Selling on Poshmark, Mercari, or Depop? Here's What You Need to Know About Resale Certificates

Poshmark, Mercari, and Depop have turned secondhand selling into a mainstream business. Millions of people use these platforms every month, and a growing number of them treat it as a real income source. But there is a persistent misconception among sellers on these platforms: "The app handles my sales tax, so I don't need to worry about anything."

That is only half right. These platforms do collect sales tax from buyers. But if you are sourcing inventory to resell, you are leaving money on the table every time you pay sales tax on your purchases. A resale certificate fixes that.

Reselling Platforms

How These Platforms Handle Sales Tax

Marketplace Facilitator Laws

All three platforms operate as marketplace facilitators under state laws passed after the 2018 South Dakota v. Wayfair Supreme Court decision. This means:

When a buyer purchases your item on any of these platforms, the platform adds sales tax at checkout, collects it, and sends it to the appropriate state. You never touch that money.

What This Means for You as a Seller

You do not need to calculate, collect, or remit sales tax on your platform sales. The platform does it all. This is a genuine relief compared to running your own e-commerce site where you would handle everything yourself.

But here is what marketplace facilitator laws do NOT cover: your purchasing side. When you buy inventory to resell, you are a business making a purchase. If the seller charges you sales tax and you do not have a resale certificate, you pay it. Every single time.

Why You Still Need a Resale Certificate

The Sourcing Tax Problem

Think about where Poshmark, Mercari, and Depop sellers actually find their inventory:

• Thrift stores (Goodwill, Salvation Army, local shops)
• Wholesale liquidation lots
• Retail clearance racks
• Estate sales and auctions
• Other online platforms
• Wholesale suppliers for new items

Many of these sources charge sales tax. A resale certificate lets you buy from them tax-free, because you are purchasing the items for resale, not personal use.

Real Numbers: What You Save

Let's say you source $1,500 per month in inventory. Some of that comes from garage sales (no tax), but about $1,000 comes from sources that charge sales tax.

At an average rate of 7%:

If you are running a part-time reselling business that nets $15,000 a year, that $840 represents over 5% of your annual profit. For full-time resellers spending $3,000 or more per month on sourcing, the savings climb above $2,500 annually.

Where to Use Your Resale Certificate for Sourcing

Thrift Stores

Most for-profit thrift stores charge sales tax on purchases. Here is how the major chains handle resale certificates:

Goodwill:

• Policies vary by regional Goodwill organization (each is independently operated)
• Many locations accept resale certificates for bulk purchases
• Ask to speak with a manager; cashiers may not be familiar with the process
• Some Goodwill regions have set up formal reseller programs

Salvation Army:

• Similar to Goodwill, policies differ by location
• Generally willing to process tax-exempt purchases with proper documentation
• Best to establish a relationship with your local store manager

Local thrift stores:

• Most will accept a valid resale certificate
• Bring a printed copy and be prepared to explain what it is
• Smaller shops may need to check with their accountant first

Wholesale Liquidation Companies

This is where a resale certificate is practically mandatory. Major liquidation platforms include:

Most liquidation companies will not even open a wholesale account without seeing your resale certificate and sales tax permit.

Retail Stores (for Arbitrage Sourcing)

If you buy clearance items from retail stores to flip on Poshmark or Mercari, you can present your resale certificate at checkout:

• Target: Enroll in their tax exemption program online
• Walmart: Present at Customer Service desk
• Nordstrom Rack / TJ Maxx / Ross: Present certificate at checkout; manager may need to approve
• Nike / Adidas outlets: Ask at register; policies vary by location

Estate Sales and Auctions

Estate sale companies sometimes charge sales tax. If they do, present your certificate. Most auction houses also collect sales tax and will honor a valid resale certificate when you register as a bidder.

Casual Seller vs. Business: The Line That Matters

When Selling Becomes a Business

There is no single magic number that transforms a hobby into a business, but the IRS and state tax authorities look at several factors:

If you are going to thrift stores every weekend looking for items to list on Poshmark, you are running a business. Full stop. The IRS does not care that you are doing it from your living room.

