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New Jersey Division of Taxation                                                                 New Jersey Sales Tax Guide

                  AX                                       New Jersey Sales Tax Guide
                  OPIC
                                                                                                               Bulletin S&U-4
Contents
Introduction ........................................................... 1
                                                                               Introduction
   Important Changes............................................ 1             This bulletin has been designed as a guide to
   Streamlined Sales and Use Tax Agreement ....... 3                           New Jersey sales tax and the taxability of cer-
Sales Tax Law ........................................................ 3       tain items and services sold at retail. The lists
   Urban Enterprise Zones .................................... 3               of taxable and exempt items given throughout
   Salem County Reduced Sales Tax ..................... 4
Use Tax .................................................................. 4   this publication are not meant to be all-
Grocery, Drug, and Household Items ................... 5                       inclusive. If after reading this bulletin you are
Services ................................................................ 14   unsure of whether or not an item is taxable,
Coupons ............................................................... 18     contact the New Jersey Division of Taxation.
Prepared Food ..................................................... 19         (For information on contacting the Division of
Newspapers, Magazines, and Books ................... 19
Digital Property .................................................. 20         Taxation see page 29 of this publication.)
Clothing and Footwear ....................................... 20
   Exempt Clothing and Footwear ...................... 20                      Important Changes
   Protective Equipment ...................................... 21
   Sport or Recreational Clothing and                                          P.L. 2006, c.44 made the following changes to
      Footwear/Equipment .................................. 21                 the Sales and Use Tax Act.
   Accessories ...................................................... 22
   Yarn Goods, Yarns, Sewing Equipment,                                        Effective July 15, 2006
      and Supplies ................................................ 22         The sales and use tax rate increased from 6% to
Leasing ................................................................ 23    7% on all retail sales of taxable merchandise or
Claim for Refund of Sales Tax ............................. 23                 services.
Businesses Collecting Sales Tax:
   Registering a Business .................................... 24              Effective October 1, 2006
   Keeping Records ............................................. 24
   Bookkeeping Methods ..................................... 24                Sales and use tax was extended to charges for
   Accounting Methods ....................................... 24               the following services and property, including
   Sales Records .................................................. 25         the new category “digital property”:
   Sales and Use Tax Returns .............................. 25
                                                                               • Space for storage;
   Exemption Certificates .................................... 25
   Sales to Government Agencies ........................ 26                    • Tanning services;
   Out-of-State Sales ........................................... 26           • Massage services, unless prescribed by a
   Retention of Records ....................................... 27
   Microfilm Records ........................................... 27              doctor;
   Data Processing Records ................................ 27                 • Tattooing, including permanent body art and
Other Taxes and Fees:                                                            permanent cosmetic makeup;
   Atlantic City Luxury Sales Tax........................ 27
   Cape May County Tourism Sales Tax ............. 27                          • Investigation and security services, including
   Domestic Security Fee .................................... 28                 detective services, patrol services, armored car
   Hotel/Motel Occupancy Fee and                                                 services, and security system services;
      Municipal Occupancy Tax .......................... 28
   Motor Vehicle Tire Fee.................................... 28               • Information services;
   Tobacco Products Wholesale Sales
      and Use Tax .................................................. 28


Rev. 12/06                                                                                                                         1
Bulletin S&U-4



