncollected tax.

Since every state has its own forms for resale certificates and its own rules for renewal of certificates (or not), administration is not a small task. And unfortunately, a task that is sometimes not given the importance it deserves until an audit is coming.

Certificate Management Program

For our customers, we are developing a Certificate Management program that will allow them to enter the key data items for tracking certificate expiration and renewals and allow them to scan copies of each resale certificate into the data base.

It will be available soon. We have other enhancements such as a program to change all IC Items from not taxable to taxable to follow.

Please take a few minutes to review the management of your customers’ resale certificates. The Wayfair decision has given this topic a new level of importance to companies who sell into other states, and you may save your company big dollars.

Passport Software is in the business of helping you run your business as efficiently as possible, so we welcome your comments about how we can help. Please call 800-969-7900 to share your input.

John Miller
Passport Software, Inc.



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Great advice, easily explained
for you to grow your business!