New Jersey Division of Taxation T Sales Tax Exemption ... · Sales Tax Exemption Administration...

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Rev. 9/06 1 AX OPIC New Jersey Division of Taxation Bulletin S&U-6 T Sales Tax Exemption Administration Introduction The New Jersey Sales and Use Tax Act (the Act) imposes a tax of 7% on the receipts from every retail sale of tangible personal property and some services (except as otherwise provided in the Act). Under certain conditions, exemp- tions are provided for otherwise taxable trans- actions. This bulletin explains the proper com- pletion and use of the following New Jersey exemption certificates used to make qualified exempt purchases: Form ST-3 Resale Certificate Form ST-3NR Resale Certificate for Non-New Jersey Vendors Form ST-4 Exempt Use Certificate Form ST-5 Exempt Organization Certificate Form ST-6A Direct Payment Certificate Form ST-7 Farmers Exemption Certificate Form ST-8 Certificate of Capital Improvement Form ST-10 Motor Vehicle Sales and Use Tax Exemption Report Form ST-10-A Aircraft Dealer Sales and Use Tax Exemption Report Form ST-10V Vessel Dealer Sales and Use Tax Exemption Report Form ST-13 Contractors Exempt Purchase Certificate Form ST-16 Exemption Certificate for Student Textbooks Form UZ-4 Contractors Exempt Purchase Certificate - Urban Enterprise Zone Form UZ-5-SB Urban Enterprise Zone Exempt Purchase Certificate NJ Exemption Certificates Under New Jersey law, some items are exempt from sales and use tax regardless of who buys them or how they are used. Examples of exempt items include most clothing, most items of food and drink (except when sold in or by restaurants or similar establishments) and prescription drugs. There are however, items which are exempt from tax only under certain conditions. The New Jersey Division of Taxation issues several ex- emption certificates which allow qualified indi- viduals and businesses to purchase taxable mer- chandise and services tax-free. Each exemption certificate has its own specific use. In addition, New Jersey sellers and purchasers may accept and issue the Streamlined Sales and Use Tax Certificates of Exemption (ST-SST) in lieu of the exemption certificates issued by the Division. Agencies of the Federal government and the United Nations as well as the State of New Jer- sey and its political subdivisions are exempt from paying sales tax provided the agency mak- ing the purchase supplies the seller with a copy of a valid purchase order or contract signed by an authorized official. See page 14 for further information. Registration New Jersey Registration Any person or organization engaged in selling taxable goods or services in this State must reg- ister with the State for sales tax purposes by fil- ing a business registration application (Form NJ-REG) at least 15 business days before

Transcript of New Jersey Division of Taxation T Sales Tax Exemption ... · Sales Tax Exemption Administration...

Page 1: New Jersey Division of Taxation T Sales Tax Exemption ... · Sales Tax Exemption Administration Rev. 9/06 1 AX OPIC New Jersey Division of Taxation Bulletin S&U-6 ... Form ST-6A Direct

Sales Tax Exemption Administration

Rev. 9/06 1

AXOPIC

New Jersey Division of Taxation

Bulletin S&U-6

Rev. 1/95

T Sales Tax Exemption Administration

IntroductionThe New Jersey Sales and Use Tax Act (the�Act�) imposes a tax of 7% on the receipts fromevery retail sale of tangible personal propertyand some services (except as otherwise providedin the Act). Under certain conditions, exemp-tions are provided for otherwise taxable trans-actions. This bulletin explains the proper com-pletion and use of the following New Jerseyexemption certificates used to make qualifiedexempt purchases:

Form ST-3 Resale CertificateForm ST-3NR Resale Certificate for Non-New

Jersey VendorsForm ST-4 Exempt Use CertificateForm ST-5 Exempt Organization

CertificateForm ST-6A Direct Payment CertificateForm ST-7 Farmer�s Exemption CertificateForm ST-8 Certificate of Capital

ImprovementForm ST-10 Motor Vehicle Sales and Use

Tax Exemption ReportForm ST-10-A Aircraft Dealer Sales and Use

Tax Exemption ReportForm ST-10V Vessel Dealer Sales and Use

Tax Exemption ReportForm ST-13 Contractor�s Exempt Purchase

CertificateForm ST-16 Exemption Certificate for

Student TextbooksForm UZ-4 Contractor�s Exempt Purchase

Certificate - Urban EnterpriseZone

Form UZ-5-SBUrban Enterprise Zone ExemptPurchase Certificate

NJ Exemption CertificatesUnder New Jersey law, some items are exemptfrom sales and use tax regardless of who buysthem or how they are used. Examples of exemptitems include most clothing, most items of foodand drink (except when sold in or by restaurantsor similar establishments) and prescription drugs.There are however, items which are exemptfrom tax only under certain conditions. The NewJersey Division of Taxation issues several ex-emption certificates which allow qualified indi-viduals and businesses to purchase taxable mer-chandise and services tax-free. Each exemptioncertificate has its own specific use. In addition,New Jersey sellers and purchasers may acceptand issue the Streamlined Sales and Use TaxCertificates of Exemption (ST-SST) in lieu ofthe exemption certificates issued by theDivision.

Agencies of the Federal government and theUnited Nations as well as the State of New Jer-sey and its political subdivisions are exemptfrom paying sales tax provided the agency mak-ing the purchase supplies the seller with a copyof a valid purchase order or contract signed byan authorized official. See page 14 for furtherinformation.

RegistrationNew Jersey RegistrationAny person or organization engaged in sellingtaxable goods or services in this State must reg-ister with the State for sales tax purposes by fil-ing a business registration application (FormNJ-REG) at least 15 business days before

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starting operations or opening an additionalplace of business in this State. If yourapplication indicates that you will collect salestax or purchase items for resale, you will be senta New Jersey Certificate of Authority (FormCA-1) for sales tax. This certificate is yourauthorization from the State of New Jersey tocollect sales tax and to issue or accept exemp-tion certificates.