•   Limousine services originating in this State,      •   Laundering. The sales tax exemption for laun-
    except as provided in connection with funeral          dering, dry cleaning, tailoring, weaving, and
    services;                                              pressing is limited specifically to providing
•   Membership fees for athletic, sporting, health         those services to clothing. The exemption does
    and fitness, and shopping clubs and                    not apply to items such as draperies, carpets,
    organizations;                                         blankets, comforters, slipcovers, tablecloths,
                                                           napkins, dust cloths, mats, mops, industrial
•   Parking, storing, or garaging a motor vehicle,
    excluding charges for residential parking, cer-        wiper cloths, fender covers, bed linens, hospi-
                                                           tal linens, table linens, linen supply towels, and
    tain employee parking, municipal metered
                                                           other cloths.
    parking, and parking subject to any other law
    or ordinance; and                                  •   Floor Covering Installation Services. The
•   Digital property, which means electronically           exemption for the installation of floor cover-
    delivered music, ringtones, movies, books,             ing that resulted in capital improvement to real
    audio and video works, and similar products            property is eliminated. Thus, the labor charge
    where the customer is granted a right or license       to install floor covering (e.g., carpeting, lino-
    to use, retain, or make a copy of such item; and       leum, tile, and padding) is now taxable. Busi-
•   Magazines and periodicals, except those sold           nesses that provide floor covering installations
    by subscription and membership periodicals             are still treated as contractors under the law.
    which are distributed by nonprofit                 •   Landscaping Services. The exemption for
    organizations.                                         landscaping services that result in a capital
The taxability of certain property and services            improvement to land was eliminated. Labor
was changed as follows:                                    charges for landscaping services, such as seed-
                                                           ing, sodding or grass plugging of new lawns;
•   Software. The current exemption for pre-               planting trees, shrubs, hedges, plants; and
    written software delivered electronically is           clearing and filling land are now taxable.
    limited to electronically delivered software
    that is used directly and exclusively in the       For more information on changes effective Octo-
    conduct of the purchaser’s business, trade or      ber 1, 2006, visit the Division’s Web site at:
    occupation. Thus, electronically delivered         www.state.nj.us/treasury/taxation/salestaxbase.shtml
    software sold to individuals is subject to tax.    The law also made two technical changes. First,
•   Delivery Charges. The law modified the ex-         it included a provision that clarified the sales and
    emption for delivery charges that are separately   use tax collection responsibility of a corporation
    stated from the purchase price of an item on the   that does not maintain a place of business in New
    invoice, bill, or similar document given to the    Jersey but, through another corporation that is re-
    purchaser. The law provides for the taxation of    lated through common ownership, conducts busi-
    delivery charges on taxable items and retains      ness activity in New Jersey through the actions
    the exemption for delivery charges on non-         of the related New Jersey agent corporation in
    taxable items.                                     furtherance of common marketing, promotion,




2                                                                                                  Rev. 12/06
                                                                        New Jersey Sales Tax Guide



selling, or service activity. Second, it incorpo-      Urban Enterprise Zones
rated several rate change provisions of the            New Jersey has established Urban Enterprise
Streamlined Sales and Use Tax Agreement, into          Zones and UEZ-impacted business districts in a
the New Jersey Sales and Use Tax Act.                  number of economically depressed cities in the
                                                       State. Urban Enterprise Zones and UEZ-impacted
Streamlined Sales and Use Tax                          business districts have been designated as areas in
Agreement (SSUTA)                                      which sales and use tax on certain items may be
The Streamlined Sales and Use Tax Agreement af-        charged at 50% of the regular rate. A qualified
fects the New Jersey sales tax treatment of certain    business located in a reduced sales tax rate zone
products and services, including, but not limited      or district will charge 3.5% sales tax on all sales
to, candy, soft drinks, prepared food, certain         of merchandise qualified for the reduced rate. In
clothing and footwear, grooming and hygiene            order for the vendor to offer this reduced rate a
products, and lease transactions. This bulletin also   purchaser must make the purchase in person at
includes a number of product definitions to help       the vendor’s place of business. In addition, the
explain why items that previously were exempt          purchaser must accept delivery at the vendor’s
from New Jersey sales tax are now taxable — and        place of business in the zone or district, or the
vice versa.                                            vendor must deliver the goods to the purchaser
                                                       from the vendor’s location in the zone or district.
For more information regarding the streamlined
sales and use tax changes that took effect Octo-       P.L. 2006, c.34 made changes to the Urban En-
ber 1, 2005, visit the Division’s Web site at:         terprise Zones Act. N.J.S.A. 52:27H-60, et seq.
www.state.nj.us/treasury/taxation/                     The UEZ law provides that the purchase exemp-
streamchanges.shtml                                    tion for certain sales made to a qualified business
                                                       remains effective; however, procedural amend-
                                                       ments to the law now require the sales tax to be
Sales Tax Law                                          collected on sales made to qualified businesses
The New Jersey Sales and Use Tax Act imposes           on and after July 15, 2006, unless the business is
a tax of 7% upon the receipts from every retail        a “small qualified business” (annual gross re-
sale of tangible personal property, digital prop-      ceipts less than $1 million in the prior annual tax
erty, and the sale of certain services, except as      period.) A qualified business other than a small
otherwise provided in the Act. Tangible personal       qualified business must pay the tax at the time of
property is defined to include prewritten com-         purchase and apply for a refund.
puter software delivered electronically. In addi-
tion, most services performed upon tangible            In order to document the exemption between
personal property are taxable unless they are spe-     July 15, 2006, and September 30, 2006, the Divi-
cifically exempted by law. Exempt items include:       sion published a temporary exemption certificate
most food sold as grocery items, most clothing         (Form UZ-5-SB Temporary). Sellers had to obtain
and footwear, disposable paper products for            the temporary certificate from any business claim-
household use, prescription drugs, and over-the-       ing the tax exemption at the point of sale. Sellers
counter drugs.                                         can no longer rely on the qualified business’s



