How to Get Tax Exempt on Amazon, Walmart and Other Retailers
Buying and reselling LEGO? What if we told you, that you can save anywhere from 5-10% on every purchase? In this tutorial, we’ll teach you how to save money by becoming tax exempt on Amazon, Walmart, and other retail stores.
What is a Sales Tax Exemption?
A sales tax exemption is a special agreement with a retailer, distributor, or manufacturer that allows you to purchase items without paying sales tax. These agreements are typically granted to certain organizations such as resellers (retailers/distributors) and nonprofits.
Typically, to gain tax exempt status with a retailer or distributor, you’ll need a resale license (certificate). A resale license is a document, issued by your state, that allows you to purchase items without paying sales tax, as long as you resell them.
How Do You Get a Resale License from Your State?
To get a resale license from your state, you usually need to file some paperwork. Within that paperwork, you’ll need to agree to:
- File a sales tax return (either monthly, quarterly, or annually depending on your state)
- Remit sales tax on the sale of those items (when sold) to that same tax authority.
Don’t feel like registering for a resale license? Here’s the thing — if you are selling on Amazon, eBay, or anywhere else, most states likely require you to report these sales anyway.
To make it easier, many states have passed laws within the last several years to require Amazon, eBay and others to collect and remit these taxes for you, so you’re merely responsible for filing a sales tax return. As always, you should confirm your local situation.
Regardless, one way or another, you’ll likely have to file some sort of sales tax documentation with your state. You might as well file one more form and get yourself a resale certificate.
Harbor Compliance’s Sales Tax Registration page can help you learn how to register for tax exempt status within your state.
Registering for Tax Exemption at Retail Stores
Assuming you’ve registered and obtained a resale license from your state, you’re now ready to save 5-10% on every purchase from retailers, by avoiding paying sales tax.
To register for tax exempt status, Amazon, Walmart, Best Buy, eBay, and many others have online programs for you to submit sales tax exemption information (i.e., resale license). Purchases in-store work a little bit differently, and we’ll discuss those as well.
Note: Your resale license isn’t just for retailers. You’ll most likely need this document if you ever set up wholesale accounts with distributors or manufacturers.
Amazon Tax Exempt Program
Open an Amazon Business Account
In order to get tax exempt purchases on Amazon.com, you’ll need to open an Amazon Business Account. This account is completely separate from your personal account and comes with some extra benefits. Most importantly, this account is free.
Amazon Business Account benefits include:
- Free shipping on orders over $25.
- Bulk/Business discounts from Amazon.com and 3rd parties.
- Allows separation of purchase account from selling account — in the case you purchase LEGO from Amazon and later sell those purchase on Amazon.
“But wait! Can I really purchase items from Amazon.com and resell them ON Amazon?”
Yes, you can. In fact, many of the items we find using our 2020 Guide to Retiring LEGO are from Amazon.com.
The big “no no” for buying from Amazon.com is specific to Prime benefits. From Amazon Prime Terms and Conditions:
“Prime members are not permitted to purchase products for the purpose of resale, rental, or to ship to their customers or potential customers using Prime benefits.”
As long as you are using a standard Amazon Business Account that has been registered with tax exempt status, you’re good to go. Do NOT sign up for Business Prime. Business Prime will violate the terms and conditions above.
Register for Tax Exempt Status
After you’ve opened your Amazon Business Account, you’ll need to submit Amazon’s sales tax exemption application.
To find the application, click on the Amazon Tax Exemption Program link in the Your Account section (this has your name or business name) at the top of your Amazon account homepage.
Within the application, you’ll need to provide a few basic details about your business (or sole proprietorship).
Once you submit the application, you’ll need to wait a few days for approval. You may need to check the application status on your own, as Amazon may not notify you upon approval. Of course, you can always verify by adding an item to your cart and going to checkout. If you’ve been approved, you’ll see $0 in sales tax on your purchase.
Now you can make sales tax exempt purchases on Amazon.com!
Walmart Tax Exempt Program
Walmart has a separate program for online and in-store purchases. In the store, you can present your state tax exempt paperwork at the service desk and they will provide you with a tax exempt card that you will present to the cashier PRIOR to starting check-out for future purchases. Just make sure you’re splitting up taxable and non-taxable purchases.
For Walmart online, you’ll need to create a new account on Walmart.com, then apply for tax exempt purchases on that account, again with your state tax exempt paperwork. Once approved, all purchases made with this account will be sales tax exempt.
Best Buy Tax Exempt Program
Best Buy tax exemption works by registering online with the same state tax exempt paperwork. You can use one account for personal and business purchases because Best Buy will ask you whether each purchase qualifies for sales tax exemption at checkout. You can also make an additional account purely for business purposes and apply for tax exemption on that account – it’s your choice.
In store, the employee doing the check-out can look up your sales tax exemption usually via your phone number associated with the tax exempt capable account.
Other Tax Exempt Programs
You are able to take advantage of sales tax exempt purchases on eBay and many other online websites. If unsure, sometimes it can be worth asking.
Here’s a quick list of retailers you can gain tax exempt status with:
- Home Depot
- Big Lots
There are nearly endless retailers that can provide you with tax exempt purchases if you simply ask them at check-out!
Most likely, it’s a compliance requirement to register with your local sales tax authority. So why not take advantage by purchasing your resale items with no sales tax?
The account setup usually only takes a few minutes and the savings can be dramatic.
Sign Up for an Amazon Business Account
Ready to gain tax exempt status on Amazon.com? The first thing you’ll need is an Amazon Business Account. Sign-up takes 5 minutes by answering a few brief questions.