The Certificate of Authority will bear your as-signed New Jersey tax identification number,which is usually based on your Federalemployer identification number (FEIN). YourNew Jersey tax identification number willappear on all preprinted forms sent to you by theState. You must include your tax identificationnumber on all exemption certificates you issue.

A Public Records Filing may also be requireddepending upon the type of business ownership.More information is available in the New JerseyComplete Business Registration Package(NJ REG) or by calling 609-292-6400.

Form NJ-REG may be filed online from theDivision of Revenue�s New Jersey BusinessGateway Services Web site at: www.state.nj.us/njbgs/. The Public Records Filing required forcertain businesses may also be completed onlineat the Business Gateway Service�s Web site.(There is a fee associated with the PublicRecords Filing.)

Streamlined Sales Tax CentralRegistrationThe central online registration system developedby the Streamlined Sales and Use Tax Project

can be used as an alternative to the traditionalregistration system currently available throughthe Division of Revenue�s Web site. Registeringthrough this central system is voluntary, unlessthe seller seeks to take advantage of the amnestyprogram (see links below). Central registrationconstitutes registration with every state that is amember of the Streamlined Sales and UseTax Project, including those that adopt theagreement after the seller registers. By regis-tering through this system, sellers agree tocollect and remit tax on all sales sourced to each member state.

Sellers that register through the central systemhave the option of choosing between threemethods of calculating, reporting, and remittingthe tax. These methods involve the selection ofa certified service provider (CSP), a certifiedautomated system (CAS), or using the seller�sown proprietary system. Sellers may also reportand remit based on traditional means, but thereare benefits to utilizing one of the other systemsthat will not be available for traditional systems.Privacy and confidentiality protections are alsoaddressed.

Additional information concerning the centralregistration system, the identification andcertification of CSPs and CASs, and otheradministrative simplifications is available at:www.streamlinedsalestax.org/

The central registration system may be accessedon the Division�s Web site at:www.state.nj.us/treasury/taxation/streamregpro.shtml

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Issuing and AcceptingExemption CertificatesGenerally, both the purchaser issuing an ex-emption certificate and the seller accepting itmust be registered with New Jersey. However,nonregistered purchasers may also issueexemption certificates.

New Jersey Exemption CertificatesThe purchaser must fill out the exemptioncertificate completely, providing the purchaser�sNew Jersey tax identification number, the nameand address of the seller, and any other informa-tion specified on the form. Nonregisteredpurchasers issuing exemption certificates mustprovide one of the following in lieu of a NewJersey tax identification number:

1. Federal employer identification number of thebusiness

2. Out-of-State registration number

Nonregistered purchasers may issue any of thefollowing exemption certificates:

ST-3NR Resale Certificate for Non-New JerseyVendors

ST-4 Exempt Use Certificate

ST-7 Farmer�s Exemption Certificate

ST-8 Certificate of Capital Improvement

ST-16 Exemption Certificate for StudentTextbooks

However, the New Jersey seller accepting anexemption certificate must always be registeredwith New Jersey.

A single exemption certificate may cover addi-tional purchases of the same general type ofproperty by the same purchaser from the samevendor.

Streamlined Certificate of Exemption(ST-SST)The following provisions apply when apurchaser claims an exemption:

1. The seller shall obtain identifying informationof the purchaser and the reason for claiming atax exemption at the time of the purchase.

2. A purchaser is not required to provide asignature to claim an exemption from taxunless a paper exemption certificate is used.

3. The seller shall use the standard format forclaiming an exemption electronically, oncesuch format is adopted by the governingboard.

4. The seller shall obtain the same informationfor proof of a claimed exemption regardlessof the medium in which the transactionoccurred.

5. The seller shall maintain proper records ofexempt transactions and provide them to theState when requested.

6. Use-based and entity-based exemptions willbe administered through a direct pay permit,an exemption certificate, or another meansthat does not burden sellers.

The State shall relieve sellers that follow theserequirements from any tax otherwise applicableif it is determined that the purchaser improperlyclaimed an exemption and to hold the purchaser

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liable for the nonpayment of tax. This relieffrom liability does not apply to a seller whofraudulently fails to collect the tax or solicitspurchasers to participate in the unlawful claimof an exemption.

Good FaithTo act in good faith means to act in accordancewith standards of honesty. In general, registeredsellers who accept exemption certificates ingood faith are relieved of liability for the collec-tion and payment of sales tax on the transactioncovered by the exemption certificate.

In order for good faith to be established, thefollowing conditions must be met:

••••• Certificate must be an official form or aproper and substantive reproduction;

••••• Certificate must be filled out completely andcorrectly; and

••••• Certificate must be dated and include the pur-chaser�s New Jersey tax identification numberor, for a nonregistered purchaser, the Federalemployer identification number or out-of-State registration number.

Improper CertificatesUnless all the good faith conditions are met, theseller may not accept the exemption certificateand must collect sales tax from the purchaserinstead. Sales transactions which are not sup-ported by properly executed exemption certifi-cates are considered taxable sales. The burdenof proof that tax was not required to be collectedis on the seller.

Correcting CertificatesBusinesses have up to ninety (90) days after thesale is completed to obtain a corrected certifi-cate if the original exemption certificate lackedsome necessary information, or if the informa-tion was incorrectly stated.

Retaining CertificatesCertificates must be retained by the seller for atleast four (4) years from the date of the lasttransaction covered by the certificate. Certifi-cates must be in the physical possession of theseller and available for inspection by the Divi-sion of Taxation.

Out-of-State SalesA business that sells taxable items to customersin another state and delivers the items sold out ofState to the purchaser does not collect NewJersey sales tax. The seller�s records shouldshow the out-of-State destination point and theseller should keep evidence of the method ofdelivery to that location such as parcel postreceipts, bills of lading, etc. For more informa-tion on out-of-State sales, request ANJ-10, Out-of-State Sales & New Jersey Sales Tax.