Rev. 12/06                                                                                              3
Bulletin S&U-4



prior exemption certificate (Form UZ-5). Form         •   Sales of services (e.g., maintenance and/or
UZ-5-SB (Temporary) was a self-executing form             repairs)
and purchasers were required to certify that they     •   Prepared food, meals, and beverages
meet the annual gross receipts threshold of less      •   Telephone and electronically communicated
than $1 million in the prior tax period. The effec-       sales
tive dates of Form UZ-5-SB (Temporary) were           •   Sales made from locations outside the county
July 15, 2006, to September 30, 2006.                 •   Charges for admissions or amusements
                                                      •   Charges for room occupancy
On and after October 1, 2006, small qualified
businesses will be issued Form UZ-5-SB, which         To qualify for the reduced rate, the sale must be
will be administered in the same manner as the        made in person from a place of business regu-
original Form UZ-5. Again, a business that does       larly operated by the vendor for the purpose of
not qualify as a “small qualified business” will      making retail sales. In addition, the purchaser
be required to pay sales tax at the point of sale,    must accept delivery at the vendor’s place of
but may apply to the Division for a refund within     business in Salem County, or the vendor must
one year of the invoice date.                         deliver the goods to the purchaser from the
                                                      vendor’s location in Salem County.
For more information, see the Division’s “Notice
Urban Enterprise Zone Businesses.”
For more information about Urban Enterprise           Use Tax
Zones or UEZ-impacted business districts visit        A use tax liability may be incurred when taxable
the New Jersey Commerce and Economic                  goods or services are purchased for use in New
Growth Commission’s Web site at:                      Jersey but sales tax was not collected, or was
www.state.nj.us/commerce/                             collected at a rate less than the New Jersey sales
econ_uez_program.shtml or see publication             tax rate. In these instances the purchaser is liable
Urban Enterprise Zone Tax Questions and               for payment of use tax at the New Jersey sales
Answers.                                              tax rate. Thus, when taxable items are purchased
                                                      from Internet retailers or mail-order catalog com-
Salem County Reduced Sales Tax                        panies that do not collect New Jersey sales tax,
                                                      the purchaser is required to remit the use tax di-
Certain sales made by businesses located in
                                                      rectly to the State of New Jersey.
Salem County are subject to sales tax at 50% of
the regular rate. Although there are certain                Example: Frank Smith, a New Jersey resi-
exceptions, the 3.5% reduced rate applies solely            dent, ordered a $3,000 pool table over the
to retail sales of tangible personal property. The          Internet from a company based in another
following are not eligible for the reduced rate:            state. The company sent the pool table to
•   Motor vehicles                                          Mr. Smith’s home in New Jersey and did
•   Alcoholic beverages                                     not charge him any sales tax. It is Mr.
•   Cigarettes                                              Smith’s responsibility to remit use tax, in
•   Mail-order, catalog, or Internet sales                  the amount of $210 ($3,000 ! 7%), directly
                                                            to the State of New Jersey.



4                                                                                               Rev. 12/06
                                                                       New Jersey Sales Tax Guide



For more information about use tax, see publica-       considered “soft drinks” and are not subject to
tion ANJ-7, Use Tax in New Jersey.                     sales tax.
                                                       NOTE: Prior to October 1, 2005, a distinction
Grocery, Drug, and                                           was made between carbonated (taxable)
Household Items                                              and noncarbonated (exempt) beverages.
Most items of food and drink purchased in a                  This distinction is no longer relevant.
food store (supermarket, grocery store, produce              Now, “soft drinks” are taxable, whether
market, bakery, etc.) are not subject to sales tax.          they are carbonated or noncarbonated.

