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How To Get A New Jersey Resale Certificate

How To Get A New Jersey Resale Certificate

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How To Get A New Jersey Resale Certificate

When a business in New Jersey purchases inventory to resell, it can do so without paying sales tax.  To do this, the retailer will need to provide a State of New Jersey Resale Certificate to their vendor. 

Learn more about how the New Jersey Resale Certificate works, how to get one, and more.

Related: Guide to starting a business in New Jersey

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.

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 to the vendor. Then, 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. Typically at the end of each month, the home goods store sends the collected sales tax to the New Jersey Division of Taxation.

The sales tax exemption is only intended for inventory that will be resold and is not intended for the tax-free purchase of items used in normal business operations, such as paper, pens, etc.

How to fill out the New Jersey Resale Certificate (Form ST-3)

Before a business starts selling products or providing taxable services, it must first register for a New Jersey Sales Tax Certificate from the State of New Jersey Division of Taxation. After filing the certificate, a Business Tax Identification Number is issued and this number will be used when filling out the 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 and type of business, and sign the certificate. 

ST-3 Resale Certificate Form

ST-3 Resale Certificate Fillable Form

New Jersey Resale Certificate FAQs

How much does a New Jersey Resale Certificate cost?

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 New Jersey Division of Taxation recommends updating them every few years to ensure the customer’s information is up-to-date.

Where do I file the New Jersey sales tax exemption certificate?

In New Jersey, the certificate is not filed with any government agency. Instead, it is kept by the seller (the business selling the merchandise for resale).

Is a Resale Certificate the same as a Sales Tax Certificate?

No – A Sales Tax Certificate and a Resale Certificate are commonly thought of as the same thing, but they are actually two separate documents. The Sales Tax Certificate 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.

In addition to these, your business may also need to register for additional items. For more information, check out our guide to New Jersey business licenses.

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. 

Author

  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

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How To Get A New Jersey Resale Certificate

How To Get A New Jersey Resale Certificate

2 Responses

  1. I have a couple questions regarding the resale certificate. Can you get a resale certificate from a packaging wholesaler like Uline if you will use the boxes for shipping the products you sell online in the US? Technically you are adding the cost of the boxes in the sale price and obtaining sales tax out of them but not sure if that qualifies for resale. lastly, there are two sections you are required to choose for NJ resale certificate form NJ State provided which are as follows “The services described above are being purchased (check the box that applies): a) By seller who will either collect tax or will resell services. b) To be performed on personal property held for sale. . This is a little confusing, in the case of buying boxes to ship your products are we supposed to select option “a”?

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