Sales are subject to New Jersey sales tax if theout-of-State customer takes delivery or posses-sion of the items sold in this State at the time ofpurchase. However, if it is a purchase for resale,an out-of-State purchaser that is registered withNew Jersey may issue a New Jersey ResaleCertificate (Form ST-3) and not pay sales tax.A qualified out-of-State vendor may also maketax-exempt purchases in New Jersey of goodsand services purchased for resale. See Resale

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Certificate (Form ST-3) below and ResaleCertificate for Non-New Jersey Vendors (FormST-3NR) on page 8.

Using Exemption CertificatesResale Certificate (Form ST-3)Form ST-3 is used by registered sellers to pur-chase tangible personal property either for resalein its present form or for incorporation intoother property held for sale. When purchasinggoods or services, a retailer or wholesaler issuesForm ST-3 to the wholesaler or manufacturer.This exempts the retailer or wholesaler from thesales tax on the purchase. Sales tax is collectedwhen these items are sold at retail. New Jerseyregistered businesses may issue Form ST-3when purchasing the following:

••••• Inventory intended for resale, rent or lease

ExampleRon, of Ron�s Toy Store, purchases an inven-tory of dolls to sell on a retail basis. Ron is-sues the doll manufacturer a resale certificateinstead of paying sales tax.

Ron also needs display cases for the dolls. Hemay not use a resale certificate when purchas-ing the display cases because they are notintended for resale. He must pay sales tax onthe display cases.

ExampleAllen, of Appliance Rentals, Inc., purchasesinventory to rent on a retail basis. He issueshis supplier Form ST-3 and does not pay salestax on the purchases. Allen will collect salestax from his customers each time they rent anappliance from him.

When items purchased with a resale certificateare taken out of inventory for personal use, thebusiness owner must pay New Jersey use tax onthe items that are not resold. Use tax is com-puted on the purchase price of the items at thecurrent sales tax rate. For more information onuse tax liabilities, request ANJ-7, Use Tax inNew Jersey.

Inventory for resale does not include suppliesand materials purchased by contractors. A con-tractor is someone who works on the land and/or buildings of another. Contractors (e.g., build-ers, landscapers) must always pay sales tax onthe materials and supplies they purchase unlessthe property being worked on belongs to a quali-fied exempt organization, a qualified urban enter-prise zone business, or a qualified housing spon-sor. See Contractor�s Exempt Purchase Certifi-cate (Form ST-13) on page 16 and Contractor�sExempt Purchase Certificate - Urban EnterpriseZone (Form UZ-4) on page 18 for additionalinformation.

NOTE: Fabricator/contractors (i.e., those whobuild, sell, and install items such ascabinets or heating ducts which be-come component parts of real proper-ty) and floor covering dealers followspecial rules for paying sales tax onmaterials and supplies.

Additional information for contractors, includ-ing fabricator/contractors and floor coveringdealers, is contained in Tax Topic BulletinS&U-3, Contractors and New Jersey Taxes,ANJ-4, Landscapers & New Jersey Sales Tax,and ANJ-5, Floor Covering Dealers.

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• Raw Materials which will become compo-nent parts of the finished product

ExampleMidge, a silversmith, purchases silver tomake jewelry. She may issue her supplierForm ST-3 and pay no sales tax since thesilver becomes part of the jewelry she isproducing for resale.

When Midge purchases tools for her business,she may not use a resale certificate since thetools do not become a component part of herfinished product. She must pay sales tax onthe tools.

• Services for resale

ExampleTom�s Gas Station is unable to complete allthe repairs to a customer�s car. Tom sends the

car to a transmission specialist (Ace Trans-mission Repairs) who completes the work andreturns the car to Tom�s Gas Station. Tommay issue a resale certificate to the transmis-sion specialist and pay no sales tax when hepays for the parts and services. When Tombills his customer, he must charge sales taxon the total bill (i.e., the charges for bothparts and labor).

If Tom has the garage�s hydraulic lifts re-paired, he may not issue a resale certificate tothe repairman since the service rendered willnot be resold. Tom must pay sales tax on theprice of the repair.

See page 7 for an illustration of how Tom willcomplete the Form ST-3 Resale Certificate heissued for the repair services purchased fromAce Transmission Repairs.

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ST-3 (11-99, R-10) State of New Jersey DIVISION OF TAXATION

The seller must collect the tax on a sale of taxable property or services

SALES TAX PURCHASER'S NEW JERSEY

CERTIFICATE OF AUTHORITY NUMBER

unless the purchaser gives him a properly completed New Jersey exemption certificate.

FORM ST-3 RESALE CERTIFICATE 222-678-901/000

To be completed by purchaser and given to and retained by seller. See instructions on back. Seller should read and comply with the instructions given on both sides of an exemption certificate.

TO Ace Transmission Repairs Date 5/21/06 (Name of Seller)

163 Holland Ave. Budd Lake NJ 07828

Address City State Zip

The undersigned certifies that:

(1) He holds a valid Certificate of Authority (number shown above) to collect State of New Jersey Sales and Use Tax.

(2) He is principally engaged in the sale of (indicate nature of merchandise or service sold):

Motor fuels, supplies, and auto repairs

(3) The merchandise or services being herein purchased are described as follows:

Transmission repairs (4) The merchandise described in (3) above is being purchased: (check one or more of the blocks which apply)

(a) ! For resale in its present form.

(b) ! For resale as converted into or as a component part of a product produced by the undersigned.

(c) ! For use in the performance of a taxable service on personal property, where the property which is the subject of this Certificate becomes part of the property being serviced or is later transferred to the purchaser of the service in conjunction with the performance of the service.

(5) The services described in (3) above are being purchased: (check the block which applies)

(a) ⌧ By a vendor who will either collect the tax or will resell the services.

(b) ! To be performed on personal property held for sale.

I, the undersigned purchaser, have read and complied with the instructions and rules promulgated pursuant to the New Jersey Sales and Use Tax Act with respect to the use of the Resale Certificate, and it is my belief that the seller named herein is not required to collect the sales or use tax on the transaction or transactions covered by this Certificate. The undersigned purchaser hereby swears (under the penalties for perjury and false swearing) that all of the information shown in this Certificate is true.

