Resale Certificates for Appliance Dealers: Buy Inventory Tax-Free

Appliance dealers operate on tight margins. A refrigerator that retails for $2,000 might cost $1,200 to $1,400 wholesale. When you add 7% or 8% sales tax to that wholesale price, you lose $84 to $112 per unit before you even sell it. Multiply that across hundreds of units per year, and the tax on your inventory purchases becomes a serious expense.

A resale certificate eliminates sales tax on appliances and related products you purchase for resale. For appliance stores, HVAC retailers, and kitchen and bath showrooms, this certificate is fundamental to maintaining competitive pricing.

Who This Guide Is For

This guide covers resale certificate usage for:

Appliance retailers selling refrigerators, ovens, dishwashers, washers, dryers, and other household appliances through showrooms or online.

HVAC equipment dealers selling heating, ventilation, and air conditioning equipment to contractors or directly to consumers.

Kitchen and bath showroom owners selling appliances, fixtures, and cabinetry as part of kitchen and bathroom remodeling.

Used appliance dealers buying, refurbishing, and reselling pre-owned appliances.

What You Can Buy Tax-Free

Tax-Exempt Inventory Purchases

Everything you purchase specifically for resale to your customers qualifies for the exemption.

The Installation Question

Installation is where appliance dealers face the most complex tax questions. The treatment depends on your state and the nature of the installation.

Scenario 1: Freestanding appliance with basic hookup. A customer buys a washer and you connect it to existing water lines. In most states, this is a retail sale of the appliance with incidental installation. The appliance is taxable, and the installation labor may or may not be taxable depending on the state. Your wholesale purchase of the washer is exempt with a resale certificate.

Scenario 2: Built-in appliance installed into cabinetry. A customer buys a built-in oven that you install into their kitchen. Some states treat this as a real property improvement (contractor rules apply), while others treat it as a retail sale with installation. The distinction matters because:

• If it is a retail sale, your wholesale purchase qualifies for the resale exemption.
• If it is a real property improvement, you may be treated as a contractor who is the end consumer of the appliance, and the resale exemption may not apply.

Most states treat appliance dealers as retailers, not contractors, even when installation is included. However, if you also perform extensive remodeling work (tearing out walls, running new plumbing), you may cross into contractor territory for those projects.

Best practice: Separately state appliance prices and installation labor on your invoices. This helps clarify the tax treatment and protects you during audits.

Extended Warranties and Service Contracts

The tax treatment of extended warranties and service contracts varies significantly by state:

• Some states tax the warranty at the time of sale. If you resell warranties, your purchase of those warranty contracts may qualify for the resale exemption.
• Some states exempt warranties entirely. No tax is charged on the warranty sale, so the resale question does not apply.
• Some states tax warranty repairs but not the warranty contract itself.

Check your specific state's rules. This is an area where many appliance dealers get audited because of inconsistent treatment.

Wholesale Appliance Sourcing

A resale certificate is your ticket to wholesale pricing from manufacturers and distributors. Here is how the appliance wholesale market works.

Major Appliance Buying Groups

Most independent appliance dealers join a buying group that negotiates volume pricing with manufacturers. Major buying groups include:

Joining a buying group requires proof of your retail business, which includes your resale certificate, business license, and sales tax permit. The group negotiates wholesale pricing, rebates, and cooperative advertising funds with manufacturers like Whirlpool, GE, Samsung, LG, and Bosch.

Direct Manufacturer Accounts

Large dealers may qualify for direct accounts with manufacturers. Requirements typically include:

• Minimum annual purchase volume
• Physical showroom
• Resale certificate and business license
• Credit application
• Commitment to display the manufacturer's products

Used Appliance Sourcing

Used appliance dealers source inventory from:

• Appliance recyclers and refurbishers
• Property management companies replacing units
• Contractors pulling out old appliances during renovations
• Consumer trade-ins

When buying from businesses that charge sales tax, provide your resale certificate. When buying from individuals, sales tax is typically not charged, but keep records of every purchase for audit purposes.

HVAC Equipment: Dealer vs. Contractor

HVAC equipment dealers face a specific challenge: the line between selling equipment and installing equipment as a contractor determines whether the resale exemption applies.

