Current through Register Vol. 56, No. 18, September 16, 2024
(a) For transactions
entered into prior to October 1, 2005, an exemption certificate is properly accepted
if the following conditions are met:
1. An
exemption certificate to be accepted in good faith must contain no statement or
entry, which the seller knows is false or misleading;
2. A seller is presumed to be familiar with the
laws and rules regarding the business in which he or she deals;
3. In general, a seller who accepts a properly
completed exemption certificate in good faith is relieved of liability for
collection or payment of tax upon transactions covered by the certificate. The
question of good faith is one of fact and depends upon a consideration of all the
conditions surrounding the transaction;
4. The certificate must be in the physical
possession of the seller, and available for appropriate inspection on or before the
90th day following the date of the transaction to which the certificate relates;
and
5. Where a certificate is not made
available for inspection on or before the date in (a)4 above, the seller must
provide to the satisfaction of the Director, by means of evidence other than
certification of the purchases, that the sale in question is, in fact,
exempt.
(b) For transactions
entered into between October 1, 2005 and December 31, 2007, an exemption certificate
is properly accepted and the seller is held harmless if the following conditions are
met:
1. The certificate must contain no statement
or entry, which the seller knows is false or misleading;
2. The certificate must be an official form or a
proper and substantive reproduction, including electronic;
3. The certificate must be filled out
completely;
4. The certificate must be
dated and include the 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; and
5. The
certificate or required data must be provided within 90 days of the sale.
(c) For transactions entered into on
and after January 1, 2008, an exemption certificate is properly accepted and the
seller is held harmless when a purchaser claims an exemption if the certificate is
fully completed.
1. The following information must
be obtained from a purchaser in order for the exemption certificate to be "fully
completed":
i. The purchaser's name and
address;
ii. The type of
business;
iii. The reasons(s) for the
exemption;
iv. The 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;
and
v. The signature of the purchaser,
if a paper exemption certificate is used, including facsimile.
2. 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 a paper exemption certificate
into an electronic format is not required to retain the paper exemption
certificate.
(d) If the
seller either has not obtained an exemption certificate, has obtained an incomplete
exemption certificate, or the seller has not obtained the relevant data elements as
provided in (c)1 above, then the standard is different from that which applies at
the point of sale as described in (c)1 above. The seller shall have at least 120
days after the Division's request for substantiation of the claimed exemption to do
the following:
1. From January 1, 2008 to
September 30, 2011, obtain a fully completed exemption certificate from the
purchaser, taken in good faith, which means that the seller is presumed to be
familiar with the laws and rules regarding the business in which he or she deals and
the exemption certificate must not contain any statement or entry that the seller
knows is false or misleading; or
2. On
and after October 1, 2011, either:
i. Obtain a
fully completed exemption certificate from the purchaser, taken in good faith, which
means that the seller obtains a certificate that claims an exemption that:
(1) Was statutorily available on the date of the
transaction in the jurisdiction where the transaction is sourced;
(2) Could be applicable to the item being
purchased; and
(3) Is reasonable for the
purchaser's type of business; or
ii. Obtain other information establishing that the
transaction was not subject to the tax.
(e) If the seller obtains the information
described in (d) above, the Division shall relieve the seller 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 Division
must establish that the seller had knowledge or had reason to know, at the time the
information was provided, that the information was materially false.