Tom�s Gas Station, Inc. NAME OF PURCHASER (as registered with the New Jersey Division of Taxation)

16 Beverly Dr., Budd Lake, NJ 07828 (Address of Purchaser)

By Thomas Abbott President (Signature of owner, partner, officer of corporation, etc.) (Title)

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Resale Certificate for Non-New JerseyVendors (Form ST-3NR)Form ST-3NR is used by qualified out-of-Statevendors to make tax-exempt purchases in NewJersey of goods or services purchased for resale.�Qualified out-of-State vendors� are vendorsthat (1) are not registered with New Jersey,(2) are not required to be registered with NewJersey, and (3) are registered with another state.When a qualified out-of-State vendor carries thegoods away with him from the point of sale, orsends his own vehicle or messenger to pickthem up in New Jersey, the qualified out-of-State vendor may use the Resale Certificate forNon-New Jersey Vendors (Form ST-3NR). TheST-3NR requires the person picking up the mer-chandise to provide acceptable identification(i.e., driver�s license of any state in the UnitedStates, major credit card including photograph,or any identification card which includes a num-ber and a photograph and the bearer�s address).

Qualified out-of-State vendors may also useForm ST-3NR for drop-shipment sales in NewJersey. See Issuing and Accepting ExemptionCertificates on page 3.

Exempt Use Certificate (Form ST-4)Form ST-4 makes it possible for businesses topurchase production machinery, packagingsupplies, and other goods or services withoutpaying sales tax if the way they intend to usethese items is specifically exempt under NewJersey law. The exemption does not apply toservices performed on the property, except asotherwise noted.

In addition to the following qualified purchases,Form ST-4 may also be used by the Federalgovernment, the United Nations, the State ofNew Jersey and any of their agencies as

acceptable proof of exemption from sales taxwhen making cash purchases of $150 or lessinstead of an official purchase order or contract.See Exempt Organization Certificate(Form ST-5) on page 14.

• Advertising for Use Out of State:See Direct-Mail Advertising for Use Out ofState on page 9.

• Certain Aircraft: (a) Aircraft used by an aircarrier as defined by the Civil AeronauticsBoard or the Code of Federal Regulationshaving its principal place of operations withinNew Jersey and engaging in interstate,foreign, or intrastate air commerce. Repairs tosuch aircraft, including the installation ofequipment or machinery and replacementparts and labor therefor, are also exempt. (b)Repairs to aircraft having a maximum takeoffweight of 6,000 pounds or more as certifiedby the Federal Aviation Administration,including machinery or equipment installedon such aircraft and replacement partstherefor. However, the exemption does notextend to purchases of this class of aircraft.

• Certain Buses: Bus companies whose ratesare regulated by the Interstate CommerceCommission or the Department of Transpor-tation may purchase buses for public passengertransportation with Form ST-4. This ex-emption also applies to buses purchased bycommon or contract carriers who transportchildren to and from school. Repair andreplacement parts for qualified buses as well aslabor charges associated with such repairs arealso entitled to exemption.

• Certain Chemicals and Catalysts:Materials used to induce chemical or refiningprocesses in which the materials are an essen-

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tial part of the process but do not become partof the finished product.

• Commercial Fishing Boats: Certain boats,including commercial party boats (headboats)engaged in sport fishing and subject to annualinspection by the U.S. Coast Guard, and ves-sels primarily engaged in commercial fishingor shellfishing. Also exempt are charges forrepairs, alterations, reoutfitting of boats, fuel,maintenance, and charges for supplies (otherthan articles purchased for the original equip-ping of a new ship). Equipment necessary forharvesting fish and shellfish may also be pur-chased with Form ST-4.

• Commercial Motor Vehicles: The purchase,rental, or lease of commercial trucks, tractors,trailers, and vehicles used in combinationwith such, which are registered as required byNew Jersey law and have a gross vehicleweight rating of more than 26,000 pounds orare operated exclusively for the carriage ofinterstate freight pursuant to Federal law areexempt from tax. Repair parts and replace-ment parts are also exempt. The exemptionalso applies to trucks, trailers, and truck-trailer combinations that are used directly andexclusively in the production for sale of tan-gible personal property on farms when thevehicles have a gross vehicle weight rating inexcess of 18,000 pounds and are registeredwith the New Jersey Division of Motor Vehi-cles for farm use. A New Jersey Exempt UseCertificate, Form ST-4, should be issued tothe seller at the time of purchase. Thepurchaser is not required to be registered withthe State to issue Form ST-4 for the purchaseof commercial motor vehicles.

ExampleFred is a commercial trucker. He operates avehicle which is registered in Pennsylvaniaand has a gross vehicle weight rating in excessof 26,000 pounds. When Fred has repairsmade in New Jersey, he may give hismechanic an exempt use certificate instead ofpaying sales tax on the parts. Sales tax must bepaid on the charges for labor. As a qualifiednonregistered purchaser, Fred will enter hisFEIN or out-of-State registration number onForm ST-4. When Fred buys motor oil for histruck, he may not issue an exempt use certi-ficate. Motor oil is a supply, and sales tax mustbe paid at the time of purchase.

• Commercial Printing: Machinery and equip-ment used by businesses engaged in commer-cial printing, publishing of periodicals, books,business forms, greeting cards, or miscellane-ous publishing, typesetting, photoengraving,electrotyping, stereotyping, and lithographicplatemaking, including supplies.

• Communications: Telephones, telephonelines, cables, central office equipment, orstation apparatus, or other machinery orequipment, including comparable telegraphequipment sold to a service provider subjectto the jurisdiction of the Board of PublicUtilities or the Federal CommunicationsCommission, for use directly and primarily inreceiving at destination or initiating, transmit-ting, and switching telephone, telegraph, orinteractive telecommunications service forsale to the general public.

• Direct-Mail Advertising for Use Out ofState: Direct mail prepared within or outsideof New Jersey by a New Jersey direct-mailadvertising or promotional firm for

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distribution out of State. The exemptionapplies to charges for printing or productionof direct mail whether prepared in New Jerseyor shipped into this State after preparationand stored for subsequent shipment to out-of-State customers. The exemption also appliesto direct-mail processing services performedin connection with the distribution of directmail to out-of-State recipients. Direct-mailprocessing services include, but are not lim-ited to, preparing and maintaining mailinglists, addressing, separating, folding, insert-ing, sorting, and packaging direct mail.

