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
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.
Alabama
Alaska (no sales tax)
Arizona
Arkansas
California
Colorado
Connecticut
Delaware (no sales tax)
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana (no sales tax)
Nebraska
Nevada
New Hampshire (no sales tax)
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon (no sales tax)
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
