Tax Resale Certificates
A tax resale certificate allows you to not pay sales tax on items that you simply decide to resell. This will also apply to supplies that are getting to be utilized in products that you simply will resell, like wood for a cupboard.
It is critical that you simply understand that tax resale certificates also can only be used on items that will be resold. Office supplies, like new computers for your employees, wouldn’t fall into the category of retail. It can be considered fraud to not pay sales tax on these things.
If this is confusing for you, just consider tax resale certificates as state tax exemption certificates. Some states actually call them exemption certificates or reseller’s permits.
In New Jersey, Make Sure that Your Purchases Qualify For Sales Tax Exemptions
Again, only purchases that will be resold exactly as they are or will make up materials for products your business makes or repairs qualify for sales tax exemptions in New Jersey.
The following will not qualify:
- Office supplies
- Tools and equipment used by your business
- Materials and services used for capital improvements to your business
- Anything for your personal use
- For example, if you make clothes for your store, you don’t have to pay sales tax on purchases of fabric, but you do have to pay it on the needles you use to sew the garment.
Make Sure You Have the Proper New Jersey Forms
Both these forms will require you to have a tax identification number from the state. This identification number indicates that you have received a permit to collect sales tax from the state of New Jersey. However, if you are not registered in New Jersey to collect sales tax then you can substitute the tax identification number with a number from another state or your federal employer identification number.
The New Jersey Division of Taxation regulates that a business has to keep the certificate on file for 4 years from the date of the transaction so that it can be inspected if necessary.
.Does A New Jersey Vendor Have To Accept My Tax Resale Certificate?
It is extremely important to a retailer’s bottom line that they do not pay sales taxes on goods if there is a possibility that the tax can be exempted on a state level. However, it is also crucial to understand that a wholesaler is not required to accept your tax resale certificate in some states.
What If A Customer Presents Me With A Tax Resale Certificate?
A customer can also present a tax resale certificate to you as a retailer and it is your discretion of whether or not you want to exempt them from the required sales tax. It is always a good idea to check on the certificate because you will be held responsible, if the certificate is expired or fraudulent, for the unpaid state sales tax. Verification is key in making sure that the correct due diligence has been completed to authenticate the tax resale certificate.
Do Big Box Stores Usually Accept Tax Resale Certificates?
A retailer should also be aware that many Big Box Stores such as Walmart or Target refuse to honor tax resale certificates to prevent retail arbitrage. Retail arbitrage is buying a rare item from a store and reselling it for a markup.
What Information Do I Need For The Tax Certificate Registration Form?
You must provide the following information:
- The name and address of the purchaser
- The name and address of the seller
- The registration number of the purchaser
- An accurate description of property purchased for resale
- The reason for the exemption
- A statement that if the property is put to use in a taxable manner that the purchaser will remit the consumer use tax
- Date and Signature and Title of the authorized individual at the purchaser
What Is A Consumer Use Tax?
A consumer has to pay taxes from purchases made from local retailers. This is often called a sales tax and is charged in 45 states. This money is usually collected on behalf of the state by the seller.
Consumer use tax is when the retailer does not charge the appropriate tax and therefore the sales tax is paid directly by the consumer to the state. This usually happens when something is purchased online or from a catalog. In these instances, the vendor does not have a set location in the state, so the sales tax can not be collected from the vendor.
Make Sure You Understand The Specific Guidelines Of Your State
A tax resale certificate is a wonderful way a business can avoid unnecessary taxes. However, we understand that there are a lot of rules and regulations, which can be very confusing to any business owner.
That Is Why We Are Here To Help
It is understandable that all this information can be very daunting. Not correctly understanding sales tax and the benefits of a tax resale certificate can lead to a great deal of trouble. A retailer could lose out on extremely beneficial sales tax exemptions status. A savvy business owner will understand that having a tax resale certificate will save them a good deal of money but leave the actual headache of registration to someone else.
On the other hand, misunderstanding and not paying the correct sales tax to a state government could very much hurt a business’s standing and reputation. Unfortunately, the rules of Tax Resale Certificates can vary greatly by the state which can be very confusing
At Tax Resale Certificate, we make the process as easy as possible. We know that a hard-working entrepreneur has a million jobs and it is smart to take advantage of our expertise. Just Our user-friendly interface to help take the headache of applying for a tax resale certificate off your plate.