ExampleThe A-1 advertising agency, located inTrenton, New Jersey, produced a brochurepromoting the products of the Smooth-TouchLeather Company of Langhorne, Pennsylvania.A-1 also packaged, labeled, sorted, and mailedthe brochure to prospective customers whosenames were selected from a mailing list pre-pared and maintained by the agency. Of the150,000 brochures distributed, 80% weremailed to addresses outside New Jersey.When A-1 bills Smooth-Touch, it mustcharge sales tax on 20% of its fee for printingthe brochures since that is the percentage ofdirect mail that was distributed in NewJersey. A-1 must also charge sales tax on 20%of its fee for the direct-mail processingservices performed in connection withdistributing the brochures. Separately statedcharges for the design and layout of the bro-chure are nontaxable advertising services.

If A-1 performed no direct-mail processingservices, but simply produced the brochuresand sent them all to Smooth-Touch inPennsylvania, A-1 would not charge sales taxon its fee for printing the brochures since the

direct mail was shipped to a location outsideNew Jersey.

• Certain Broadcasting Equipment:Machinery, apparatus, or equipment used di-rectly and primarily in the production ortransmission of radio or television broadcastsby commercial broadcasters operating under abroadcasting license issued by the FederalCommunications Commission or by providersof cable/satellite television program services.The exemption also applies to parts with auseful life of more than one year. Equipmentused in the construction or operation oftowers does not qualify for the exemption.

••••• Film/Video Production: Tangible personalproperty used directly and primarily in theproduction of film or video for sale includingmotor vehicles, replacement parts (withoutregard to useful life), tools, and supplies.Charges for installing, maintaining, servicing,or repairing such property are also exempt.�Film or video� means motion pictures in-cluding feature films, shorts and documenta-ries, television films or episodes, and similarfilm and video productions whether for broad-cast, cable, closed circuit, or unit distribution,and whether in the form of film, tape, or otheranalog or digital medium. The exemptiondoes not apply to any film or video producedby or on behalf of a corporation or other per-son for its own internal use for training, ad-vertising, or other similar purposes.

• Film, Audio/Visual Material: Films, records,tapes, and other types of visual or soundtranscriptions produced for exhibition in thea-ters or for broadcast by radio or televisionstations or networks and not used foradvertising may also be purchased with FormST-4.

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••••• Limousines: Limousines sold to a personlicensed under New Jersey law to operate alimousine service and charges for the repair,including replacement parts, of a limousineoperated by a person so licensed or by a per-son licensed by another state or by the UnitedStates to operate a limousine service.

A �limousine� is defined as (1) a motor vehi-cle registered under the provisions of N.J.S.A.39:3-19.5, or registered as a limousine underthe laws of another state or the United States;and (2) used exclusively in the business ofcarrying passengers for hire to provide prear-ranged passenger transportation at a premiumfare on a dedicated, nonscheduled, charterbasis, that is not conducted on a regular routeand with a seating capacity of no more than14 passengers, excluding the driver.

For purposes of the exemption, a limousinedoes not include any taxicab, hotel or airportshuttle or bus, or bus used solely to transportchildren or teachers to and from school, nordoes it include any vehicle owned and op-erated without charge by a business entity forits own purposes.

••••• Newspaper Advertising: Advertising materi-als to be published in a newspaper or maga-zine, such as display or classified ads.

• Newspaper Production Machinery:Machinery and equipment used directly andprimarily in the production of newspapers,including supplies. This machinery andequipment must be located in the productiondepartment of a newspaper plant.

• Wrapping/Packaging Materials: Wrappingpaper, bags, cartons, tape, rope, twine, labels,nonreturnable containers, and all other packag-ing supplies when the use of the supplies is

incidental to the delivery of merchandise.Storage containers are not considered to bepackaging materials. However, containersused in a farming enterprise are exempt.

ExampleHenry Johnson owns a company (CrestManufacturing, Inc.) that manufactures televi-sion sets. In order to deliver the sets to whole-salers, he must package them in cardboardboxes and seal the boxes with tape. WhenHenry purchases the boxes and rolls of tape,he may issue his supplier an exempt usecertificate. However, he may not purchase thetape dispensers with Form ST-4 as theseitems are not part of the packaging used todeliver the television sets.

See page 13 for an example of how Henrywill complete Form ST-4 when purchasingthe packaging materials necessary to deliverhis television sets.

• Prewritten Software: Sales of prewrittensoftware delivered electronically that is useddirectly and exclusively in the conduct of thepurchaser�s business, trade, or occupation.This exemption does not apply to softwaredelivered by the �load and leave� method.

• Production Machinery: Machinery andequipment used directly and primarily in theproduction of merchandise by manufacturing,assembling, processing, and refining. Theexemption also applies to parts with a usefullife of more than one year, and to imprintingservices performed on such machinery. Theexemption does not apply either to supplies orto tools which are simple, hand-held, manu-ally operated instruments used in connectionwith the production machinery or equipment.

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ExampleJim purchases a turret lathe for use in his ma-chine business. He may issue his supplier anexempt use certificate instead of paying salestax because the lathe will be used directly inthe production of merchandise for sale. How-ever, Jim may not use Form ST-4 to purchasea forklift used exclusively to transport hisfinal product from the warehouse to theloading dock.

• Recycling Equipment: Equipment which isused exclusively to sort and prepare solidwaste for recycling or in the recycling of solidwaste. Equipment used in the process afterthe first marketable product is produced orequipment used to reduce iron or steel wasteto a molten state does not qualify.

• Research and Development: Tangiblepersonal property purchased for use or con-sumption directly and exclusively in researchand development in the experimental orlaboratory sense. Research and developmentin the experimental or laboratory sense meansresearch and development work which has asits goal or purpose:

1. Basic research in a scientific or technicalfield of endeavor; or

2. The advancement of technology byexperimentation in a scientific ortechnical field of endeavor; or

3. The development of new products; or4. The improvement of existing products; or5. The development of new uses for existing

products.