Food and food ingredients (exempt) means sub-          Food and beverages that are eligible to be pur-
stances, whether in liquid, concentrated, solid,       chased with food stamps are exempt from sales
frozen, dried, or dehydrated form, that are sold       tax. Thus, taxable items such as candy and soft
for ingestion or chewing by humans and are con-        drinks are not subject to tax when purchased
sumed for their taste or nutritional value. This       with food stamps.
term does not include tobacco, alcoholic bever-
                                                       Sales of disposable household paper products
ages, candy, or soft drinks.
                                                       such as towels, napkins, toilet tissue, diapers,
Dietary supplements (exempt) are any products          paper plates, and cups are exempt from sales tax.
required by the Federal government to be labeled       This exemption does not apply to the sale of dis-
as a dietary supplement, and that are identifiable     posable paper products for industrial, commer-
by the “Supplement Facts” box on the label.            cial, or other business use.
Many items that are commonly marketed as
                                                       Prescription drugs and over-the-counter (OTC)
health supplements, energy bars, or meal replace-
                                                       drugs are also exempt from tax provided there is
ment bars do not fall within the definition of
                                                       a label identifying the product as a drug, such as
“dietary supplements.” These items could be tax-
                                                       a “Drug Facts” panel or a statement of active in-
able as candy if they meet the definition below.
                                                       gredients. Beginning October 1, 2005, the OTC
Candy (taxable) means a preparation of sugar,          drug exemption does not apply to any grooming
honey, or other natural or artificial sweeteners in    and hygiene product, which means a soap or
combination with chocolate, fruits, nuts, or other     cleaning solution, shampoo, toothpaste, mouth-
ingredients or flavorings in the form of bars,         wash, antiperspirant, suntan lotion, or sunscreen.
drops, or pieces. Any preparation containing
                                                       Medical Equipment and Supplies. Diabetic sup-
flour or requiring refrigeration is not considered
                                                       plies, prosthetic devices, durable medical equip-
“candy” and is not subject to sales tax.
                                                       ment for home use, and mobility enhancing
Soft drinks (taxable) are nonalcoholic beverages       equipment are exempt from tax. Repair and re-
in liquid form that contain natural or artificial      placement parts for such devices and equipment
sweeteners. Beverages that contain milk or milk        are also exempt. However, such items are subject
products; soy, rice, or similar milk substitutes; or   to tax when purchased for use in providing medi-
more than 50% fruit or vegetable juice are not         cal services for compensation, and are not




Rev. 12/06                                                                                               5
    Bulletin S&U-4



transferred to the purchaser of the medical ser-                       Ammonia ...................................................... T
vices. Thus, medical equipment purchased for                           Anesthetics ................................................... E
use within a medical facility which does not go                        Antacids ........................................................ E
with the patient when he or she leaves the facil-                      Antibiotics .................................................... E
ity is subject to tax.                                                 Antifungals ................................................... E
                                                                       Antihistamines .............................................. E
Examples of “prosthetic devices” include: hear-                        Antinauseants ............................................... E
ing aids, pacemakers, heart valves, prescription                       Antiperspirants.............................................. T
eyeglasses and contact lenses, artificial limbs.                       Arch Supports ............................................... E
Examples of “durable medical equipment” in-                            Arthritis Relievers......................................... E
clude: bath and shower chairs, bed pans, raised                        Artificial Tears .............................................. E
toilet seats. Examples of “mobility enhancing                          Aspirins and Combinations .......................... E
equipment” include: canes, crutches, wheelchairs,                      Asthma Preparations ..................................... E
wheelchair lifts, hand controls for vehicles.                          Astringents .................................................... E
The following is a list of items commonly found                        Athlete’s Foot Treatments ............................. E
in a retail store, with an indication of whether the                   Baby Bath Soaps-Liquid, Bar ....................... T
item is taxable (T) or exempt (E) from sales tax                       Baby Food ..................................................... E
when sold to an individual consumer. The tax-                          Baby Formulas .............................................. E
ability for items whose status changed on Octo-                        Baby Lotions ................................................. T
ber 1, 2005, is shown in bold (T or E). Where                          Baby Pants .................................................... E
applicable, a footnote indicates the product defini-                   Baby Powder ................................................. T
tion to refer to for more information. Some items                      Baby Shampoos ............................................ T
found on the list may become taxable if sold as                        Baby Wipes ................................................... E
prepared food. See the definition of prepared                          Bags:
food on page 19. For additional information, see                           Cloth, Plastic ........................................... T
the Notice regarding food and food products.                               Paper for household use ............................... E
                                                                       Baked Goods................................................. E
Acne Products:                                                         Baking Cups:
    Creams or Lotions .................................. E                 Foil .......................................................... T
    Cleansers or Soaps .................................. T5               Paper for household use ............................... E
Air Fresheners ............................................... T       Baking Powder ............................................. E
Alcohol, Rubbing.......................................... E           Baking Soda .................................................. E
Alcohol, Swabs and Pads ............................. E                Balloons ........................................................ T
Alcoholic Beverages (prepackaged                                       Bandages ....................................................... T
    or by the drink) ....................................... T         Band Aids ..................................................... T
Allergy Relief Products ................................ E             Bath Beads, Oils, Sachets ............................. T
Aluminum Foil ............................................. T          Bathing Caps................................................. E

     The taxability of certain items changed on October 1, 2005. Refer to the following definitions for more information.
1                                       3                          5
  Food and food ingredients, page 5.        Candy, page 5.           Grooming and hygiene products, page 5.
2                                       4                          6
  Dietary supplements, page 5.              Soft drinks, page 5.     Prescription drugs and over-the-counter (OTC) drugs, page 5.
                                                                   7
                                                                     Clothing, page 20.

