Rev. 12/17
About New Jersey Taxes
Arts & Crafts Businesses & New Jersey Sales Tax
Publication ANJ-11
Introduction
Sellers doing business in New Jersey must comply with the State’s tax laws whether they sell their
products from shops, at flea markets, at craft shows, by mail, or from home. All sellers, even seasonal
businesses, are required to register with the State for tax purposes at least 15 business days before
starting business. To fulfill the registration obligation, you must file a Business Registration
Application (Form NJ-REG
).
You can file Form NJ‑REG online through the Division of Revenue and Enterprise Services’ NJ Business
Gateway Services website. If your application indicates that the business will collect Sales Tax or
purchase materials for resale, the Division of Revenue and Enterprise Services will send you a New
Jersey Certificate of Authority (Form CA-1), which is your authorization to collect New Jersey Sales
Tax and accept exemption certificates. You must be registered with New Jersey to accept exemption
certificates. You also may be required to make a Public Records Filing depending on the type of
business ownership. More information on Public Records Filing is available in the New Jersey Complete
Business Registration Package (NJ-REG) or by calling 609-292‑9292.
Sales and Use Tax Rate
Effective January 1, 2018, the New Jersey Sales and Use Tax rate decreases from 6.875% to 6.625%. The
State reduced the tax rate from 7% to 6.875% in 2017. Additional information about the Sales and Use
Tax rate change is available online
.
Sales
New Jersey imposes Sales and Use Tax on every retail sale of tangible personal property or digital
property and on the sale of certain services within this state, except as otherwise provided in the Sales
and Use Tax Act (e.g., most clothing and footwear are exempt
). Arts and crafts business owners
registered in New Jersey who sell taxable items must collect Sales Tax on all taxable transactions and
send it to New Jersey.
Retail Sales. Sellers must collect Sales Tax on the purchase price, including delivery charges, of all
taxable items sold if the retail customer (end user) or someone acting for the customer picks up the
merchandise in New Jersey or asks to have it shipped to a New Jersey address, even if the items are
later shipped out of state.
Exception:
Delivery to a package shipper or freight company located in New
Jersey that will, in turn, ship the item out of state. Items shipped to a destination outside New Jersey
are generally not subject to New Jersey Sales Tax. For more information, see publication ANJ-10
,
Out-
of-State Sales & New Jersey Sales Tax.
Publication ANJ–11 About New Jersey Taxes:
Arts & Crafts Businesses
Rev. 12/17
Sales for Resale to Other Businesses. If another business purchases your product for
resale
, the
purchaser is not considered to be the end user and no tax is due if the purchaser provides a fully
completed Resale Certificate (Form ST-3
) or Streamlined Sales and Use Tax Agreement Certificate
of Exemption (Form ST-SST). If the purchaser does not provide the seller with an exemption
certificate, the seller
must
collect Sales Tax.
Qualified Out-of-State Sellers. Qualified out-of-state sellers may make tax-exempt purchases in New
Jersey of tangible personal property, specified digital products, or services purchased for resale. When
the qualified out-of-state seller picks up the property from the seller’s New Jersey location, or sends its
own vehicle or messenger to pick up the item(s) in New Jersey, the qualified out-of-state seller may use
the Resale Certificate for Non-New Jersey Sellers (Form ST-3NR
) or Streamlined Sales and Use Tax
Agreement Certificate of Exemption (Form ST-SST). “Qualified out-of-state sellers” are sellers that (1)
are not registered with New Jersey (2) are not required to be registered with New Jersey
and
(3) are
registered with any other state. An out-of-state seller may not use an
ST-3NR unless the purchase
qualifies for exemption under New Jersey law.
If a qualified out-of-state business that is not registered in New Jersey makes a purchase and asks to
have the product shipped directly to its customer in New Jersey, the out-of-state business may use the
resale certificate of its home state. This drop-shipment transaction is the only time a New Jersey seller
may accept an exemption certificate of another state. The out-of-state business also may use Form ST-
3NR, Form ST-SST, or Uniform Sales and Use Tax Certificate – Multijurisdiction
published by the
Multistate Tax Commission. If no resale certificate is provided, the seller must charge New Jersey Sales
Tax. For more information on drop shipments, see
ANJ-10,
Out-of-State Sales & New Jersey Sales Tax.
Exempt Organizations. Many churches, hospitals, volunteer fire departments, and other nonprofit
organizations are exempt from paying Sales Tax on items purchased for the exclusive use of the
organization. The Division of Taxation issues an Exempt Organization Certificate (Form ST-5) to
those organizations that qualify for exempt status. When selling products to these organizations, the
seller must obtain a photocopy of their ST‑5 certificate to document why Sales Tax was not collected.