Research and development does not includethe ordinary testing or inspection of materialsor products for quality control, efficiency sur-veys, management studies, consumer surveys,

advertising, promotions, or research in con-nection with literary, historical, or otherscholarly research done in fields other thanscience and technology.

ExampleTrue Alloys, Inc. purchases materials fromwhich it will construct an apparatus that itsresearch department will use to test thestrength of several new alloys the company isdeveloping. True Alloys will issue an exemptuse certificate to the supplier and not paysales tax on the purchase since the materialsare being used directly in laboratory research.However, True Alloys must pay sales taxwhen it buys the special tools and dies neededto construct the apparatus since the tools areonly incidental to research.

• Solar Energy Devices: Devices or systemsspecifically approved by the Board of PublicUtilities, Division of Energy and designed toprovide heating or cooling or electrical ormechanical power by converting solar energyto some other usable energy source, includingdevices for storing solar-generated energy.The purchaser is not required to be registeredwith New Jersey to issue Form ST-4 to pur-chase solar energy devices.

ExampleMary buys a solar energy collector to heat andcool her home. She may issue the supplier anexempt use certificate instead of paying salestax on the collector. However, she may not usean exempt use certificate to purchase insula-tion used to reduce heat loss through her walls,roof, slab, or foundation. Since insulation isnot directly used in the gathering, storing, orconversion of solar energy, sales tax must bepaid when it is purchased.

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ST-4 (2-00, R-12) State of New Jersey DIVISION OF TAXATION

ELIGIBLE NONREGISTERED PURCHASER: SEE INSTRUCTIONS**

SALES TAX PURCHASER'S NEW JERSEY

CERTIFICATE OF AUTHORITY NUMBER

FORM ST-4 222-092-244/000

EXEMPT USE CERTIFICATE To be completed by purchaser and given to and retained by seller.

Please read and comply with instructions on both sides of this Certificate.

TO West End Packaging Date 5/19/06 (Name of Seller) 1166 Homer St. Hackettstown NJ 07840

Address City State Zip

The undersigned purchaser certifies that there is no requirement to pay the New Jersey Sales and/or Use Tax on the purchase or purchases covered by this Certificate because the tangible personal property or services purchased will be used for an exempt purpose under the Sales & Use Tax Act.

The tangible personal property or services will be used for the following exempt purpose:

Delivering television sets.

The exemption on the sale of the tangible personal property or services to be used for the above described exempt purpose is provided in subsection N.J.S.A. 54:32B- 8.15 (See reverse side for listing for principal

exempt uses of tangible personal property or services and fill in the block with proper subsection citation).

I, the undersigned purchaser, have read and complied with the instructions and rules promulgated pursuant to the New Jersey Sales and Use Tax Act with respect to the use of the Exempt Use Certificate and it is my belief that the seller named herein is not required to collect the sales or use tax on the transaction or transactions covered by this Certificate. The undersigned purchaser hereby swears under the penalties for perjury and false swearing that all of the information shown in this Certificate is true.

Crest Manufacturing, Inc. NAME OF PURCHASER (as registered with the New Jersey Division of Taxation)

26 Eleventh Ave. Hackettstown NJ 07840 (Address of Purchaser)

By Henry Johnson President (Signature of Owner, Partner, Officer of Corporation, etc. or qualified officer of Agency)

MAY BE REPRODUCED (Front and Back Required)

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Exempt Organization Certificate(Form ST-5)An Exempt Organization Certificate, FormST-5, is used by a qualified, registered nonprofitorganization to purchase, with its own funds,goods and services for its exclusive use withoutpaying sales tax. Some examples of organiza-tions that may have exempt status are churches,hospitals, veterans� organizations, and fire com-panies. When the organization makes purchases,a photocopy of the Form ST-5 is given to thesupplier in lieu of paying sales tax.

NOTE: State Occupancy Fee/MunicipalOccupancy Tax. Although qualifiednonprofit organizations are exempt fromNew Jersey sales tax under the NewJersey Sales and Use Tax Act, theseorganizations are not exempt from theState occupancy fee or the municipaloccupancy tax. Thus the ST-5 cannot beused to exempt a qualified nonprofitorganization from paying either the feeor the tax.

Form ST-5 is not required for the United Statesor State of New Jersey departments or agencies,or New Jersey political subdivisions or publicschools to make tax-exempt purchases. Paymentfrom government funds with the official letter-head or purchase order signed by a qualifiedofficer is sufficient proof for the seller of theexemption from paying the sales tax. For cashpurchases of less than $150, a Form ST-4,Exempt Use Certificate, signed by a qualifiedgovernment or school official is satisfactory.There is an exemption from paying the Stateoccupancy fee and the municipal occupancy taxfor agencies and instrumentalities of the UnitedStates and the State of New Jersey, and New

Jersey political subdivisions and public schools.Documentation provided to exempt purchasesfrom sales tax is also sufficient to provideexemption from the occupancy fee/tax.

For more information on exempt organizationcertificates, request brochure M-5014, ExemptOrganization Certificate Form ST-5.

Direct Payment Permit(Forms ST-6A and ST-6X)The holder of a valid Regular Direct PaymentPermit may issue Form ST-6A at the time ofpurchase in those cases where the taxable statusof the purchase is not known at the time of pur-chase. (The holder of a valid Audit Direct Pay-ment Permit may issue Form ST-6X at the timeof purchase according to the terms of thetaxpayer�s audit agreement governing use of thecertificate.)

To obtain a Regular Direct Payment Permit,complete an Application for Direct PaymentPermit, Form ST-6B, and mail to:

NEW JERSEY DIVISION OF TAXATION

PO BOX 264TRENTON NJ 08695-0264

An application for a Regular Direct PaymentPermit may be filed only by registered busi-nesses that acquire tangible personal property orservices under circumstances which make itimpossible at the time of purchase to determinethe taxable status of the property or services.

