Instructions for use of resale certificates – ST-3

Home / Instructions for use of resale certificates – ST-3

1. Registered sellers who accept fully completed exemption certificates within 90 days subsequent to the date of sale are relieved of
liability for the collection and payment of sales tax on the transactions covered by the exemption certificate. The following
information must be obtained from a purchaser in order for the exemption certificate to be fully completed:
• Purchaser’s name and address;
• Type of business;
• Reasons(s) for exemption;
• Purchaser’s New Jersey tax identification number or, for a purchaser                  that is not registered in New Jersey, the
Federal employer identification number or out-of-State registration                      number. Individual purchasers must
include their driver’s license number;
• If a paper exemption certificate is used (including fax), the signature                 of the purchaser.
The seller’s name and address are not required and are not considered when determining if an exemption certificate is fully completed.
A seller that enters data elements from paper into an electronic format is not required to retain the paper exemption certificate.
The seller may, therefore, accept this certificate as a basis for exempting sales to the signatory purchaser and is relieved
of liability even if it is determined that the purchaser improperly claimed the exemption. If it is determined that the
purchaser improperly claimed an exemption, the purchaser will be held liable for the nonpayment of the tax.
2. Retention of Certificates – Certificates must be retained by the seller for a period of not less than four years from the date of the
last sale covered by the certificate. Certificates must be in the physical possession of the seller and available for inspection.
3. Acceptance of an exemption certificate in an audit situation – On and after October 1, 2011, if the seller either has not obtained
an exemption certificate or the seller has obtained an incomplete exemption certificate, the seller has at least 120 days after the
Division’s request for substantiation of the claimed exemption to either:
1. Obtain a fully completed exemption certificate from the purchaser,                        taken in good faith, which,
in an audit situation, means that the seller obtain a certificate                                  claiming an exemption that:
(a) was statutorily available on the date of the transaction, and
(b) could be applicable to the item being purchased, and
(c) is reasonable for the purchaser’s type of business; OR
2. Obtain other information establishing that the transaction was not                      subject to the tax.
If the seller obtains this information, the seller is relieved of any liability for the tax on the transaction unless it is discovered
through the audit process that the seller had knowledge or had reason to know at the time such information was provided that the
information relating to the exemption claimed was materially false or the seller otherwise knowingly participated in activity
intended to purposefully evade the tax that is properly due on the transaction. The burden is on the Division to establish that the
seller had knowledge or had reason to know at the time the information was provided that the information was materially false.
4. Additional Purchases by Same Purchaser – This certificate will serve to cover additional purchases by the same purchaser of the
same general type of property. However, each subsequent sales slip or purchase invoice based on this Certificate must show the
purchaser’s name, address and New Jersey, Federal, or out of state registration number for purpose of verification.
5. Retention of Certificates – Certificates must be retained by the seller for a period of not less than four years from the date of the last
sale covered by the certificate. Certificates must be in the physical possession of the seller and available for inspection on or before
the 90th day following the date of the transaction to which the certificate relates.
EXAMPLES OF PROPER USE OF RESALE CERTIFICATE
a. A retail household appliance store owner issues a Resale Certificate when purchasing household appliances from a supplier for resale.
b. A furniture manufacturer issues a Resale Certificate to cover the purchase of lumber to be used in manufacturing furniture for sale.
c. An automobile service station operator issues a Resale Certificate to cover the purchase of auto parts to be used in repairing customer cars.
EXAMPLES OF IMPROPER USE OF RESALE CERTIFICATE
In the examples below, the seller should not accept Resale Certificates, but should insist upon payment of the sales tax.
a. A lumber dealer can not accept a Resale Certificate from a tire dealer who is purchasing lumber for use in altering his premises.
b. A distributor may not issue a Resale Certificate on purchases of cleaning supplies and other materials for his own office maintenance,
even though he is in the business of distributing such supplies.
c. A retailer may not issue a Resale Certificate on purchases of office equipment for his own use, even though he is in the business of selling
office equipment.
d. A supplier can not accept a Resale Certificate from a service station owner who purchases tools and testing equipment for use in his
business.
REPRODUCTION OF RESALE CERTIFICATE FORMS: Private reproduction of both sides of Resale Certificates may be made without the
prior permission of the Division of Taxation.
FOR MORE INFORMATION: Call the Customer Service Center (609) 292-6400. Send an e-mail to: nj.taxation@treas.state.nj.us.
Write to: New Jersey Division of Taxation, Information and Publications Branch, PO Box 281, Trenton, NJ 08695-0281.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to Top