Why the Distinction Matters

As a casual seller, you are just getting rid of personal belongings. You typically do not owe sales tax (the platform collects it), and you do not need a resale certificate because you are not sourcing inventory.

As a business, you should:

1. Register for a sales tax permit in your home state
2. Obtain a resale certificate
3. Track all income and expenses
4. Report your earnings on Schedule C
5. Use your certificate when sourcing inventory

The $5,000 1099-K Threshold

Starting in 2025, payment platforms are required to issue a Form 1099-K to sellers who receive $5,000 or more in gross payments during the year. Some states have lower thresholds, with several set at just $600.

Important: receiving a 1099-K does not automatically mean you owe income tax on the full amount. If you sold personal items at a loss (your old jacket for $30 that you paid $120 for), that is not taxable income. But if you are reselling for profit, every dollar of profit is reportable.

Platform-Specific Details

Poshmark

• Sales tax: Collected by Poshmark on all orders
• Seller fees: 20% commission on sales over $15; flat $2.95 on sales of $15 or less
• 1099-K: Issued if you meet the federal or state threshold
• Certificate use: Not for buying on Poshmark, but for sourcing inventory elsewhere
• Poshmark does not have a tax exemption program for buyers on the platform itself

Mercari

• Sales tax: Collected by Mercari on all orders
• Seller fees: 10% selling fee plus payment processing
• 1099-K: Issued at applicable thresholds
• Certificate use: Same as Poshmark; use it with your external suppliers
• Mercari's buyer protection does not extend to tax exemption claims

Depop

• Sales tax: Collected by Depop on US orders
• Seller fees: 0% for Depop Payments (as of current policy); payment processing fees still apply
• 1099-K: Issued at applicable thresholds
• Certificate use: External sourcing only
• Depop skews younger and more fashion-forward, but the tax rules are identical

State-Specific Rules to Watch

States With No Sales Tax

If you source inventory in Alaska, Delaware, Montana, New Hampshire, or Oregon, there is no state sales tax to worry about. You still benefit from having a resale certificate for sourcing in other states.

States That Require In-State Registration

If you regularly buy inventory from suppliers in these states, your out-of-state certificate may not be accepted:

• California
• Florida
• Hawaii
• Illinois
• Louisiana
• Maryland
• Massachusetts
• Washington

You may need to register for a sales tax permit in those states and obtain a state-specific resale certificate.

States With Clothing Exemptions

Some states do not charge sales tax on clothing at all, which affects resellers in the fashion space:

If you source clothing in these states, you may not pay tax regardless of your certificate. But for non-clothing items (shoes above certain thresholds, accessories), the certificate still matters.

How to Get Your Resale Certificate

The process is straightforward:

1. Register your business with your state (LLC or sole proprietorship)
2. Apply for a sales tax permit through your state's department of revenue
3. Receive your resale certificate (in many states, it comes with your permit)
4. Make copies to give to each supplier and keep originals on file

Processing times vary by state. Some issue permits online within minutes. Others take 2-4 weeks.

Apply for Your Resale Certificate

Setting Up Proper Record Keeping

Once you have your certificate and start sourcing tax-free, keep organized records:

What to Track

Why This Matters in an Audit

If a state auditor asks you to prove that your tax-exempt purchases were genuinely for resale, you need to show that the items you bought ended up listed and sold on your platforms. Matching purchase receipts to sales records is the gold standard.

Getting Started Checklist

1. Decide if your selling activity qualifies as a business (regular sourcing = yes)
2. Register your business with your state
3. Apply for a sales tax permit
4. Obtain your resale certificate
5. Submit your certificate to thrift stores, liquidators, and suppliers
6. Set up a basic tracking system for purchases and sales
7. Keep all receipts and 1099-K forms for at least four years

Stop paying sales tax on inventory you are buying to resell. A resale certificate is one of the simplest ways to improve your margins on Poshmark, Mercari, and Depop.

Get Your Resale Certificate Today

Questions about reselling and sales tax? Contact us for guidance.

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