Delaware Form 373: wholesale exemption for out-of-state pickups

Form 373, the Wholesale Exemption Certificate, is the paper a Delaware wholesaler keeps when an out-of-state buyer picks up goods in Delaware and takes them straight out of the state. Without it, the sale counts as a delivery inside Delaware and goes into the wholesaler’s taxable gross receipts. The current version is marked “Revised 12/26/13” and has two pages: the certificate itself and a page of instructions.

When a Delaware wholesaler needs Form 373

Delaware has no sales tax. Its gross receipts tax is charged to the seller, and for a wholesaler it applies to goods physically delivered within the state to the purchaser or the purchaser’s agent. Title 30, § 2901(8)b.6 of the Delaware Code leaves one kind of pickup out of those receipts: the purchaser’s vehicle or vessel is not headquartered or dispatched from within Delaware, the property is immediately taken outside Delaware, and the purchaser gives the wholesaler an exemption certificate. Form 373 is that certificate.

The Division of Revenue’s gross receipts FAQ puts the condition plainly: the wholesale pickup is not taxed only if Form 373 is completed prior to or concurrent with the sale. A certificate signed weeks after the goods left the dock does not meet that wording.

Three nearby situations work differently:

• Goods you ship yourself to a customer outside Delaware, by mail or common or contract carrier, are not taxable gross receipts either. Form 373 is not the document for them; the FAQ asks you to keep documentation of the interstate shipment.
• A retail sale picked up in Delaware is taxable no matter where the customer takes the goods afterward. Form 373 covers wholesale sales only.
• A resale certificate from the buyer’s home state does not help. The Division’s exemption certificates page says sales tax exemption and reseller certificates are not applicable in Delaware and that sales for resale are not exempt.

How to fill out Form 373, section by section

The certificate has no printed numbers. The image below numbers its six blocks in the order you meet them on the page, and the table uses the same numbers. The PDF on the Division’s site has no fillable fields, so it is printed and completed by hand.

The instructions say the seller completes the form with all pertinent information, and the FAQ addresses the wholesaler in the same way (“only if you complete Form 373”). The Delaware Code describes the certificate as one the purchaser provides to the wholesaler. On the form both sides sign, each for its own statements, and the FAQ wants the form completed prior to or concurrent with the sale.

The purchase orders on which the exemption is claimed must show the name and address of the destination when it differs from the purchaser’s address. An exemption claimed by a parent or affiliated company does not extend to its subsidiaries, affiliates, officers or employees; each buying entity needs its own certificate.

Single purchase or blanket certificate

A single purchase certificate covers one invoice. A blanket certificate covers repeat pickups by the same out-of-state purchaser, as long as the seller holds a properly executed certificate dated within one year before each sale. Every later sales slip or invoice under the blanket certificate must carry a note that an exemption is being claimed.

Who owes the tax if a certificate turns out to be wrong

The two official texts do not say the same thing here. The page 2 instructions of the 12/26/13 form say that when a wholesaler relies on an untrue or incomplete certificate furnished by a purchaser and does not pay tax, the wholesaler is still liable for the tax, penalty and interest.

The current text of 30 Del. C. § 2902(c)(6) says a wholesaler is entitled to rely on an exemption certificate that is valid on its face and complies with the Director’s regulations, and is not liable for tax on sales covered by invalid certificates. The person who provided an invalid certificate is liable for the tax, calculated without the monthly exclusion, plus interest and a penalty under § 535(a) equal to 75% of the underpayment, in addition to possible prosecution.

The Division’s Business Tax Forms page still links the version revised 12/26/13. If a certificate you accepted turns out to be untrue, ask the Division’s gross receipts tax department, (302) 577-8780, before relying on either reading, or get advice from a Delaware tax adviser.

Records to keep after the pickup

• The signed Form 373, kept for three years from the end of the calendar year in which the sale occurs.
• A current list of valid exemption certificates.
• Invoices or sales slips noting the exemption claim, and purchase orders showing the destination when it differs from the buyer’s address.
• Tax records and invoices organized so Division of Revenue staff can match each exempt sale to a certificate, as the instructions require.

The instructions give no address for sending Form 373 to the Division. That sets it apart from a payment voucher such as Form CIT-VCH, which travels with a corporate income tax payment. Form 373 stays in the wholesaler’s files for review.

How exempt pickups relate to the gross receipts return

A sale covered by a valid certificate does not result in taxable gross receipts for the wholesaler. Under § 2902(c)(1) wholesalers pay 0.3983% of aggregate gross receipts from goods physically delivered in Delaware, after a $100,000 deduction for each month. Quarterly filers, whose taxable receipts in the lookback period do not exceed the $1,500,000 threshold (adjusted annually), get a $300,000 deduction per quarter. Monthly returns are due by the 20th of the following month and quarterly returns by the last day of the month after the quarter ends. Delaware has required online filing of gross receipts returns at tax.delaware.gov since January 1, 2021; the FAQ points to TIM 2020-2 for the exceptions that allow paper.