Lessons. Fees for lessons and instructions are not taxable. If materials or supplies are provided to the
students as part of the lessons without a separate charge, the entire fee for the lessons (including
materials or supplies) is nontaxable. The instructor must pay Sales Tax on the materials and supplies
when they are purchased. However, if there is a separate charge for materials and supplies, the
instructor must collect Sales Tax from the students on those items. In this case, the instructor may
provide the supplier with a fully completed resale certificate instead of paying Sales Tax when the items
are purchased.
For more information on issuing and accepting exemption certificates, see Tax Topic Bulletin S&U-6
,
Sales Tax Exemption Administration.
Publication ANJ–11 About New Jersey Taxes:
Arts & Crafts Businesses
Rev. 12/17
Purchases
Materials. When sellers buy materials that will become a component part of the products they make
and sell, they may use a fully completed resale certificate instead of paying Sales Tax.
Supplies and Tools. Sales Tax must be paid on purchases of supplies and tools. Items such as paint
brushes, knives, scissors, tools, detergents, and disposable paper products for business use differ from
materials because they do not become component parts of the finished product.
Example: Amy designs and makes hand‑crafted wooden toys and sells them at a local flea market. She
may issue a fully completed resale certificate to her New Jersey supplier when she buys the wood, nails,
string, paint, and glue that ultimately become part of the toys she sells. She does not pay Sales Tax on
these materials. However, Amy may not use a resale certificate when purchasing the paint brushes and
scissors she needs to make her toys since the tools do not become component parts of her finished
product. She must pay Sales Tax on the tools.
Packaging/Wrapping. Nonreturnable items used to contain, protect, wrap, and ship products to
customers are exempt from New Jersey Sales Tax. To qualify for exemption, the packaging items must
be incidental to the delivery of the products and an Exempt Use Certificate (Form ST-4
) or
Streamlined Sales and Use Tax Agreement Certificate of Exemption (Form ST-SST) must be
provided to the supplier of the packaging items.
Production Equipment. Some machinery and equipment used directly and primarily in the production
of tangible personal property by manufacturing, processing, assembling, or refining also are exempt.
For example, a lathe used to make hand‑crafted toys or a sewing machine used by a clothing
manufacturer are types of exempt production equipment. By issuing Form ST-4 or Form ST-SST to
the supplier, the purchaser would pay no Sales Tax on qualified equipment. For more information on
exempt production equipment, see Tax Topic Bulletin S&U-6
,
Sales Tax Exemption Administration.
Use Tax
Out-of-State Purchases. If a seller buys supplies or tools outside New Jersey for use in this state, the
seller owes Use Tax to New Jersey
if no Sales Tax was paid on the purchase.
If sales tax was paid to
another state at a rate lower than the current New Jersey Sales and Use Tax rate, the seller owes Use
Tax on the difference between the amount of Sales Tax that would have been due in New Jersey and
the amount of sales tax paid in the other state. This provision of the law protects home-state sellers
from unfair competition. If materials that become a component part of the seller’s product are
purchased out of state, no Use Tax is due to New Jersey. For more information on New Jersey Use Tax,
see publication ANJ-7
,
Use Tax in New Jersey.
NOTE: If a seller buys materials with a resale certificate and decides to use them for personal purposes
(and not to resell them), Use Tax must be paid to New Jersey at the rate in effect when the
items were removed from inventory.
Publication ANJ–11 About New Jersey Taxes:
Arts & Crafts Businesses
Rev. 12/17
Records & Returns
Records. The seller must keep all resale certificates for at least four years from the date of the last
transaction covered by the certificate. Certificates must be in the physical possession of the seller and
available for inspection by the Division of Taxation. The seller should keep copies of invoices and other
records, such as those that verify out-of-state deliveries (shipping receipts, bills of lading, etc.), for at
least four years in case of an audit.
Sales Tax Returns. Every three months a New Jersey Sales and Use Tax Quarterly Return (
Form ST-
50) must be filed, even if no Sales and Use Tax was collected in that particular quarter. In addition,
sellers that collected more than $30,000 in New Jersey Sales and Use Tax during the preceding
calendar year must file a Sales and Use Tax Monthly Remittance Statement (
Form ST-51) for the first
and/or second month of each calendar quarter (January, February, April, May, July, August, October,
and November) and make the required payment if the amount of tax due for that month exceeds $500.
If $30,000 or less in New Jersey Sales and Use Tax was collected during the preceding calendar year,
Form ST‑51 is not required regardless of the amount of tax due for that particular month. Credit is
taken on the quarterly return for any payment(s) made in months one and/or two of the quarter. For
more information, see Tax Topic Bulletin S&U-7
,
Filing Sales and Use Tax Returns.
Seasonal Businesses. Sellers who intend to do business only during particular seasons should indicate
on the Business Registration Application (Form NJ-REG
) the months in which they will be doing
business. They must file the required quarterly returns and monthly remittance statements for the
period the business is open.
For More Information
Contact the Division’s Customer Service Center at 609-292-6400, or email us. Many State tax forms and
publications are available on our website.