6                                                                                                                                 Rev. 12/06
                                                                                                       New Jersey Sales Tax Guide



Bathroom Cleaners ....................................... T                    Cake Mixes ................................................... E
Batteries ........................................................ T           Calling Cards, Telephone (prepaid):
Batteries-Hearing Aid ................................... E                       Sale of Card ............................................ T
Bed Linens .................................................... T                 Additional Minutes ................................. T
Bed Pans (for home use) ............................... E                      Camera Lens and Eyeglass Cleaner
Bee Sting Relievers....................................... E                      Tissues .................................................... T
Beverage Powders (Kool-Aid,                                                    Candles ......................................................... T
                                                                                                                                                    3
    lemonade, iced tea) ................................. E                    Candy ............................................................ T
Beverages, Sweetened:                                                             Taxable unless product contains
    Containing milk, milk products, or                                            flour (e.g., Nestle Crunch) or
       milk substitutes (soy, rice, etc.) .......... E4                           requires refrigeration
    Containing more than 50% juice ............ E4                             Canes ............................................................ E
    Containing no milk products and                                            Canker Sore Preparations ............................. E
       containing 50% or less juice ............... T4                         Canned Goods:
Beverages, Unsweetened .............................. E4                          Fruits ....................................................... E
Bibs ............................................................... E            Meats, Fish (except pet food) ................ E
Bird Food ...................................................... T                Milk ........................................................ E
Birth Control Preparations ............................ E
                                                                       6          Vegetables ............................................... E
Biscuits, Crackers ......................................... E                 Car Wash and Wax ........................................ T
Blankets (except baby                                                          Carbonated Beverages (See Beverages)
    receiving blankets) .................................. T                   Carpet Cleaners............................................. T
Bleach-Liquid, Dry ....................................... T                   Carpet Deodorizers ....................................... T
Blistex® (medicated) .................................... E                    Castor Oil ...................................................... E
Blood Pressure Cuffs .................................... T                    Cat Food ....................................................... T
Books (except certain textbooks                                                CDs, Cassettes, DVDs .................................. T
    approved by the school) .......................... T                       Cereal Bars ................................................... *3
Bottled Water:                                                                   *Taxability depends on ingredients.
    Unsweetened ........................................... E4                    See Candy, page 5.
    Sweetened ............................................... T4               Cereals .......................................................... E
Braces-Ankle, Knee ...................................... E                    Chapstick® (medicated) ............................... E
Bread and Rolls ............................................ E                 Charcoal, Charcoal Briquets ......................... E
Breast Cream ................................................ T                Cheese, Cheese Spreads ............................... E
Breast Pump .................................................. T               Chewing Gum ............................................... T
Breast Shells, Bra Pads ................................. E                    Chewing Tobacco ......................................... T
Breath Freshener ........................................... T                 Chips-Chocolate, Butterscotch, etc.
Bubble Bath .................................................. T                  (for use in baking):
Butane ........................................................... E              Sweetened ............................................... T1
                                                                                  Unsweetened ........................................... E
    The taxability of certain items changed on October 1, 2005. Refer to the following definitions for more information.
1                                            3                             5
  Food and food ingredients, page 5.             Candy, page 5.              Grooming and hygiene products, page 5.
2                                            4                             6
  Dietary supplements, page 5.                   Soft drinks, page 5.        Prescription drugs and over-the-counter (OTC) drugs, page 5.
                                                                           7
                                                                             Clothing, page 20.

Rev. 12/06                                                                                                                                              7
    Bulletin S&U-4



