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How to Get a Resale Certificate in New Jersey?

How To Get A Resale Certificate In New Jersey

When a business makes a purchase with the intention of resale, they can avoid paying the sales tax on the transactions. All a business has to do is provide their vendor with a resale certificate in New Jersey.

In this article, we’ll discuss what a resale certificate is, how to apply for one in New Jersey and more.

What is a Resale Certificate?

A resale certificate is a certificate of exemption on paying sales taxes that a business can use while purchasing from another business. This document states that the purchaser is buying the commodities for the purpose of resale. This certificate also allows the purchaser to collect sales tax from his customers at the time of resale.

For instance, if you, as a business, purchase a full batch of wooden tables to resell it to your customers, you aren’t required to pay any sales tax on the purchase. Instead, you must submit a resale certificate to your supplier proving that the purchase is for the purpose of resale. You can then charge the same percentage of sales tax from your customers at the time of sale. This tax must be remitted to the state at the time of filing returns.

Now that you know the basics of what a resale certificate is, let’s talk about how to apply for the resale certificate.

Getting Started

To get a resale certificate and purchase commodities without paying sales tax, a business must first get a sales permit in New Jersey.

  • Any business with a physical presence in the state (an office, a warehouse, store etc.,),
  • Business that temporarily sell products and taxable services in the state,
  • Business that have representatives (employees, agents) working in the state,
  • An out of state business selling in New Jersey with annual sale of more that $100,000 or 200 and more transaction,

In all these scenarios, a business requires a sales tax registration. Once you get your seller’s permit, you can fill the ST-3 resale certificate form.

ST-3 : Resale Certificate Form

The resale certificate in New Jersey is a document you provide to your vendors at the time of purchase to avoid paying sales tax. The certificate is simply filled by the purchaser and kept with the seller, without being filed with the state. However, just because the certificate isn’t filed with the state, it still holds a lot of power.

Incomplete filling of the form or wrong information entered on the document can make the purchaser liable to pay sales tax as well as additional fines and penalties.

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

Steps for Filling Out the ST-3 New Jersey Resale Certificate Form are as follows:

Step 1: Download the New Jersey Resale Certificate Form (ST-3)
Step 2: Specify the name, address of the seller and the date of filing the form
Step 3: Indicate the type of merchandise that the seller deals in
Step 4: Indicate the merchandise that you are willing to purchase from the vendor
Step 5: Specify whether the merchandise being purchased is to be :

  • Resold in present form,
  • Resold as a physical component of another product,
  • To be used in performance of taxable service

Step 6: In case of the purchase of services, the purchaser must clarify whether the purchase is with the purpose of collecting sales tax and reselling the service or is going to be performed on a personal property held for sale.
Step 7: The purchaser must specify their name, address, type of business and the signature of the legal representative of the business (owner, partner, officer of corporation, etc.).

In case of a non-New Jersey seller, the business must apply for the ST-3NR Resale Certificate.

Does a New Jersey Resale Certificate Expire?

No, a resale certificate in New Jersey does not expire. However, it is preferable to renew your certificate every few years to keep the information up to date.

Is a Resale Certificate the Same as a Sales Tax ID?

A resale certificate and sales tax ID are separate documents. The sales tax ID allows a business to sell taxable commodities and services and collect sales tax from customers. The resale certificate allows a business to purchase commodities for resale without paying any sales tax. At the sale time, they are able to collect the sales tax from their customers before remitting it to the state.

In most cases, once you apply for a sales tax permit, you automatically receive a resale certificate. All you are required to do is fill out the document accurately and submit it to the vendor at the time of purchase.

Read more to learn about applying for a sales tax ID in your state.

Are Sellers Required to Accept Resale Certificates?

Seller’s are not under an obligation to accept a resale certificate but that isn’t common. In most cases, sellers have no issue accepting the document as long as the purchaser provides accurate and complete information. However, if the seller refuses to accept the resale certificate, you can either pay the sales tax to him or find a different vendor.

What Steps Should a Business Take to Accept a Resale Certificate?

As a vendor who is selling out to a business for further sale, collecting proof is crucial. You don’t want to end up selling a commodity tax free to someone who will use the commodity for their personal use. Therefore, before accepting a resale certificate from a business, the vendor should:

  • Check the resale certificate to ensure it is filled completely
  • Verify the business’s tax registration number with the revenue and tax department of the state
  • Check whether the goods being purchased for resale match the goods that the business deals in
  • Keep a copy of the resale certificate as proof

With the specified steps, a vendor can make sure that the purchaser is genuinely involved in the resale of commodities and won’t use the goods to satisfy personal needs.

The resale certificate in New Jersey is a prerequisite for businesses involved in the resale of commodities. Without this document, businesses will be forced to pay the sales tax at the time of purchase.

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