NOTE: The holder of a Regular Direct PaymentPermit may not use Form ST-6A to pur-chase goods that are clearly taxable atthe time of purchase, such as office equip-ment and supplies, repair services, etc.

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A list of Direct Payment Permit Holders isavailable at:www.state.nj.us/treasury/taxation/taxinfo.shtml

Farmer�s Exemption Certificate(Form ST-7)Farmers, including nursery owners and green-house owners, use this exemption certificate topurchase goods and certain services used directlyand primarily for the production, handling, andpreservation for sale of agricultural or horticul-tural commodities. The exemption applies onlyto purchases by the farmer; it does not apply topurchases by contractors or others doing workfor the farmer. A farmer does not need to beregistered with the State to issue Form ST-7.

The exemption does not apply to purchases ofautomobiles, energy, or materials which will beincorporated into a building or structure. How-ever, farmers may issue Form ST-7 to purchasematerials to construct a silo, greenhouse, grainbin, or manure handling facility that is to beused directly and primarily in the production,handling, or preservation of farm commoditiesfor sale. This exception for certain constructionmaterials applies only to purchases by farmers;it does not apply to purchases by contractors.

For more information about exempt purchasesof certain commercial vehicles, includingcertain vehicles registered for farm use, seeCommercial Motor Vehicles on page 9.

Certificate of Capital Improvement(Form ST-8)A Certificate of Capital Improvement, FormST-8, is issued by a property owner to a contrac-tor when work is done to real property whichresults in a capital improvement. A capital im-provement occurs when real property (land or

buildings) is improved in a way that increasesits capital value or useful life. A property ownerissues Form ST-8 to the contractor and does notpay sales tax on the labor portion of the contrac-tor�s bill. Sales tax is paid on the materials at thetime of purchase by the contractor or by anyother individual making the purchase. A prop-erty owner does not need to register with NewJersey to issue Form ST-8.

For more information on capital improvements,request Tax Topic Bulletin S&U-2, Sales Taxand Home Improvements.

Motor Vehicle Sales and Use TaxExemption Report (Form ST-10)Form ST-10 is used by registered motor vehicledealers to report sales tax exemptions to theDivision for nonresidents who have purchasedand taken delivery of motor vehicles in this State.The purchaser signs Form ST-10 certifying thathe/she is a nonresident and meets all the require-ments for claiming a sales tax exemption. SeeGood Faith on page 4.

NOTE: If a person has homes in both NewJersey and another state (e.g., owns ahouse in New Jersey, but spends thewinters in Florida), he or she is notentitled to a sales tax exemption as a�nonresident.�

For more information on sales tax and motorvehicles, see the New Jersey Sales & Use TaxGuide for Automobile Dealers, available at:www.state.nj.us/treasury/taxation/pdf/njcar.pdf

Aircraft Dealer Sales and Use TaxExemption Report (Form ST-10-A)Form ST-10-A is used by registered aircraftdealers to report exempt sales of airplanes.When a nonresident comes into New Jersey and

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purchases an airplane, no sales tax is due pro-vided the purchaser will base the airplane inanother state. If the nonresident purchaser basesthe airplane in New Jersey within 12 months ofthe date of sale, the exemption is voided andsales tax plus penalty and interest charges aredue on the purchase price of the aircraft.

Vessel Dealer Sales and Use TaxExemption Report (Form ST-10V)Form ST-10V is used by registered vesseldealers to report exempt sales of boats. An ex-empt sale is one made to a New Jersey residentwho purchases the boat in New Jersey for useoutside New Jersey and, as part of the sales con-tract, the dealer transports the boat out of Stateor the dealer arranges to have the boat trans-ported out of State. Sales tax is due if the resi-dent purchaser does not pay sales or use tax onthe boat in another state and then subsequentlybrings the boat back to New Jersey for use inthis State, even on a limited basis.

Also exempt is a sale made to a nonresidentwho purchases the boat in New Jersey with theintention of basing it in his or her state of resi-dence. This exemption applies whether the non-resident purchaser takes possession of the boatin New Jersey or contracts with the dealer tohave it delivered out of State. If the nonresidentpurchaser bases the boat in New Jersey within12 months of the date of sale, the exemption isvoided and sales tax plus penalty and interestcharges are due on the purchase price of theboat. The exemption does not apply if the non-resident purchaser maintains a summer home orother place of abode in New Jersey.

ExampleJames T. Anderson of Pennington, New Jersey,purchased a 32-foot motorized sailboat fromLuxury Crafts LTD, a registered vessel dealerlocated in Toms River, New Jersey. The salescontract for Jim�s new boat specifies that thevessel will be transported by Luxury Crafts to amarina in Boca Raton, Florida, and deliveredthere to Mr. Anderson for use in that state. Lux-ury Crafts will complete a Vessel Dealer Salesand Use Tax Exemption Report (Form ST-10V)and not charge sales tax on the transaction. Mr.Anderson also signs the Form ST-10V certifyingthat the requirements for the sales tax exemptionhave been met.

Contractor�s Exempt PurchaseCertificate (Form ST-13)Form ST-13 is used by registered contractors topurchase materials, supplies, or services for usein performing work on the real property of aqualified exempt organization (an organizationwhich holds a valid New Jersey Exempt Organi-zation Certificate, Form ST-5); or for a Federalor New Jersey governmental entity; or for aqualified housing sponsor. The contractor pro-vides Form ST-13 to his supplier and does notpay sales tax on the purchase price provided thematerials will be entirely used or consumed onthe job contracted for by the exempt organiza-tion. Form ST-13 must include the exempt orga-nization number shown on Form ST-5 or, if thework is being done for a qualified governmentagency, the agency�s purchase order number.

Form ST-13 may not be used to rent machineryor equipment or to purchase tools or materialssuch as hammers and tarpaulins (rain covers)which may be used on other jobs. For more

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information on Contractor�s Exempt PurchaseCertificates, request Tax Topic Bulletin S&U-3,Contractors and New Jersey Taxes.