Chips-Potato, Corn, etc. ................................ E                 Cornstarch ..................................................... E
Christmas Trees ............................................ T              Cosmetics ..................................................... T
                                                                                                                                                7
Christmas Tree Skirts-Paper, Cloth .............. T                         Costumes ...................................................... E
Cigarette Filters ............................................ T            Cottonballs .................................................... T
Cigarette Papers ............................................ T             Cough Preparations....................................... E
Cigarettes ...................................................... T         Cream, Milk, Half and Half .......................... E
Cigars ............................................................ T       Crepe Paper................................................... T
Cleaning Liquids, Powders ........................... T                     Crutches ........................................................ E
Clothes Lines ................................................ T            Cups:
Clothes Pins .................................................. T              Paper for household use ............................... E
Clothing (see Clothing and Footwear, page 20)                                  Plastic, Foam .......................................... T
Cocktail Onions, Olives ................................ E                  Cuticle Remover ........................................... T
                                                                                                                                                5
Cocktail Sauces ............................................ E              Dandruff/Seborrhea Shampoo ...................... T
Cocoa, Instant ............................................... E            Decongestants ............................................... E
Cod Liver Oil ................................................ E            Decorations-Paper, Plastic ............................ T
Coffee (beans, packaged, instant) ................. E                       Dehydrated Food (hunting, etc.) ................... E
Coffee Filters-Paper for household use ............. E                      Dental Floss .................................................. T
Coffee Pot Cleaners ...................................... T                Dental Rinse ................................................. T
Cold Preparations and Remedies .................. E                         Denture Adhesives, Preparations .................. T
Cold Sore Preparations ................................. E                  Deodorants, Antiperspirants ......................... T
Combs ........................................................... T         Deodorizers-Room, Car, Carpet ................... T
Computers: (see also Services, page 14)                                     Depilatories ................................................... T
   Computer Systems .................................. T                    Detergents ..................................................... T
   Hardware Components ........................... T                        Diabetic Supplies:
   Prepackaged Software ............................ T                         Glucometers ............................................ E
Condiments (catsup, mustard, etc.) .............. E                            Lancets .................................................... E
Condoms ....................................................... T              Syringes .................................................. E
Confections (see Candy) ............................... T                      Test Strips ............................................... E
Constipation Products ................................... E                 Diaper Liners ................................................ E
Contact Lens Care Products ......................... T                      Diapers (including disposable) ..................... E
Contact Lens Cleaner, Solution .................... T                       Diarrhea Aids ................................................ E
Contact Lenses (prescription) ....................... E                     Digestive Aids............................................... E
Contraceptive Preparations ........................... E6                   Dinnerware:
Cooking Wine ............................................... E                 Paper for household use ............................... E
Copper Cleaner ............................................. T                 Plastic, Foam .......................................... T
Corn and Callus Pads .................................... T                 Dips (cheese, onion, etc.) .............................. E
Corn and Callus Removers ........................... E                      Dish Detergents ............................................ T

     The taxability of certain items changed on October 1, 2005. Refer to the following definitions for more information.
1                                          3                            5
  Food and food ingredients, page 5.           Candy, page 5.             Grooming and hygiene products, page 5.
2                                          4                            6
  Dietary supplements, page 5.                 Soft drinks, page 5.       Prescription drugs and over-the-counter (OTC) drugs, page 5.
                                                                        7
                                                                          Clothing, page 20.

8                                                                                                                                     Rev. 12/06
                                                                                                   New Jersey Sales Tax Guide



Disinfectants ................................................. T           First Aid Products:
Distilled Water .............................................. E                Bandages ................................................. T
Diuretics........................................................ E             Healing Agents, Solutions, etc. ............... E
Dog Food ...................................................... T           Fishing Bait ................................................... T
Doilies-Paper, Foil ........................................ T              Flags:
Douches:                                                                        State of New Jersey ................................ E
    Antiseptic, Anti-Infectious ...................... E                        United States of America ........................ E
    Cleaning, Deodorizing ............................ T                        All Others ............................................... T
Drain Openers, Cleaners ............................... T                   Flashlights ..................................................... T
Drawer Liners ............................................... T             Flatware ........................................................ T
DVDs, CDs ................................................... T             Flea Collars ................................................... T
Dyes .............................................................. T       Floor Cleaners and Polishes ......................... T
Ear Preparation, Ache Aids ........................... E                    Floor Coverings ............................................ T
Ear Syringes .................................................. E           Floor Finishes (Wax) .................................... T
Eczema Preparations..................................... E                  Floor Wax Remover ...................................... T
Eggs (fresh, dried) ........................................ E              Flowers ......................................................... T
Electrical Supplies ........................................ T              Food Coloring ............................................... E
Energy Bars ................................................... *3          Food Wraps:
   *Taxability depends on ingredients.                                          Aluminum Foil ....................................... T
    See Candy, page 5.                                                          Paper Freezer Wrap for household use ...... E
Epsom Salt:                                                                     Plastic Storage Bags ............................... T
    Garden Use ............................................. T                  Plastic Wrap ............................................ T
    Medical Use (for humans) ...................... E                           Waxed Paper for household use .................. E
Expectorants ................................................. E            Foot Care Preparations ................................. E
Eye Preparations ........................................... E              Foot Deodorizers .......................................... T
Eyeglass Cleaner Tissues .............................. T                   Footwear (see Clothing and Footwear, page 20)
Eyeglass Frames (fitted with                                                Formica Cleaners and Polishes ..................... T
    corrective lenses) .................................... E               Freezer Packs (blue ice) ................................ T
Eyeglasses (corrective) ................................. E                 Frozen Foods (see also Ice Cream)............... E
Fabric Softeners ............................................ T             Fruit .............................................................. E
Facial Cleansing Pads ................................... T                 Fruit Drinks (containing 50% or less juice) .. T4
Feminine Napkins, Tampons ........................ E                        Fuels:
Fever Blister Aids ......................................... E                  Charcoal .................................................. E
Fiberglass Cleaner ........................................ T                   Charcoal Lighter ..................................... E
Film, Film Processing ................................... T                     Cigarette Lighter Fluid ........................... E
Firewood ....................................................... E          Fungicides ..................................................... E
First Aid Kits ................................................ T           Furniture ....................................................... T

