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Can Your Seller’s Permit Be Revoked?

Sellers Permit

To put it simply, yes, your seller’s permit can be revoked.

A sellers permit is your license to legally conduct business in your state, collect sales tax from consumers at the point of sale and remit those taxes to the state authorities. Another license, usually referred to as the resale certificate, is also issued along with the seller’s permit that allows you to buy products and commodities from other sellers without having to pay the sales tax. This only applies to situations where your purchase is to be resold, rented or leased out to another consumer.

Since almost all states require a seller’s permit before a business can start operating within state borders, it’s not hard to evaluate the importance of the license.

So what happens if you do not follow through with the state guidelines? Does your seller’s permit get revoked? We’ve already answered that. If so, what kind of practices can lead to revocation? How can you prevent your license from being revoked? Can a revoked seller’s permit be reinstated? Let’s find out!

How Can Your Seller’s Permit be Revoked?

As a business that applies for a seller’s permit, you have some responsibilities to fulfill. It’s not just a piece of paper that you receive from the state authorities but your license to conduct business in a state. And for you to be able to conduct business legally, a lot more than just a document is required. You must hold up the integrity of the document, follow the state guidelines and stay within the boundaries stated by the said document.

Your inability to abide by specified guidelines is an easy way to get your license revoked.

If you’ve just established a business and are conducting it without a seller’s license, that is your first red flag. Especially if your business has anything to do with the wholesale or retail of commodities. If you’re currently setting up your business in a state that mandates a seller’s license, you must get all essential business licenses prepared in advance. If you’re unable to do so, you can be found guilty of a misdemeanor.

In this type of legal violation, you can be charged with a fine of $5,000, a year’s jail time or both. While this situation won’t lead to an existing seller’s permit being revoked (since you haven’t even applied for one), it sure can make obtaining a seller’s permit very difficult in the future.

You can avoid a criminal citation or prosecution by applying for your seller’s permit or clearing your revoked status within 5 days grace period.

Now, coming to a scenario where you’ve possibly applied for a seller’s permit but didn’t follow through with the right procedure or the documents required by the authorities. You can end up with a lot of wasted time and money on your hands. Since these procedures can be a little complicated, we recommend registering with online service providers that can get all your documents filed and approved for you. This type of situation will ensure you avoid any pitfalls during the procedure and can focus on the business you’re trying to set up.

Finally, when it comes to a business that already has a seller’s permit, you’re expected to be a responsible owner who keeps a record of all essentials transactions. Since a seller’s permit is your license to collect sales tax from your customers, you must have some type of evidence to validate those transactions.

Keeping adequate records of all your sales and purchases is extremely essential. Keeping in mind that you haven’t paid the sales tax for the purchase you made to resell or rent, you need proof of those transactions too.

If you make a purchase with the pretense of reselling it but use it for your personal purpose or for your business and get caught, you can end up losing your seller’s permit. And without a seller’s permit, you’ll have no legal right to continue on with your business.

How to Prevent Your Seller’s License From Being Revoked?

Preventing a seller’s permit from being revoked is pretty easy. All you’re required to do is follow the guidelines and laws of your state.

Note: Just because you have a seller’s permit for a particular state does not mean you can use it in another. If you’re setting up your practice in another state, you must go through their guidelines and apply for a permit there. Since sales and use taxes are subject to state regulations, so are the permits.

Here are some basic things to do to ensure your seller’s permit doesn’t get revoked:

Keep Records. These can include physical books of accounts or digital summary of every transaction that includes both incomes and expenses. Make sure to have a clear distinction between what has been bought with a resale certificate for the purpose of being resold or rented. As well as, expenditure on products or services bought for use by the business should be clearly stated.

Since these expenses also include the sales tax paid by you, a record of that is crucial.

Ensure that you have all crucial documents like receipts, bills, invoices, contracts and more. The information reflected in your records should align with the documents you hold as proof.

Discrepancies between the documents and records can put your business in trouble.

With a seller’s permit, you’re expected to collect sales taxes from your customers and remit them to the state authorities. In this case, you must file for sales and use taxes with the required documents on time.

Can a Revoked Seller’s License be Reinstated?

A revoked seller’s license can make it difficult for you to apply for another one. However, in such a case you must,

  • File tax returns that haven’t been filed yet
  • Pay outstanding liabilities, if any,
  • Consult the Department regarding payment arrangements

If you’re able to get your license reinstated, ensure that none of the previous mistakes are repeated.

Applying for a seller’s license or filing all the right documents might seem a little difficult sometimes, but it’s not if you know whom to ask for help. Online service provider’s can help you apply for all your business licenses. Check out the services here!

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