N.J. Admin. Code § 18:24-10.5

Current through Register Vol. 56, No. 24, December 18, 2024

Section 18:24-10.5 - Exemption certificates; conditions, retention, and inspection; use of resale certificates by out-of-State sellers

(a) All certificates, whether single purchase or blanket, accepted by a seller as a basis for exemption from any tax imposed by the Sales and Use Tax Act (N.J.S.A. 54:32B-1 et seq.) shall be retained by the seller for a period of not less than four years from the date of the last use of such certificate as a basis for exemption.

(b) Whenever the sale for resale exemption is claimed by an unregistered out-of-State seller, either the fully completed resale certificate of another state, or a Division-approved multi-jurisdictional resale certificate, or the Streamlined Sales and Use Tax Agreement Certificate of Exemption - New Jersey (Form ST-SST), including evidence that the purchaser is a licensed seller in one or more jurisdictions, accepted by the seller, is deemed evidence of exemption, unless: the person to whom the sale was made and who issued the certificate was required to be registered in New Jersey under N.J.S.A. 54:32B-2(i) at the time of sale, or the person to whom the sale was made took delivery of the property at the sale location in New Jersey. If the person to whom the sale was made was not required to be registered in New Jersey at the time of sale, and in fact was not registered, but did take delivery of the tangible personal property at the sale location in New Jersey, the acceptable evidence of exemption is a New Jersey Resale Certificate for Non-New Jersey Sellers (Form ST-3NR) or other approved form.

(c) The seller shall obtain the same information for proof of a claimed exemption regardless of the medium in which the transaction occurred.

(d) The seller shall maintain proper records of exempt transactions and provide them to the Division when requested.

(e) In the case of drop-shipment sales, the Division will allow a third-party seller (for example, drop shipper) to claim a resale exemption based on an exemption certificate provided by its customer/reseller or any other acceptable information available to the third-party seller evidencing qualification for a resale exemption, regardless of whether the customer/reseller is registered to collect and remit sales and use tax in the state where the sale is sourced.

(f) The Division shall relieve sellers that follow the requirements of N.J.A.C. 18:24-10.4 from the tax otherwise applicable if it is determined that the purchaser improperly claimed an exemption and will hold the purchaser liable for the nonpayment of tax. This relief from liability does not apply to a seller who fraudulently fails to collect tax, a seller who solicits purchasers to participate in the unlawful claim of an exemption, or a seller who accepts an exemption certificate when the purchaser claims an entity-based exemption when:

1. The subject of the transaction sought to be covered by the exemption certificate is actually received by the purchaser at a location operated by the seller; and

2. New Jersey has indicated on the Streamlined Sales and Use Tax Agreement Certificate of Exemption - New Jersey (Form ST-SST), that the claimed exemption is unavailable.

(g) The Division shall relieve a seller of the tax otherwise applicable if the seller obtains a fully completed exemption certificate or captures the relevant data elements required under the Agreement within 90 days subsequent to the date of sale.

(h) The Division shall relieve a seller of the tax otherwise applicable if the seller obtains a blanket exemption certificate from a purchaser with which the seller has a recurring business relationship. Notwithstanding the provisions of (d) above, the Division may not request from the seller a renewal of blanket certificates or an update of exemption certificate information or data elements when there is a recurring business relationship between the buyer and seller. For purposes of this subsection, a "recurring business relationship" exists when a period of no more than 12 months elapses between sales transactions.

(i) The Division may require purchasers to update exemption certificate information or to reapply with the State to claim certain exemptions.

N.J. Admin. Code § 18:24-10.5

Amended by 48 N.J.R. 824(a), effective 5/16/2016