    The taxability of certain items changed on October 1, 2005. Refer to the following definitions for more information.
1                                          3                            5
  Food and food ingredients, page 5.           Candy, page 5.             Grooming and hygiene products, page 5.
2                                          4                            6
  Dietary supplements, page 5.                 Soft drinks, page 5.       Prescription drugs and over-the-counter (OTC) drugs, page 5.
                                                                        7
                                                                          Clothing, page 20.

Rev. 12/06                                                                                                                                           9
    Bulletin S&U-4



Furniture Polishes and Cleansers .................. T                       Hypodermic Syringes and Needles ............... E
Fuses ............................................................. T       Ibuprofen....................................................... E
Garbage Pails ................................................ T            Ice ................................................................. E
Garden Supplies ............................................ T              Ice Buckets, Ice Chests ................................. T
Gatorade........................................................ T4         Ice Cream:
Gelatin and Gelatin Desserts ........................ E                         Individually wrapped bars,
Gift Certificates ............................................ E                    sandwiches, popsicles, cones
Gift Wrap, Bows, Boxes, Tags ...................... T                               (single item or by the box) .................. E
Glass Cleaners .............................................. T                 By the gallon or part thereof ................... E
Gloves ........................................................... E        Ice Cream Cones (hand-dipped) ................... T
Granola Bars ................................................. *3           Iced Tea:
  *Taxability depends on ingredients.                                           Liquid, sweetened ................................... T4
    See Candy, page 5.                                                          Liquid, unsweetened ............................... E
Greeting Cards .............................................. T                 Powder, sweetened or unsweetened ........ E
Grenadine...................................................... E           Ingrown Nail Preparations ............................ E
Grip Tape ...................................................... T          Insect Bite and Sting Preparations ................ E
Guest Towels-Paper for household use ............ E                         Insecticides, Repellents ................................ T
Hair Care Products:                                                         Instant Cocoa, Coffee, Tea ............................ E
    Brushes, Combs ...................................... T                 Insulin ........................................................... E
    Conditioners ........................................... T              Iodine, Tincture of ........................................ E
    Curler Papers .......................................... T              Itch, Rash Relievers ...................................... E
    Rinses ..................................................... T          Jams and Jellies ............................................ E
    Rogaine® ................................................. T            Jewelry Cleaners ........................................... T
    Shampoos ............................................... T              Juice Drinks:
Halloween Masks ......................................... T                     Containing 50% or less juice .................. T4
Hand Cleaners............................................... T                  Containing over 50% juice ..................... E
Hand Lotion .................................................. T            Keys ............................................................ T
Hay Fever Aids ............................................. E              Laundry Soaps and Detergents ..................... T
Headache Relief Aids ................................... E                  Lawn Bags .................................................... T
Health/Fitness Equipment (weights,                                          Laxatives ....................................................... E
    exercise balls, steps, etc.)........................ T                  Leather Cleaners (saddle soap) ..................... T
Heating Pads ................................................. E            Leavening Agents ......................................... E
Hemorrhoid Treatments ................................ E                    Lemonade:
H.I.V. Testing Kits (only when sample is                                        Liquid, sweetened ................................... T4
    sent to lab for analysis and report) .......... E                           Powdered ................................................ E
Hosiery, all types ........................................... E            Lice Treatments (for humans) ....................... E
Hot Chocolate, Instant .................................. E                 Light Bulbs ................................................... T


     The taxability of certain items changed on October 1, 2005. Refer to the following definitions for more information.
1                                          3                            5
  Food and food ingredients, page 5.           Candy, page 5.             Grooming and hygiene products, page 5.
2                                          4                            6
  Dietary supplements, page 5.                 Soft drinks, page 5.       Prescription drugs and over-the-counter (OTC) drugs, page 5.
                                                                        7
                                                                          Clothing, page 20.

