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We are verifying seller permits and/or exemption numbers to ensure that we are dealing with registered vendors. If states offer online validation, is that a good practice?

Full Question: We are setting up standard internal policy for vendor and customer master data that requires that we verify Sellers permit and/or exemption numbers, to ensure that we are dealing with registered vendors. Many states have online validation sites, is this overkill or a good best practice used by many companies.

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Answer:

Diane Yetter photoAt this time there are only a few states that require online validation of exemption and resale numbers and assess liability if the seller has not performed the validation. Under the Streamlined Sales Tax Project, this is not required however, sellers are required to validate that the format of the number and the type of exemption claimed does exist in the state. In terms of a best practice, for the states that do require the validation, this should be performed. In other states, the format of the number, the type of exemption claimed and the form completed should be validated to ensure the seller is protected in case of audit.

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