• New Standards Regarding Sales Tax Exemption Certificates
  • November 8, 2011 | Author: Robert C. Daleo
  • Law Firm: Riker Danzig Scherer Hyland & Perretti LLP - Morristown Office
  • The New Jersey Division of Taxation has historically required a seller to obtain exemption certificates in good faith in order for many sales tax exemptions to apply.

    Due to changes in the Streamlined Sales and Use Tax Agreement, standards regarding exemption certificates have changed as follows:

    • Sellers must simply obtain a completed exemption certificate within 90 days of sale. Good faith acceptance at the point of sale is no longer applicable.
    • If a seller did not obtain a completed exemption certificate, the seller has 120 days after the Division of Taxation's request for the exemption certificate to (1) acquire in good faith a fully completed exemption certificate from the purchaser; or (2) otherwise demonstrate that the sale is exempt from sales tax.

    If a seller satisfies (1) or (2) above, the seller is not liable for tax on the sale unless the seller knew, or should have known, that the claimed exemption was materially false or knowingly participated in an activity intended to evade the tax on the sale.