Thank you to a client from New Jersey for that great question! A New Jersey resale certificate is a document that that allows a business to purchase goods for resale without paying sales tax. The business is then expected to collect sales tax from the customer when they re-sell the item. In order to use a resale certificate, you first need to need to register with the NJ Division of Revenue and Enterprise Services (DORES) for tax purposes and get a Business Registration Certificate (BRC). We’ll tell you everything you need to know about using a resale certificate in New Jersey.
You can only use a resale certificate if you 1.) are registered for New Jersey taxes, and 2.) are purchasing items for resale. Here are the types of items eligible to purchase with a resale certificate:
You cannot use a resale certificate to buy items you don’t plan to use in resale, even if you’re using them for other business purposes. For example, you can’t use a resale certificate to buy your employees new office chairs.
First, you need an EIN. Then you can register for New Jersey taxes. And finally, you can fill out the New Jersey Resale Certificate and give it to the person you’re buying goods from. We’ll explain each step.
LLCs, corporations, and partnerships that want to register for taxes in New Jersey first need to obtain an EIN. Sole proprietors aren’t required to get an EIN to register for taxes, but the Division of Revenue recommends it. An EIN is a federal tax ID number issued to a business by the IRS—sort of like a social security number for businesses. You can get an EIN for free directly from the IRS, either online or by mail.
Next, you need to register for taxes by submitting a NJ-Reg form to the Division of Revenue by mail or fax, or you can register online using New Jersey’s Online Business Registration. To register, you’ll need:
Once you’ve registered, you’ll be mailed a Business Registration Certificate, which will include your Taxpayer ID number. (This number will be your EIN number + a 3-digit suffix.) You’re required to display your BRC at your place of business.
Now that you’re registered for taxes, you can use a resale certificate. New Jersey resale certificate forms can be downloaded online. There are different resale certificates for New Jersey businesses and out-of-state businesses:
Note: If you are purchasing product machinery or packaging supplies, use the Exempt Use Certificate instead of a resale certificate.
You should fill out the certificate completely, sign it, and give it to the person or business you’re buying goods from. The supplier can then legally sell you the goods without charging sales tax. You must submit your resale certificate to the supplier within 90 days of making the purchase.
If you are a supplier and receive a resale certificate from a customer, you should review the resale certificate carefully before accepting it and make sure it has been filled out completely and is being used for a legitimate purpose (to purchase goods that are intended for resale). If you are found to have accepted a resale certificate that you knew to be illegitimate, you can be held liable for the nonpayment of the sales tax. (However, if you accept a resale certificate in good faith and it turns out to be illegitimate, you won’t be held liable.)
You’re then required to keep the resale certificate with your records for at least 4 years. You don’t need to submit the certificate to the Division of Revenue. If the customer makes multiple purchases of the same kind, the same resale certificate can be used to cover subsequent purchases.
