New Jersey Resale Certificate: How to Get, Use, and Accept One

TL;DR

• A New Jersey resale certificate lets an eligible buyer purchase goods or services tax-free for resale.

• New Jersey-registered buyers use Form ST-3, while qualifying out-of-state sellers use Form ST-3NR.

• A fully completed certificate received within 90 days can relieve the seller of liability. An audit provides at least 120 days after the Division requests substantiation to cure a missing or incomplete certificate.

• Keep each resale certificate for four years from the date of the last sale it covers.

• A missing certificate can expose the seller to $6,625 per $100,000 of unsupported sales at New Jersey's 6.625% rate.

What is a New Jersey resale certificate?

A New Jersey resale certificate lets a registered buyer purchase qualifying goods or services without paying sales tax because the buyer will resell them. Form ST-3 serves as the standard certificate for buyers registered in New Jersey.

On Form ST-3, the purchaser certifies that it holds a valid Certificate of Authority to collect New Jersey Sales and Use Tax. The purchaser also identifies its principal business, describes the purchase, and states how the property or service will be resold. Qualifying purchases include inventory for resale and materials incorporated into a finished product held for sale. Certain services performed on inventory or acquired for resale can also qualify.

The buyer gives the completed certificate to the seller rather than sending it to the Division of Taxation. Qualified out-of-state sellers may use Form ST-3NR. New Jersey sellers may also accept the multistate Form ST-SST in most circumstances.

How do I get a New Jersey resale certificate?

Your business must hold a New Jersey Certificate of Authority before it can issue Form ST-3. A retailer opening its first New Jersey store registers before placing inventory orders, because ST-3 asks for the buyer's New Jersey taxpayer identification number. Register for Sales and Use Tax with Form NJ-REG through the Division of Revenue and Enterprise Services. A remote seller with no New Jersey location chooses Register as Remote Seller Only.

After New Jersey issues the Certificate of Authority, complete ST-3 and provide it to the seller. Do not send the certificate to the Division of Taxation. The buyer must identify its business, New Jersey taxpayer number, purchased property or services, and resale purpose.

A remote seller must register when its gross revenue from New Jersey deliveries exceeds $100,000 or it completes at least 200 separate New Jersey transactions during the current or prior calendar year. Several states have eliminated the 200-transaction test. New Jersey has not.

Which form is the New Jersey resale certificate?

Form ST-3 is the standard New Jersey resale certificate for buyers registered in the state. The current ST-3 revision is dated 3-23. A buyer uses it for property or services purchased for resale, for incorporation into a product held for sale, or for certain taxable services. The buyer certifies that it holds a valid New Jersey Certificate of Authority, identifies its principal business, describes the purchase, and states the resale purpose.

Form ST-3NR applies to qualifying out-of-state sellers that are registered elsewhere but are neither registered nor required to register in New Jersey. The current ST-3NR revision is dated 3-17. The purchaser certifies that it lacks specified business activity or property in New Jersey and provides an FEIN or out-of-state registration number. An individual purchaser provides a driver’s license number.

Form ST-SST provides a multistate alternative because New Jersey participates in the Streamlined Sales and Use Tax Agreement. In most circumstances, a purchaser may issue ST-SST instead of a New Jersey general-use exemption certificate. A New Jersey seller may accept it when the purchaser supplies a New Jersey tax ID, FEIN, foreign identification number, or driver’s license number.

Can an out-of-state buyer issue a New Jersey resale certificate?

Yes, on Form ST-3NR, if the buyer qualifies as an out-of-state seller. It must not be registered in New Jersey, must not be required to register there, and must be registered in another state. Form ST-3 is only for buyers registered in New Jersey.

For an ordinary New Jersey sale, ST-3NR applies when the buyer carries the goods away or sends its own vehicle or representative to collect them. The purchaser certifies that it has no New Jersey place of business or employees. The purchaser also certifies that it conducts no service activities there and has no independent contractors or leased tangible personal property there. If the purchaser later uses or consumes tax-free property in New Jersey, it agrees to pay the proper tax.

A seller cannot accept ST-3NR when the transaction or purchaser does not qualify. For example, a lumber dealer cannot accept it from a contractor buying materials for work on a customer’s real property because the contractor is the retail purchaser. A bookseller also cannot accept it from a doctor buying books for a waiting room because the doctor is not buying the books for resale. A candy wholesaler cannot accept ST-3NR from a purchaser that lists a New Jersey store address, because that address gives the seller reason to believe the purchaser should be registered in New Jersey. A plant nursery cannot accept ST-3NR from a New York florist that asks for delivery by common carrier to New York, because a sale shipped out of state is not a New Jersey sale.

