Why do we collect exemption certificates from the federal government? We can assume that all sales are exempt when dealing with the United States government. Right? Wrong. That’s the problem. We don’t always know if the items that are sold are going to be used by the federal government. Obtaining a certificate from the government can be like pulling teeth. I can’t tell you how many times I have had to explain to a federal employee why they had to provide documentation. Since we can end up having to prove that the items were, in fact, used by the government during a sales tax audit, we need proof.
Most states have a designated exemption certificate for the federal government. Some are easy to identify, such as the states that use the SST form. For others, like Virginia, you may have to dig for that specific certificate and then have it completed.
One possible exception to needing a certificate when selling to the federal government is when a federal employee is purchasing with an official government-issued credit card or paying with a government-issued check. This is proof that the purchased items are being used by the federal government and documenting the transaction can help protect you during audit.
Have you seen or heard of the General Service Administration SmartPay Cards? There are four cards that federal employees can use for official government business. You should obtain all the relevant information from the card and document the exemption in order to exempt the transaction. These cards can be used when employees travel and can only be exempted when the sixth digit of this card is a 0,6,7,8 or 9.
Do you have trouble obtaining documentation for government exemptions, or is it just me?
Other recent “Exemption Certificate Mgmt.” posts by Silvia Aguirre:
- Exemption Certificates for Federal Government Purchases
- Marketplace Fairness: What Does It Mean For Exemption Certificates?
- Will Oregon Start Charging Sales Tax? If So - Are You Ready?
- Canada is Bringing Back Exemption Certificates!
- Louisiana Changes State Forms to Include Parish Exemptions
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