used by manufacturers that purchase tangible personal property for resale and their own use. They usually require the seller to exempt the purchases and pay use tax upon removal from inventory. Manufacturers will either use an exemption certificate or will rely on a state issued direct pay permit/agreement. A direct payment permit allows a business to purchase taxable goods and services without paying tax to the vendor and to remit the correct use tax directly to the DRS. That allows businesses the necessary time to determine how much tax to assess on their purchases. Burden of proof The ultimate burden of responsibility to verify the validity of the exemption lies with the issuer of the certificate. That is, the reseller or manufacturer who provided the certificate to the seller has the burden of proof and the financial responsibility for the tax, penalties, and interest if the proof is not met. The seller, as a collection agent for the state, can be made liable for the uncollected taxes if the burden of proof is not met, as outlined by state law and/or regulation. There are two principles of proof used by states: Good faith acceptance is defined as "total absence of intention to seek unfair advantage or to defraud another party; honest intention to fulfill one's obligations; observance of reasonable standards of fair dealing." In practice, that translates to accepting a completed certificate that appears reasonable on its face. For example, reasonableness for a manufacturer of widgets would be the purchase of raw materials such as metals or plastics, tools, etc. The purchase of children's toys or clothing would be unreasonable for the same manufacturer of widgets. Strict liability acceptance is defined as "Liability that does not depend on actual negligence or intent to harm, but that is based on the breach of an absolute duty to make something safe." Then, the liability of the seller is relieved upon receipt of the certificate, the seller has no obligation to validate the statements made by the purchaser. See also Interstate commerce clause Tax exemption Tax holiday Tax-free shopping Taxing and Spending Clause, specifically Article I, Section 9, Clause 5 Quill Corp. v. North Dakota References External links California BOE Use Tax FAQ Maine use tax FAQ Massachusetts use tax statute. Arkansas sales & use tax rules Streamlined Sales Tax Project Local taxation State taxation in the United States Tax terms Sales taxes