How do I use the MTC (multijurisdiction) form for sales tax exemption?
Many states accept out-of-state resale exemptions if you have not yet met nexus and registration requirements in the particular state. By using the MTC form, you can claim an exemption for multiple states by indicating your out-of-state sales tax registration number next to each state.
Please note that for certain states not accepting out-of-state resale certificates, you should only use state-specific (native) registration data (if you are registered with the particular state). As of the date of this article, the following states listed on the MTC form would not accept out-of-state resale certificates:
Please do not mark out-of-state registration numbers from other states next to these states on the MTC form and when uploading it via Exemption Certificate Wizard, as this would invalidate your resale certificate.
Example 1: Blank form
Color-coded guidelines for state ID numbers:
Red fields accept only state-specific (native) ID numbers
Green fields accept out-of-state ID numbers
Example 2: One registration
MTC form filled out with a single out-of-state registration number from California.
For example, “Cookies and Tea LLC” is a California registered business with a sales tax license aka seller’s permit that resells print-on-demand products. The company has used its California sales tax ID number in 29 other states where out-of-state ID numbers are applicable.
Therefore, “Cookies and Tea LLC” may have their sales exempt from sales tax in 30 states at once while being registered in only 1 state.
Example 3: Multiple registrations
MTC form filled out with all out-of-state registration numbers.
For example, the company “Cookies and Tea LLC” is a registered business with sales tax licenses and seller’s permits in 8 states that do not accept out-of-state registrations on MTC forms. The company has used its California sales tax ID number in 29 other states where out-of-state ID numbers are accepted, and native sales tax ID numbers in the rest of the states.
“Cookies and Tea LLC” may have their sales exempt from sales tax in 37 states at once, while being registered only in 8 states.
The company may apply the above approach only if it is not required to register for sales tax purposes in states that accept out-of-state numbers. The company should monitor its revenue and number of units sold for economic nexus thresholds, as well as keep an eye on other possible nexus criteria (such as hiring employees from a certain state or establishing any physical location).
If a nexus is created, the company is required to register for sales tax purposes in the state. If the company registers in a new state, the company submits a revised MTC form to the vendor with a state-specific (native) ID number for the registered state.
Please note that this is for illustration purposes only, and you should consult on the validity of resale documentation with a tax expert and by verifying state-specific rules.