How to Complete the Delaware Wholesale Exemption Certificate

Delaware is a hub for business, and it houses more new company formations yearly than any other state. If you own a business in Delaware, you’ll be subject to the state’s gross receipts tax on any goods you sell, tangible or not.

One of the few exceptions is the sale of goods to businesses with no physical location or business presence in Delaware. If you, as a wholesaler, wish to skip gross receipt taxes on goods sold to these out-of-state businesses, you’ll need to learn how to use Delaware’s Wholesale Exemption Certificate.

What is a Delaware Wholesale Exemption Certificate?

According to Delaware statute 30 DE Code § 2902, Delaware’s Wholesale Exemption Certificate is used by wholesalers in Delaware when selling goods to out-of-state companies. A wholesaler is a business that sells products, typically in bulk, to other companies who, in turn, sell those products to end consumers.

Let’s say your business sells pre-built gaming PCs, direct from the manufacturing company, to small retailers across the country who then sell them to local video game enthusiasts. In this example, you’d be the wholesaler.

A Wholesale Exemption Certificate proves that a sale is headed out of Delaware and will not be warehoused or stored before leaving state lines; thus, it is not subject to the state’s gross receipts tax. Delaware charges this gross receipts tax on the seller of goods instead of the typical sales tax imposed on buyers, which is more common in other states.

Who needs a Delaware Wholesale Exemption Certificate?

Delaware businesses that primarily or occasionally sell goods to companies outside of the state will use at least one Wholesale Exemption Certificate with each out-of-state company they work with, if they want to avoid paying a gross receipts tax on those sales.

Wholesale tax exemptions don’t extend to subsidiary businesses of the companies you sell to, so you should be prepared to fill out a Certificate for each business you deal with.

For example, if you sell guitar amp simulator software licenses in bulk to RockStudy LLC tax-free to provide to their online customers, you can’t reuse the same Wholesale Exemption Certificate for its subsidiary, GuitarMax LLC. You must supply and verify separate, accurate documentation for each buyer.

Does Delaware have a resale certificate?

No. Delaware has no consumer sales tax, so they don’t issue resale certificates, which allow resellers to purchase goods tax-free in other states. Instead, a gross receipts tax is levied on the business doing the selling. Wholesale Exemption Certificates are used to sidestep this tax on valid outbound sales.

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How to Fill Out the Delaware Wholesale Exemption Certificate

When you’re completing a tax-exempt transaction, you’ll need to understand how to fill out Delaware’s form accurately and completely. Delaware’s Wholesale Exemption Certificate should be completed prior to or at the time of a sale. On it, both you and the buyer will provide identifying information about your companies and the nature of the transaction.

Step 1. Download Delaware’s Wholesale Exemption Certificate

Since you’ll need to fill out the Certificate prior to making any sales, the first thing you’ll do is download a copy of Delaware’s Wholesale Exemption Certificate, Form 373, from the Division of Revenue website. According to Delaware’s instructions for Form 373, wholesalers using it are free to reproduce and copy it as many times as necessary without obtaining permission from the state.

Step 2. Complete the seller section

In the first section of the Wholesale Exemption Certificate, you, as the seller, will provide information about your business. This includes:

• The business name and mailing address
• The location where you will be shipping goods to
• The home state of the business
• The wholesaling business’s date of formation
• The wholesale business’s EIN number

These details tie every completed Certificate to a wholesale business located in Delaware. So, make sure the information you supply for your business is true and accurate.

Step 3. Pick your certificate type

The same Wholesale Exemption Certificate form can be used for a single tax-exempt sale or multiple sales from the same company if you frequently sell products to them. Choose between single purchase or blanket as your certificate type, and check the box that corresponds with your choice:

• Single: Applies tax exemption to one invoice. List the invoice number and the date of the transaction.
• Blanket: Covers multiple sales to the same buyer for up to 12 months.

If you choose the blanket option, make sure to make a note on each invoice to which your Wholesale Exemption Certificate is being applied.

Step 4. Complete the buyer section

The out-of-state buyer or retailer’s company information goes in the next section of the Wholesale Exemption Certificate. Similar to the section you filled out, this will include:

• The purchasing company’s name and address
• The home state of the business
• The purchasing company’s date of incorporation
• The purchasing company’s EIN number

As the wholesaler, verify the information included here for accuracy. Double-check the date and state of formation for the company you’re selling to with a free online business search, as this information is often made public. The Delaware Director of Revenue is able to revoke your Certificate if the buyer’s section is empty or inaccurate.

Step 5. Retain your Wholesale Exemption Certificate

Once both parties review your Wholesale Exemption Certificate for completeness and accuracy, an officer or authorized individual of both the purchasing business and the seller will sign and date it.

After the transaction is complete, the Delaware-based wholesaler must also keep a copy of the completed Wholesale Exemption Certificate for at least three years.

Selling Goods to Businesses Outside of Delaware

Doing business in Delaware has many perks, since the state tends to pass legislation and tax laws that benefit business owners. If you enjoy being a wholesaler in the First State, Wholesale Exemption Certificates can relieve your company of some of the tax burdens Delaware businesses do have to deal with. Use Delaware’s Wholesaler Tax Tips to learn more about saving on taxes for your business.