Drop shipments provide the sole exception for another state’s certificate. When an out-of-state retailer directs a supplier to deliver goods to a New Jersey customer, the supplier may accept the retailer’s resale certificate from another state or the MTC Uniform Sales & Use Tax Certificate. The supplier may also accept ST-3NR or ST-SST, as explained in New Jersey’s exemption certificate guidance.

What makes a New Jersey resale certificate valid?

A New Jersey resale certificate is valid only when the buyer fully completes every required field. An incomplete certificate leaves the seller liable for uncollected sales tax unless the seller cures the deficiency under the audit rules. The seller must also be registered with New Jersey to accept an exemption certificate.

Form ST-3 requires the purchaser’s name, address, New Jersey taxpayer identification number, business type, exemption reason, and signature on a paper or faxed certificate. The seller’s name and address are optional. Form ST-3NR uses the buyer’s federal employer identification number or out-of-state registration number instead of a New Jersey number. An individual must provide a driver’s license number.

A seller may convert certificate data into an electronic record and discard the paper copy. New Jersey requires a signature only on paper and faxed certificates. A certificate the buyer provides electronically does not need one.

A seller avoids liability when it receives a fully completed certificate within 90 days of the sale. If an audit finds no certificate or an incomplete one, the seller receives at least 120 days after the Division requests substantiation to obtain a valid certificate or other proof that the sale was exempt.

The seller must accept a late certificate in good faith. The exemption must have been legally available on the sale date, applicable to the purchase, and reasonable for the buyer’s business. Relief does not apply when the seller knew or had reason to know the information was materially false, knowingly participated in activity intended to evade the tax, fraudulently failed to collect tax, solicited an unlawful exemption, or accepted an ST-SST entity exemption that New Jersey disallows for an item received at the seller’s location.

When does a New Jersey resale certificate expire?

New Jersey sets no expiration date for a blanket resale certificate while no more than 12 months pass between sales, and the Division cannot require a renewal. The Division recommends that sellers collect an updated certificate every four years.

Sales at least once every 12 months establish the recurring business relationship that keeps a blanket certificate active. For each later purchase covered by the certificate, the seller must clearly mark the sales slip or invoice with the purchaser’s name and address, plus its identification number.

How long must sellers keep New Jersey resale certificates?

Keep each resale certificate for four years from the date of the last sale it covers.

The seller must physically possess the certificate and make it available for inspection. New Jersey also requires contemporaneously dated certificates and supporting documentation. Summary records alone do not provide adequate evidence during an audit.

What happens if a New Jersey resale certificate is missing or invalid?

A seller without a fully completed resale certificate must collect and remit New Jersey sales tax unless the seller cures the deficiency during the audit response period. After the Division requests substantiation, the seller receives at least 120 days to obtain a fully completed certificate in good faith or other evidence that the sale was not taxable. The exposure is $6,625 per $100,000 of unsupported sales at New Jersey's 6.625% rate.

Buyer liability depends on how the purchased property is used. A toy store can issue ST-3 for dolls held as resale inventory, but it owes tax on display cases because the store uses them in its own business. A purchaser that improperly claims an exemption becomes responsible for the tax, interest, and applicable penalties.

When a certificate review turns up prior periods where New Jersey tax went uncollected, Taxwire runs voluntary disclosure agreements, which typically cover a lookback of three to four years. Buyers that paid New Jersey tax on inventory they later resold can use Taxwire's tax recovery service to reclaim the overpayment.

Frequently asked questions

Does New Jersey generally accept resale certificates issued by other states?

No. A New Jersey seller generally cannot accept another state’s resale certificate for a New Jersey sale. The exception applies to drop shipments. For a qualifying drop shipment, a supplier may accept the retailer’s out-of-state resale certificate, the MTC multistate certificate, Form ST-3NR, or Form ST-SST.

What does a buyer owe when resale inventory is taken for personal use?

The buyer owes New Jersey Use Tax on the purchase price of inventory withdrawn for personal use. The current Sales Tax rate applies. A buyer that improperly claimed the resale exemption may also owe interest and penalties.

Can a seller accept a resale certificate after the sale?

Yes. A fully completed certificate received within 90 days of the sale generally relieves the seller of liability. During an audit, a seller with no certificate or an incomplete certificate receives at least 120 days after the Division requests substantiation to obtain valid documentation or other proof that the transaction was exempt.

Does New Jersey accept the Streamlined exemption certificate?

Yes. New Jersey sellers may generally accept Form ST-SST instead of the state’s general-use exemption certificates. The purchaser must provide an accepted identifier, such as a New Jersey tax ID, federal employer identification number, foreign identification number, or an individual driver’s license number.