If you run an Ecommerce or CPG business in New Jersey, securing a New Jersey Resale Certificate is a smart move to protect your margins and streamline operations.
This certificate allows you to purchase inventory and raw materials tax-free, helping you lower upfront costs, stay competitive in pricing, and remain compliant with New Jersey sales tax laws.
Understanding Resale Certificates in New Jersey
What is a New Jersey Resale Certificate?
In New Jersey, a Resale Certificate is a document issued by the New Jersey Division of Taxation that allows businesses to:
- Purchase goods without paying sales tax, provided these goods are intended for resale to their customers in the normal course of their business.
- Additionally, it makes tax-exempt purchases of inventory and materials that will become part of the products they sell by presenting a valid resale certificate to their suppliers.
New Jersey employs two primary forms to facilitate sales tax exemptions for resale purposes, distinguishing between in-state and out-of-state purchasers:
- Form ST-3 (Resale Certificate): This form is specifically designated for use by businesses that are registered within New Jersey when making purchases from in-state suppliers.
- Form ST-3NR (Resale Certificate for non-New Jersey Sellers): This form is for businesses not registered in New Jersey and not required to be registered in New Jersey, typically out-of-state sellers, when they purchase items for resale from suppliers located within New Jersey.
The purpose is to prevent double taxation once at the wholesale level and again at the point of retail sale.
However, a New Jersey resale certificate is not a blanket exemption from all sales tax obligations. Businesses are still required to collect and remit sales tax on taxable sales to end consumers.
Why do you need a Resale Certificate in New Jersey?
Obtaining a resale certificate in New Jersey offers several significant advantages for businesses that purchase goods for resale.
Here are some key benefits:
- Avoid Paying Sales Tax on Inventory: The most direct benefit is that you can purchase inventory and materials for resale without paying New Jersey‘s sales tax upfront.
- Maintain Competitive Pricing: By not paying sales tax on the cost of goods, businesses have more flexibility in setting competitive prices for products in the New Jersey market. This can be a crucial advantage, especially in price-sensitive industries.
- Legal Compliance: Possessing and using a valid resale certificate for eligible purchases ensures businesses comply with New Jersey’s sales tax laws and regulations to avoid penalties.
In New Jersey, the specific form required for a resale certificate for multiple and recurring purchases is the Resale Certificate (Form ST-3).
When filling out Form ST-3, a purchaser must include their New Jersey Taxpayer Registration Number (also known as their Certificate of Authority number) to identify that it is registered with the New Jersey Department of Revenue and authorized to make tax-exempt purchases for resale.
Resale Certificate vs. Sales Tax Permit: What’s the Difference?
A New Jersey Sales Tax Permit authorizes your business to collect and remit sales tax on taxable sales to customers. A New Jersey Resale Certificate (Form ST-3), on the other hand, allows you to purchase goods tax-free from suppliers if those goods are intended for resale. To use a resale certificate, you must have an active sales tax permit.
Who Can Use a Resale Certificate in New Jersey?
Businesses that purchase goods for resale can use a New Jersey Resale Certificate. To do so, the business must actively sell taxable tangible products and hold a valid New Jersey Certificate of Authority.
How to Get a Resale Certificate in New Jersey: A Step-by-Step Guide
Getting a resale certificate in New Jersey is simple, but you’ll need to meet a few key requirements first. Here’s how to do it:
1. Make Sure You’re Eligible: Your business must sell taxable goods or services and be registered with the New Jersey Division of Taxation if you are an in-state business. Only businesses with a valid New Jersey Sales Tax Permit (for in-state businesses) are eligible to use a resale certificate. Out-of-state businesses not required to be registered in New Jersey may use Form ST-3NR.
2. Get a New Jersey Sales Tax Permit: If you don’t already have one, apply for a New Jersey Certificate of Authority through the New Jersey Online Business Registration website. This permit is required before you can issue or use a resale certificate. Need help? Read our blog: How to Get a Seller’s Permit in New Jersey
3. Gather Your Business Information: You’ll need basic business details to complete the resale certificate, including:
- Your legal name and address
- Seller’s legal name and address
- Your New Jersey Taxpayer Identification number (for ST-3) or Federal Employer
- Identification Number/out-of-state registration number (for ST-3NR)
- Your type of business
- Your reason(s) for exemption
- Your authorized signature and date of issue
4. Complete the Form ST-3 or Form ST-3NR: Download and fill out the New Jersey Resale Certificate (Form ST-3 or Form ST-3NR, if applicable) from the New Jersey Division of Taxation website. You’ll present this form to your suppliers when making tax-exempt purchases.
5. Submission: No submission required in New Jersey. You don’t submit the resale certificate to the state. Instead, give the completed form directly to your suppliers when buying items for resale.
6. Pay Any Applicable Fees: There’s no cost to use the resale certificate itself (Form ST-3).
7. Understand Renewal Requirements: The New Jersey Resale Certificate is valid only while the buyer continues to purchase the same general type of property. While the certificate itself doesn’t “expire” in the same way a permit does, it’s a best practice to provide updated certificates to your suppliers.
Suppliers may, however, periodically request an updated form (e.g., every few years) to ensure their records are current. The New Jersey Certificate of Authority remains valid for as long as the business exists without any changes in ownership or structure.
If you’re a registered retailer, you must keep up with all sales tax filings and payments to stay in good standing. If there are any changes to your business details or exemption status, you should give your suppliers an updated Form ST-3.
How to Use a Resale Certificate in New Jersey
To properly utilize your resale certificate in New Jersey when making tax-exempt purchases for resale, you’ll need to present a valid copy of your New Jersey Resale Certificate (Form ST-3 or ST-3NR, as applicable) to your supplier at the time of purchase.
