(a) The Department of Finance and Administration shall administer use-based exemptions and entity-based exemptions when practicable through a direct pay permit, an exemption certificate, or another means that does not burden sellers.

(b)

(1) A seller that follows the exemption requirements as prescribed by the Director of the Department of Finance and Administration shall be relieved from any tax otherwise applicable if it is determined that the purchaser improperly claimed an exemption.

(2) If it is determined that the purchaser improperly claimed an exemption, the department shall hold the purchaser liable for the nonpayment of tax.

(3) The relief from liability provided in subdivision (b)(1) of this section does not apply to a seller that:

(A) Fraudulently fails to collect the sales or use tax;

(B) Solicits a purchaser to participate in the unlawful claim of an exemption; or

(C) Accepts an exemption certificate from a purchaser claiming an entity-based exemption when:

(i) The subject of the transaction sought to be covered by the exemption certificate is actually received by the purchaser at a location operated by the seller; and

(ii) The state where that location resides provides an exemption certificate that clearly and affirmatively indicates that the claimed exemption is not available in that state.

(4)

(A) A seller may obtain a fully completed exemption certificate or capture the relevant data elements required by the department within ninety (90) days after the date of sale.

(B)

(i) If the seller has not obtained an exemption certificate or all relevant data elements and the department makes a request for substantiation of the exemption, the seller has one hundred twenty (120) days from the date of the request to prove by other means that the transaction was not subject to sales or use tax or to obtain in good faith a fully completed exemption certificate from the purchaser.

(ii) As used in subdivision (b)(4)(B)(i) of this section, "good faith" means that the seller obtains a certificate that claims an exemption that:

(a) Was statutorily available on the date of the transaction in the jurisdiction where the transaction is sourced;

(b) Could be applicable to the item being purchased; and

(c) Is reasonable for the purchaser's type of business.

(c) A third party vendor may claim a resale exemption based on an exemption certificate provided by its customer or any other acceptable information available to the third party vendor evidencing qualification for a resale exemption regardless of whether the customer is registered with the department to collect and remit sales or use tax.