Exemption Certificate for StudentTextbooks (Form ST-16)The sale of textbooks for use by students in aschool, college, university, or other educationalinstitution, approved as such by the Departmentof Education, is exempt from sales tax. Whenthe educational institution declares that the booksare required reading for school purposes, the pur-chaser may issue the vendor Form ST-16 and notpay sales tax. The purchaser is not required to beregistered with New Jersey to issue Form ST-16.

Urban Enterprise Zone ExemptPurchase Certificate (Form UZ-5)The UZ-5 exemption certificate is only appli-cable to purchases made prior to July 15, 2006,regardless of the effective dates printed onthe certificate. It has been replaced with theUZ-5-SB, issued to small qualified businesses(see below) that can continue to claim theexemption at the time of purchase.

Urban Enterprise Zone ExemptPurchase Certificate (Form UZ-5-SB)Under the Urban Enterprise Zones Act, a quali-fied business is eligible for an exemption fromsales and use tax on purchases of tangiblepersonal property (other than motor vehicles andparts and supplies) and services (except tele-communication services) for exclusive use orconsumption on the premises of the qualifiedbusiness at its zone location. Tangible personalproperty and services do not include gas, elec-tricity, prepared foods and beverages, rooms, oradmissions. A qualified business must pay thefull rate of tax on purchases of these items.

However, there is an exemption for purchases ofenergy and utility service by a qualified UrbanEnterprise Zone manufacturing business em-ploying at least 250 people within the zone, atleast 50% of whom were employed directly inthe manufacturing process, for exclusive use atthe zone location. Such businesses must beapproved by the New Jersey Commerce, Eco-nomic Growth & Tourism Commission andissued Form UZ-6 in order to document theexemption.

Only personal property controlled by the quali-fied business qualifies for the exemption. Tan-gible personal property generally includes itemssuch as construction materials, office supplies,office or business equipment, office and storefurnishings, trade fixtures, cash registers, etc.Exempt services performed for a qualifiedbusiness at its zone location include items suchas janitorial and maintenance services, installing,maintaining, or repairing tangible personalproperty used in business, etc. The exemption isnot available to sellers located within UrbanEnterprise Zone-impacted business districts.

Effective July 15, 2006, procedural amendmentsto the law require sales tax to be collected onsales made to qualified Urban Enterprise Zonebusiness, unless the business is a �small qualifiedbusiness� (annual gross receipts less than $1million in the prior annual tax period.) A quali-fied business other than a small qualified busi-ness must pay the tax and apply for a refund.

In order to document the exemption betweenJuly 15, 2006, and September 30, 2006, theDivision has published a new temporary exemp-tion certificate (Form UZ-5-SB (Temporary)).Sellers must obtain the temporary certificatefrom any business claiming the tax exemption at

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the point of sale. Sellers can no longer rely onthe qualified business�s prior exemption certifi-cate (UZ-5). Form UZ-5-SB (Temporary) is aself-executing form and purchasers are requiredto certify that they meet the annual gross re-ceipts threshold of less than $1 million in theprior tax period. The effective dates of FormUZ-5-SB (Temporary) are July 15, 2006, toSeptember 30, 2006.

On and after October 1, 2006, small qualifiedbusinesses will be issued Form UZ-5-SB whichwill be administered in the same manner as theoriginal UZ-5 form. Again, businesses which donot qualify as a small qualified business will berequired to pay tax and apply for a refund.

Effective July 15, 2006, the UZ-5 exemptioncertificate is no longer valid, regardless of theeffective dates printed on the certificate. Aqualified business that is not a small qualifiedbusiness and therefore cannot issue the newUZ-5-SB (Temporary) must pay the sales tax atthe point of sale, but may apply to the Divisionfor a refund within one year of the sale.

More information on the Urban EnterpriseZones Program is available on the New JerseyCommerce, Economic Growth & TourismCommission�s Web site at:www.state.nj.us/commerce/econ_uez_program.shtml

Contractor�s Exempt PurchaseCertificate � Urban Enterprise Zone(Form UZ-4)A contractor issues a properly completed Con-tractor�s Exempt Purchase Certificate - UrbanEnterprise Zone (Form UZ-4) to suppliers whenpurchasing materials that will be incorporatedinto real property, supplies that will be entire-ly used or consumed on the job, or services foruse in performing work for a qualified businessat the business�s real property in an Urban En-terprise Zone. The exemption does not apply toequipment that the contractor rents or leases toperform work for a qualified business. The con-tractor can only obtain Form UZ-4 from a quali-fied business. The contractor also issues copiesof Form UZ-4 to subcontractors for their use inmaking exempt purchases for the job. Subcon-tractors must attach their name, address, andcertificate of authority number (in addition tothe name, address, and number of the contrac-tor) and then give the UZ-4 and attachments totheir vendors. Finally, this certificate is notavailable to vendors located within Urban Enter-prise Zone-impacted business districts.

For more information on exemption certificatesused by qualified businesses located within anUrban Enterprise Zone, see Urban EnterpriseZone Tax Questions and Answers, available at:www.state.nj.us/treasury/taxation/uezsbafaqs.shtml

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For More Information

By Phone• Call the Division of Taxation�s Customer

Service Center at 609-292-6400

• TTY equipment users call 1-800-286-6613(within NJ, NY, PA, DE, and MD) or609-984-7300 (anywhere)

Online• Division of Taxation Web site:

www.state.nj.us/treasury/taxation/

• E-mail: [email protected]

• Subscribe to NJ Tax E-News, the Divisionof Taxation�s online information service, at:www.state.nj.us/treasury/taxation/listservice.shtml

In WritingNew Jersey Division of TaxationInformation and Publications BranchPO Box 281Trenton, NJ 08695-0281

• Call NJ TaxFax at 609-826-4500 from yourfax machine�s phone

• Visit the Division of Taxation�s Web site:www.state.nj.us/treasury/taxation/

Order Forms and Publications• Call the Forms Request System at

1-800-323-4400 (Touch-tone phones withinNJ, NY, PA, DE, and MD) or609-826-4400 (Touch-tone phones anywhere)