Watch dealing in New Jersey: licensing, records, and tax

Summary

New Jersey has no state licence for watch or secondhand dealers. The licensing is municipal: N.J.S.A. 40:52-1 lets a town license pawnbrokers, junk dealers and itinerant vendors, and stores selling "goods and chattels of every kind" — and Newark and Jersey City both do.

What the state does impose is unusual. It has a 1939 statute about second-hand watches by name, which reaches every pre-owned watch, steel included. It has a used-jewelry law in the criminal code with records, a weekly police copy and a holding period — and nobody can tell you yet whether a watch is "jewelry" under it. It has a bulk-value precious metals regime that is very likely not about you. And it has 6.625% sales tax.

If you trade in Newark or Jersey City, the city pages carry the licence that actually gates you: Newark and Jersey City.

The second-hand watch law

N.J.S.A. 45:22-35 to -40 (L.1939, c.55) applies to anyone engaged in the business of buying or selling watches. The official statutes show no amendment since 1939. Four duties:

• The tag. A second-hand watch you offer, display or hold for sale carries a tag with the words "second-hand", placed so they are in plain sight at all times (45:22-35).
• The invoice. On sale, the buyer gets a written invoice bearing the words "second-hand watch" in bold letters, larger than any other writing on it (45:22-36). It gives vendor and buyer names and addresses, the date, the maker, and the case and movement serial and identifying numbers — and it says so if those numbers were erased, defaced, removed, altered or covered. That is a concrete template requirement: check your invoice before you use it.
• The duplicate. Keep a duplicate of every invoice for at least five years, open during business hours to the county prosecutor (45:22-36).
• The advertising. Anyone who advertises or displays a second-hand watch "in any manner" must state clearly that it is a second-hand watch (45:22-37). Whether that reaches online listings, and whether "pre-owned" is clear enough, has not been tested.

A violation is a misdemeanour: a fine of up to $500, up to 100 days' imprisonment, or both (45:22-39). Pawnbroker's auction sales and unredeemed pledges are excluded (45:22-40).

What makes a watch "second-hand"

The definition in 45:22-38 has three limbs, and none of them is about metal:

1. the watch, or its case or movement, was previously sold to someone buying it for use rather than resale;
2. its case or movement serial numbers or identifying marks have been erased, defaced, removed, altered or covered — a replaced or re-stamped caseback is enough; or
3. its movement is more than five years old and has been repaired by anyone, the vendor included. Cleaning and oiling, or recasing the movement in a new case, is not a repair.

The third limb is the one that surprises people: new-old-stock with a repaired movement over five years old is second-hand even if no consumer ever owned it.

The used-jewelry law — and whether a watch is jewelry

N.J.S.A. 2C:21-36 (P.L.2009, c.214) applies to anyone engaged in the business of retailing, wholesaling, or smelting jewelry who buys used or secondhand jewelry. For every such purchase it requires you to:

• keep for five years the seller's name, address and telephone number, a descriptive list with any identifying characteristics, digital photographs of the items, and a photocopy of the seller's ID;
• check ID — a valid State or federal driver's licence, or another government-issued ID bearing a photograph;
• deliver weekly to the police department where your business is a copy of the record of everything bought the preceding week; and
• hold each piece at least 10 business days after that weekly copy is delivered.

Because the hold runs from the weekly delivery, not the purchase, a piece bought on a Monday and reported the following week can be tied up for about three weeks. A municipal ordinance adopted before January 16, 2010 may set a longer hold.

Two further sections bite. Anyone who buys used jewelry — business or not — must immediately report to law enforcement a delivery or sale that would make a reasonable person believe the piece was probably stolen (2C:21-39). And if a covered buyer fails to comply with 2C:21-36, the knowledge needed for a receiving-stolen-property charge is presumed (2C:21-38). That presumption is the most consequential sentence in New Jersey's regime.

The law does not apply to licensed pawnbrokers, to "sales made through an Internet website", or to a retailer whose primary business is not jewelry and who buys used jewelry on no more than three days a year.

The open question is the word "jewelry", which the statute does not define. A gold or gem-set watch is the strongest case for being caught, a steel sports watch the weakest; neither is settled. The asymmetry is worth seeing clearly: complying means records many dealers keep anyway, while not complying — if watches turn out to be jewelry — brings the 2C:21-38 presumption. It is the first question on the attorney list below.

Bulk-value precious metals buyers

N.J.S.A. 51:6A applies to a person in the business of buying precious metals — gold, silver, platinum, palladium and their alloys — who buys them on the basis of bulk value from someone not in the business of selling them. Such a buyer must register with the police of the municipality before buying (51:6A-2), issue serialized receipts, keep digital photographs, and keep the metals in the form bought for at least two business days, minimum 48 hours (51:6A-1(g)).

It is a scrap-and-melt regime. A dealer who prices a watch by brand, model and condition rather than metal weight is likely outside it, though "bulk value" is not defined. Towns may adopt rules stricter than the Act (51:6A-7).

Sales tax

New Jersey's Sales Tax is 6.625% on most tangible personal property. Every vendor — seasonal and one-time vendors at a show included — must register at least 15 business days before starting business. Registration produces a Certificate of Authority (Form CA-1), which authorises you to collect tax and to issue or accept exemption certificates, and which must be displayed where customers can see it. An out-of-state dealer heading to a New Jersey watch show needs to have done this three weeks out.

Remote sellers must register, collect and remit once their sales delivered into New Jersey exceed $100,000, or number 200 or more separate transactions, in the current or prior calendar year. The transaction limb can catch a low-revenue seller of straps or inexpensive watches. A marketplace collects and remits on every marketplace sale whether or not the seller is over either threshold.

Urban Enterprise Zones. Newark and Jersey City are both on the state's UEZ list. A certified seller inside a zone charges 3.3125%, but only on sales that originate and are completed by the buyer in person at the zone premises. Mail-order, telephone and similar sales delivered within New Jersey are taxed at the regular rate — so a watch you ship to a New Jersey buyer does not get the reduced rate. UEZ businesses file Form UZ-50 monthly, by the 20th. Whether your address is inside a zone, and whether you are certified, are separate questions.

Business registration

Registration is two filings with the Division of Revenue and Enterprise Services. First the Certificate of Formation — $100 for any for-profit entity. Then Form NJ-REG, the tax and employer registration. With both done you can obtain a Business Registration Certificate (BRC). For an LLC, the alternate name registration is $50 and the Annual Report $75.

Cities

Because the state does not license dealers, the licence that governs your day-to-day is your town's — and New Jersey towns may be stricter than the state on precious metals. The two cities covered so far both reach watch dealers, and both hold stock longer than you might expect: see Newark and Jersey City.