New Jersey generally does accept resale certificates issued by other states. However, there might be specific conditions:
- Good Faith Acceptance: Vendors in New Jersey will typically accept an out-of-state resale certificate in good faith, provided it contains all the necessary information (buyer’s name, address, seller’s permit number from the issuing state, reason for exemption, etc.).
- Reciprocity: The acceptance might be based on reciprocal agreements with the state that issued the certificate, and New Jersey also participates in the Streamlined Sales Tax Agreement (SSTA), which facilitates acceptance of a uniform certificate.
If you are an out-of-state business purchasing from a vendor in New Jersey, you can use the Uniform Sales and Use Tax Certificate – Multijurisdiction Form or New Jersey’s Form ST-3NR (Resale Certificate for Non-New Jersey Sellers).
It’s always a good idea to confirm the vendor’s policy on accepting out-of-state certificates beforehand.
Multi-Jurisdictional Resale Certificates
A multi-jurisdictional resale certificate simplifies tax-exempt purchases for businesses that buy goods for resale across state lines.
Unlike a single-state resale certificate, a standardized multi-jurisdictional form allows multiple states to recognize the purchase as tax-exempt because it’s intended for resale.
However, it’s crucial to understand that not all states accept these multi-state forms, and acceptance can come with specific conditions.
There are two primary types of multi-jurisdictional resale certificates that a business operating in or selling to vendors in New Jersey might encounter:
- Uniform Sales & Use Tax Resale Certificate – Multijurisdiction Form: This is a widely recognized form accepted by a significant number of states (though not all). New Jersey accepts this form if it’s properly completed. For New Jersey-based buyers, it should include their New Jersey Sales Tax Permit number. Out-of-state purchasers should include their home state’s registration number where indicated. You can find this form on the Multistate Tax Commission (MTC) website.
- Streamlined Sales Tax (SST) Certificate of Exemption: The state of New Jersey became a full member of the Streamlined Sales Tax on October 1, 2005. As such, it accepts the SST Certificate of Exemption for qualifying resale purchases. Businesses using either certificate must ensure they meet all New Jersey-specific requirements. You can find more information about the SST and its member states on the Streamlined Sales Tax Governing Board website.
Businesses need to verify whether New Jersey accepts these multi-jurisdictional certificates and if there are any specific requirements or limitations on their use within the state. This is to avoid any audit issues.
Responsibilities When Using or Accepting a Resale Certificate in New Jersey
Buyer Responsibilities
If you’re using a New Jersey resale certificate, you’re responsible for ensuring it’s used only for purchases of goods or services you intend to resell. Using it for personal or operational items (like office supplies or equipment) is illegal and may lead to penalties.
- New Jersey-based buyers: Provide a fully completed Form ST-3 to your suppliers for qualifying purchases.
- Out-of-state buyers: New Jersey has a Resale Certificate for non-New Jersey Sellers (Form ST-3NR). New Jersey vendors also accept either a valid resale certificate from your home state or the Uniform Sales and Use Tax Certificate – Multijurisdiction Form, under specific conditions that ensure documentation and compliance with New Jersey tax regulations.
Seller Responsibilities
As a seller in New Jersey, accepting a resale certificate comes with the responsibility of verifying and retaining proper documentation for tax-exempt sales. You must:
- Accept the certificate in good faith
- Ensure it includes all required information: buyer’s name, address, sales tax permit number (or equivalent), reason for exemption, and signature.
- Reject the certificate if the items aren’t for resale (e.g., personal or business use)
Keep records for at least 4 years: A properly completed resale certificate serves as official proof for why you didn’t collect sales tax. You must retain a physical copy for four years from the date of the last sale covered by the certificate in case of an inspection by the New Jersey Division of Taxation.
Frequently Asked Questions About the New Jersey Resale Certificate
Are There Penalties for Misusing a Resale Certificate in this State?
Yes. Improper use of a resale certificate, such as using it for personal or non-resale purchases, can result in serious penalties.
Sellers demonstrate fraudulent intent when they fraudulently fail to collect the tax or solicit purchasers to make unlawful exemption claims. The state may hold the seller responsible for any sales tax due from such transactions.
Always use Form ST-3 correctly and only for qualified resale purchases to avoid issues.
Does a New Jersey Resale Certificate Expire?
A New Jersey resale certificate stays valid if the buyer keeps making recurring purchases from the seller.
A blanket certificate covers multiple transactions and stays effective if the buyer purchases the same general type of property.
However, it is only valid while your New Jersey Sales Tax Permit remains active. Revoking or inactivating your permit invalidates your resale certificate.
How Do I Verify a New Jersey Resale Certificate?
If you’re a seller in New Jersey, you can’t verify ST-3 or ST-3NR forms online directly. Here’s how to validate a buyer’s resale certificate:
1. Ask the buyer for a completed ST-3 form and review it for all required information. Make sure the purchase is for resale and is consistent with good faith.
2. You can then verify the validity of the buyer’s Business Registration Certificate using the NJDOR On-Line Business Registration Certificate Service
3. Enter the Name Control and one of the following:
- Taxpayer Identification Number
- Business Entity Identification Number
- Business Registration Certificate.
4. Fill out all required fields. Once done, click Submit.
How TaxHero Can Help
Managing sales tax compliance and resale certificates in New Jersey doesn’t have to be complicated. TaxHero simplifies the process, from keeping your New Jersey Sales Tax Permit active to ensuring you use resale certificates correctly.
Save time. Avoid penalties. Stay compliant.
Schedule a Demo to see how TaxHero can streamline your New Jersey resale certificate process today!