HVAC Dealer (Retailer)

If you sell HVAC equipment to contractors or directly to consumers for them to install (or for a separate contractor to install), you are a retailer. Your wholesale purchases of that equipment qualify for the resale exemption. You charge sales tax on the retail sale.

HVAC Contractor

If you purchase HVAC equipment and install it yourself as part of a contracted project, many states treat you as a contractor consuming the materials. In this case, you are the end user of the equipment, and the resale exemption does not apply. You would pay sales tax on your purchase, and the labor/installation is taxed according to your state's contractor rules.

The Hybrid Model

Many HVAC businesses do both: they sell equipment at retail and they install equipment under contract. In this case:

• Use your resale certificate for equipment you will sell at retail (without installation, or with installation separately priced as a retail transaction).
• Pay sales tax on equipment you will consume in a contractor installation.

Keep clear records separating these two categories. Mixed-use purchases are a top audit target.

Collecting Sales Tax From Customers

Standard Retail Sales

Charge sales tax on the full retail price of the appliance. If delivery and installation charges are taxable in your state, include those as well.

Example: Refrigerator sale

• Refrigerator: $1,800.00
• Delivery: $75.00 (taxable in this state)
• Installation: $0.00 (freestanding, no installation needed)
• Subtotal: $1,875.00
• Sales tax (7%): $131.25
• Total: $2,006.25

Your wholesale cost was $1,100. Without a resale certificate, you would have paid $77 in sales tax on that purchase. Across 300 units per year, that is $23,100 in savings.

Tax-Exempt Customers

Some buyers may be tax-exempt:

• Contractors purchasing appliances for resale to their clients (they provide their resale certificate)
• Government agencies with exemption documentation
• Nonprofit organizations with valid exemption certificates
• Other retailers buying for resale

Collect and file copies of every exemption certificate you receive from customers.

Common Mistakes Appliance Dealers Make

Blurring the Retail/Contractor Line

If you sell appliances and also do renovation work, be clear about which transactions are retail sales and which are contractor installations. Using the resale exemption on equipment you install as a contractor is a common audit finding.

Not Collecting Tax on Taxable Accessories

Some dealers forget to charge tax on accessories sold separately (ice maker kits, dryer vent kits, water filtration systems). If the sale is taxable, collect the tax.

Ignoring Extended Warranty Tax Treatment

The rules for warranty taxation are state-specific and often misunderstood. Review your state's guidance on this topic. Getting it wrong in either direction creates liability.

Using the Certificate for Showroom Fixtures

A built-in display kitchen that will never be sold is a business fixture, not resale inventory. Pay the sales tax on those purchases. Floor model appliances that will eventually be sold at a discount can qualify for the exemption.

Not Updating Certificates With Suppliers

If your business moves, changes its legal name, or gets a new tax ID, update your certificates with every supplier. Outdated certificates can be rejected during a state audit of your vendor's records.

State-Specific Notes

States With High Combined Rates

In states like Tennessee (up to 9.75%), Louisiana (up to 11.45%), and California (up to 10.25%), the savings from a resale certificate on appliance inventory are enormous. A dealer purchasing $500,000 in inventory annually in a 10% jurisdiction saves $50,000.

Energy Star and Tax Holidays

Several states offer periodic sales tax holidays for Energy Star appliances. During these periods, consumers pay no sales tax on qualifying purchases. As a dealer, you still buy inventory tax-free with your resale certificate year-round. The tax holiday affects what you collect from customers, not what you pay to suppliers.

Real Savings by Business Type

For an independent appliance store spending $200,000 per year at wholesale, $14,000 in annual tax savings goes directly to the bottom line.

Get Your Resale Certificate Today

Your resale certificate is the foundation for wholesale purchasing, buying group membership, and competitive pricing. Stop paying sales tax on inventory you intend to resell.

Apply for Your Resale Certificate

Related Articles

• What Can You Buy Tax-Free With a Resale Certificate? - Full breakdown of exempt vs. taxable purchases.
• Resale Certificates for Contractors - If you also do installation work, understand the contractor rules.
• How to Set Up a Wholesale Business - Setting up wholesale accounts and distribution.