How To Get A New Jersey Resale Certificate [2023 Guide]
When a business purchases inventory to resell, they can do so without paying sales tax. In order to do so, the retailer will need to provide a State of New Jersey Resale Certificate to their vendor.
Learn more about what a resale certificate is, how to get one, and more.
What is a Resale Certificate?
When retailers purchase products to resell, they often don’t pay sales tax to the supplier on the purchase. The state sales tax will still be paid, but instead of the retailer paying sales tax, the retailer charges sales tax to their customer on the final value of the merchandise. The collected sales tax is then sent by the retailer to the New Jersey Division of Taxation.
For example, when a home goods store in New Jersey orders a new shipment of kitchen appliances to sell in their store, by having a resale certificate, the store owner won’t pay sales tax on this transaction. This is because these kitchen appliances are not a final purchase for the store but inventory intended to be sold to the end user.
When a customer decides to buy one of these kitchen appliances from the store, the retailer will charge sales tax to the customer based on the full price of the appliance. This additional charge is the sales tax that New Jersey imposes on retail transactions.
The home goods store, in its role as the retailer, is responsible for collecting this sales tax from all their transactions. Then, typically at the end of each month, the home goods store sends the collected sales tax to the state’s tax department.
The purpose of the certificate is to provide evidence of why sales tax was not collected on a transaction. Similar names for a resale certificate include reseller number, seller’s permit, exemption certificate, wholesale license, or reseller’s license. In order for the supplier to allow the tax-exempt purchase, the seller needs proof the buyer intends to resell the product by providing a valid resale certificate.
The sales tax exemption is only intended to be used for inventory that will be resold and not intended for the tax-free purchase of items used in normal business operations such as paper, pens, etc.
Before a business starts selling products or providing taxable services, it must first register for a New Jersey Business Tax Identification Number from the state of New Jersey Division of Taxation. The New Jersey Business Tax Identification Number allows for the registration of a New Jersey Sales Tax Certificate, which is sometimes referred to as a Certificate of Authority, seller’s permit, reseller permit, sales tax registration number, or sales tax permit.
To receive a New Jersey Tax Identification Number, a business will submit Form NJ-REG.
Is a Resale Certificate the same as a Sales Tax Certificate?
A Sales Tax License and a Resale Certificate are commonly thought of as the same thing, but they are actually two separate documents. The Vendor’s License allows a business to sell and collect sales tax from taxable products and services in the state, while the Resale Certificate allows the retailer to make tax-exempt purchases for products they intend to resell.
How to fill out the New Jersey Resale Certificate
Filling out Form ST-3 is pretty straightforward but it is critical for the seller to gather all the information. If audited, the New Jersey Division of Taxation requires the seller to have a correctly filled out Form ST-3 Resale Certificate. Without it correctly filled out, the seller could end up owing sales taxes that should have been collected from the buyer in addition to penalties and interest.
Steps for filling out the ST-3 New Jersey Resale Certificate
Step 1 – Begin by downloading the New Jersey Resale Certificate Form ST-3
Step 2 – Identify the name and business address of the seller
Step 3 – Describe the nature of the merchandise or service of the buyer
Step 4 – List the merchandise or services being purchased
Step 5 – Check whether the merchandise is
- For resale in its present form.
- For resale and being converted
- For use in the performance of a taxable service on personal property
Step 6 – If services are being purchased, indicate whether the seller will collect New Jersey sales tax or resell the services or if the services will be performed on personal property held for sale
Step 7 – The purchaser will certify that the services or property being purchased are for resale, provide their address, type of business, and sign the certificate.
ST-3 Resale Certificate Fillable Form
New Jersey Resale Certificate FAQs
How much does a Resale Certificate cost in New Jersey?
There is no cost for a Certificate of Exemption in New Jersey.
Does a New Jersey Resale Certificate Expire?
New Jersey Resale Certificates don’t expire; however, the Division of Taxation recommends the certificate be updated every few years to ensure the customer’s information is up-to-date.
Where do I file the New Jersey sales tax exemption certificate?
The resale certificate is kept on file by the seller and is not filed with the state.
How often is New Jersey sales tax due?
Most new businesses are set up to file and pay sales and use tax monthly, but depending on the amount of tax collected, your business may have a quarterly filing frequency instead.
Are sellers required to accept resale certificates?
Sellers are not required to accept resale certificates, however, most do. If the vendor doesn’t accept the certificate for tax exempt purchases, the buyer will have to pay sales tax on the merchandise being purchased. In most cases, a credit is available when filing the New Jersey sales tax return.
What steps should a business take to accept a resale certificate?
When a business is presented with a resale certificate, the burden of proof is on the seller to verify that the buyer’s information is correct and to keep these records. Failing to verify this information may put the liability of paying New Jersey sales taxes on the seller.
Before accepting a resale certificate, a seller should:
– Review the resale certificate to make sure it is completely filled out.
– Verify the purchaser’s business tax registration number is registered and active in New Jersey by checking the Division of Revenue’s Business Registration Certificate Service.
– Sellers are also responsible for examining the certificate and evaluating whether the goods sold are reasonably consistent with the purchaser’s line of business. For example, if the buyer’s business is a car dealership, but they want to purchase office supplies tax-free, the seller should investigate further.
– Keep a file of resale certificates.
Alaska (no sales tax)
Delaware (no sales tax)
Montana (no sales tax)
New Hampshire (no sales tax)
Oregon (no sales tax)