Resale Certificate for Gift Shops and Souvenir Stores: Buy Inventory Tax-Free
Gift shops and souvenir stores carry hundreds or thousands of unique SKUs at low to mid price points. A single store may stock magnets, keychains, t-shirts, mugs, candles, locally made crafts, plush toys, ornaments, and dozens of other categories. Monthly wholesale spending ranges from $5,000 for a small seasonal shop to $40,000+ for a high-traffic tourist location. At 7% sales tax, that is $4,200 to $33,600 per year in unnecessary cost.
A resale certificate eliminates sales tax on every wholesale inventory purchase. You collect the appropriate tax from your customers at the register.
Where Gift Shops Source Inventory
Gift shops buy from a wider variety of suppliers than most retail stores. Each channel requires your resale certificate on file.
National wholesale distributors. Burton + Burton (gifts, plush, balloons), Enesco (figurines, branded gifts), AMSCAN (party and seasonal), Precious Moments, Willow Tree, and Yankee Candle wholesale programs. These companies sell through sales reps or online portals and require your resale certificate at account setup.
Trade shows and buying markets. Atlanta Market (AmericasMart), NY NOW, Las Vegas Market, Dallas Total Home and Gift Market, and the Philadelphia Gift Show. You need a resale certificate or seller's permit to register as a buyer. Shows are where you discover new vendors and trending items that differentiate your store.
Regional and local artisans. Handmade soap, pottery, local honey, artwork, and other locally produced goods. Even when buying from a one-person craft operation, you can present your resale certificate to purchase inventory tax-free. Many small artisans do not know to ask for it, but the exemption still applies.
Import wholesalers. Companies like Oriental Trading Company, DollarDays, and Kole Imports supply low-cost novelty items, party favors, and tourist trinkets. Your certificate goes on file when you open an account.
Consignment arrangements. Some gift shops take local art and crafts on consignment rather than buying outright. See the consignment section below.
What You Can Buy Tax-Free
- Souvenirs (magnets, keychains, shot glasses, postcards, snow globes)
- Apparel (t-shirts, hats, sweatshirts with local branding)
- Mugs, drinkware, and barware
- Candles and home fragrance (Yankee Candle, local pours, diffusers)
- Plush toys and stuffed animals
- Ornaments and holiday items (seasonal inventory)
- Jewelry (costume, handmade, locally sourced)
- Stationery (greeting cards, journals, note cards, pens)
- Bath and body products (soap, lotion, bath bombs)
- Food items sold at retail (candy, fudge, local honey, jams, sauces)
- Artwork and prints (purchased for resale)
- Toys and games
- Gift wrap, bags, and tissue (sold to customers or included with purchase)
- Books and local interest publications
What You CANNOT Buy Tax-Free
| Item | Why It Is Taxable |
|---|---|
| Display shelving and fixtures | Store equipment |
| Cash register and POS system | Business equipment |
| Store lighting and decor | Business property |
| Security cameras | Business equipment |
| Shopping bags with your logo (given free) | Business expense, not sold |
| Price tags and labels | Business supply |
| Cleaning supplies for the store | Business use |
| Sample candles burned in-store for scent | Consumed, not sold |
Sample and display items. If you open a candle to burn in-store so customers can smell it, that candle is consumed, not resold. Same with any product you open for demonstration. Some states require you to pay use tax on items withdrawn from inventory for store use or display.
Consignment in Gift Shops
Many gift shops blend wholesale purchasing with consignment, especially for local artisan goods.
How consignment works. The artisan retains ownership. You display and sell the item. When it sells, you keep a commission (typically 40-60%) and pay the artisan the remainder. You collect sales tax from the customer on the full selling price.
Resale certificate implications. You do not need a resale certificate for consigned items because you are not purchasing them. The certificate only applies to inventory you buy outright from wholesalers and vendors. If you carry both bought and consigned goods (most gift shops do), the certificate covers only the bought portion.
Sales tax responsibility. In most states, the party making the retail sale (you, the shop) collects and remits sales tax on consignment sales. The consignor (artisan) does not typically need their own sales tax registration if you handle collection. However, this varies by state. Some states require the consignor to also hold a permit.
Seasonal and Tourist Location Considerations
Seasonal shops. If you operate a gift shop that is only open during tourist season (beach towns, ski resorts, holiday markets), your resale certificate is still valid year-round. You can buy off-season inventory at trade shows in January for a shop that opens in May. The certificate covers purchases of goods intended for resale regardless of when you actually sell them.
Pop-up shops and market booths. Craft fairs, farmers markets, and holiday pop-ups require a sales tax permit in most states. If you have a permanent store and also sell at events, your existing certificate covers wholesale purchases for both channels. If you only sell at events and have no permanent location, you still need a sales tax permit (and therefore a resale certificate) in most states.
Hotel and resort gift shops. If you operate the gift shop inside a hotel, the shop is a separate retail operation for tax purposes. Room charges and gift shop sales have different tax treatments. The resale certificate covers your gift shop inventory.
Dollar Savings
| Shop Type | Monthly Wholesale Spend | Annual Tax Savings (7%) |
|---|---|---|
| Small seasonal shop | $3,000 | $2,520 |
| Standard gift/souvenir store | $10,000 | $8,400 |
| High-traffic tourist location | $25,000 | $21,000 |
| Multi-location operator | $60,000+ | $50,400+ |
Common Mistakes
Burning display candles and not paying use tax. Every candle, soap, or product you open for in-store demonstration is withdrawn from inventory. You owe use tax on the wholesale cost of those items.
Not collecting tax on food items. Packaged food (candy, fudge, jams) may be taxable or exempt depending on your state. Many states exempt grocery food but tax candy separately. Know your state's definitions.
Assuming consignment means no tax obligation. As the shop making the sale, you almost always owe sales tax on consignment transactions. The consignment arrangement affects who owns the goods, not whether sales tax applies at the register.
Using the resale certificate for store supplies. Shopping bags you give away, wrapping you provide as a free service, and decorative items that stay in the store are business expenses, not resale items.
How to Get Started
- Apply for your resale certificate through your state or our service.
- Register for trade shows. Atlanta Market, NY NOW, and regional shows require proof of resale authority.
- Provide the certificate to all suppliers. Wholesale distributors, local artisans you buy from, and import companies.
- Set up your POS with correct tax categories. Food vs. non-food, taxable vs. exempt items.