Sales Tax Exemption Certificates

Frequently Asked Questions

1. Why did Digi-Key mail me a sales tax exemption certificate?
  Most states require sales tax (or use tax) to be paid on the purchase of personal property unless the purchase is exempt. Sales tax is added to the purchase price of the products and remitted to the state by the seller; use tax is reported and remitted to the state by the buyer. In each case, the liability is the same. Digi-Key is collecting sales tax from our customers unless we have a properly executed exemption certificate.
 
2. But why is Digi-Key required to collect sales tax in your state now, but was not required to do so in the past?
  Most states require businesses to collect sales tax on "taxable sales" if they have a "physical presence" in that state. "Physical presence" is often defined to include providing on-site engineering support, participating in trade fairs and business solicitation by agents or representatives of the company.

Digi-Key Corporation made the decision to register and begin to charge sales tax in other states due to the growth and anticipated growth of our business. We believe it is important to have the ability to selectively provide on-site engineering support, participate in trade fairs nationally, and to visit our customer to meet and better understand their needs. We currently have regional representatives and they are actively visiting key customers.

 
3. What happens if I do not return a sales tax exemption certificate to Digi-Key?
  In this case, Digi-Key will be required to collect sales tax on your purchases and remit the tax to your state.
 
4. If I fax or email in the exemption certificate, do I also have to mail it?
  No. As long as the form is signed it can be faxed or emailed and does not have to be mailed.
 
5. I have already sent in an exemption certificate, havent you received it?
  It doesn't appear that it was received, can you resend it. The fax number is (218) 681-7931.
 
6. What type of purchases are taxable and/or Am I charged sales tax if the purchase is for resale?
  Generally, products you purchase and use or consume are taxable, but products you purchase for resale or use to manufacture goods that will be resold are not taxable.

To understand your states specific sales tax law we recommend a web search and/or consult your tax advisor. The following link on the web maybe of assistance:
www.taxadmin.org/fta/link/forms.html

 
7. I think I was sent the wrong form.
  Some states have several sales tax exemption certificate forms. You may want to confirm that you are using the appropriate form through a web search and/or by consulting your tax advisor. The following link on the web maybe of assistance:
www.taxadmin.org/fta/link/forms.html
 
8. What if some of the products I buy from Digi-Key are taxable and some are not?
  This is a very typical situation. In this case it is common to provide Digi-Key a sales tax exemption certificate and we will not charge you sales tax on any purchases. Typically, your responsibility would be to identify and total your taxable purchases each month and remit any sales tax (or use tax) due directly to your state.
 
9. Can I authorize Digi-Key to charge sales tax on some purchases and not others?
  Although technically this can be done, it can often be confusing and we strongly recommend the solution in #8 above. This gives you complete control and the ability to easily correct reclassification of a purchase from taxable to non-taxable or vice versa.
 
10. I have received more than one request for a sales tax exemption certificate.
  Requests are mailed to newly added Digi-Key customers. If you have several account locations with Digi-Key, a request may have been generated for each location. It is also possible that we have inadvertently assigned you more than one customer number. If a sales tax exemption should apply to your Digi-Key purchases, the safest response would be to return a certificate for each request.
 
11. If I am tax exempt why am I being charged tax when I drop ship to another state?
  Sales tax collection is based on the address that you are shipping to. The tax collected will be based on the ship to location's tax requirements. In order not to be charged the tax you would need to have a tax exempt certificate on file for the state you are shipping to.

Digi-Key Sales Tax Contact Information

Telephone: 800-344-4539
Fax: 218-681-7931
Email: salestax@digikey.com
Mail: Digi-Key Corporation
P.O. Box 677
Thief River Falls, MN  56701-0677