10                                                                                                                                      Rev. 12/06
                                                                                                     New Jersey Sales Tax Guide



Lighter Fluid ................................................. E            Motion Sickness Remedies........................... E
Linens ........................................................... T         Mouthwash ................................................... T
Liners (garbage can, shelf, etc.) .................... T                     Muscle Ache Relievers ................................. E
Lint Removers .............................................. T               Nail Biting Deterrents ................................... T
Lip Balms (medicated) ................................. E                    Nail Polish .................................................... T
Lipstick ......................................................... T         Nail Polish Remover ..................................... T
Litter Box Liners ........................................... T              Napkins, Table-Paper for household use .......... E
Lotions:                                                                     Nasal Sprays, Decongestants ........................ E
    Cleansing ................................................ T             Newspapers, Periodicals ............................... E
    Moisturizing ........................................... T               Nicotine Gum ............................................... E
Lunch Bags:                                                                  Nicotine Patch............................................... E
    Paper for household use ............................... E                Nursing Bottles, Nipples, Funnels ................ T
    Plastic ..................................................... T          Nursing Pads-Paper ...................................... E
Lye ................................................................ T       Nuts
Magazines (qualified periodicals) ................ E                             Unsweetened ........................................... E
Make-up ........................................................ T               Sweetened (see Candy)
Make-up Remover ........................................ T                   Oil-Cooking, Salad ....................................... E
Maraschino Cherries ..................................... E                  Olives ............................................................ E
Marshmallow Fluff ....................................... E                  Oral Pain Relievers ....................................... E
Marshmallows .............................................. T3               Orthopedic Devices ...................................... E
Matches ......................................................... T          Oven Cleaners............................................... T
Meats ............................................................ E         Oven Cooking Bags:
Medicines (for pets) ...................................... T                    Paper for household use ............................... E
Menstrual Cramp Relievers .......................... E                           Plastic or Aluminum ............................... T
Metal Cleaners and Polishes ......................... T                      Ovulation Testing Kits .................................. T
Mildew Remover .......................................... T                  Oxygen .......................................................... E
Milk (fresh, dried), Cream,                                                  Paint Remover .............................................. T
    Half and Half .......................................... E               Paper Bags for household use ............................ E
Mineral Oil ................................................... E            Paper Goods (plates, towels, etc.)
Mineral or Herbal Supplements                                                    for household use .......................................... E
    (in form of pills, capsules, etc.) .............. E2                     Paperback Books .......................................... T
Mixes for Soups ............................................ E               Pedialyte ....................................................... E
Mixes for alcoholic beverages:                                               Peroxide, Hydrogen (for medical use) .......... E
    Powdered ................................................ E              Pet Foods ...................................................... T
    Liquid, unsweetened ............................... E                    Pet Shampoo ................................................. T
    Liquid, sweetened (see Beverages)                                        Pet Supplies .................................................. T
Mops, Mop Handles ..................................... T                    Petroleum Jelly ............................................. T

    The taxability of certain items changed on October 1, 2005. Refer to the following definitions for more information.
1                                           3                            5
  Food and food ingredients, page 5.            Candy, page 5.             Grooming and hygiene products, page 5.
2                                           4                            6
  Dietary supplements, page 5.                  Soft drinks, page 5.       Prescription drugs and over-the-counter (OTC) drugs, page 5.
                                                                         7
                                                                           Clothing, page 20.

Rev. 12/06                                                                                                                                           11
    Bulletin S&U-4



Pets ............................................................... T       Rug Deodorizers ........................................... T
Pickles ........................................................... E        Salads (potato salad, coleslaw, etc.) ............. E
Pies, Pie Crusts ............................................. E             Saliva Substitutes .......................................... E
Pillows .......................................................... T         Salt and Salt Substitutes ............................... E
Place Mats:                                                                  Sandwich Bags:
    Cloth and plastic ..................................... T                    Paper for household use ............................ E
    Paper for household use ............................... E                    Plastic ..................................................... T
Plants ............................................................ T        Sanitary Napkins, Tampons .......................... E
Plastic Items .................................................. T           Scouring Pads ............................................... T
Plates:                                                                      Seeds (flower or vegetable) .......................... T
    Paper for household use ............................... E                Shampoos ..................................................... T
    Plastic, Foam .......................................... T               Shaving Cream ............................................. T
Poison Ivy and Oak Treatment                                                 Shelf Liners ................................................... T
    Preparations ............................................ E              Shoe Inserts (Odor Eaters) ............................ E
Polishing Cloths and Mitts ........................... T                     Shoe Laces .................................................... E
Popcorn:                                                                     Shoe Polish ................................................... T
    Popped, sweetener added ........................ T3                      Shoes (see Clothing and Footwear, page 20)
    Popped, no sweetener added ................... E                         Shower Caps ................................................. T
    Unpopped, any flavor ............................. E                     Sinus Relievers ............................................. E
Powdered Beverage Mix .............................. E                       Skin Bleaches ............................................... T
Pregnancy Testing Kits ................................. T                   Skin Irritation Relievers ................................ E
Prescription Contraceptives .......................... E                     Sleep Aids ..................................................... E
Prescription Drugs ........................................ E                Snuff ............................................................. T
Pre-Soaks, Laundry ....................................... T                 Soap .............................................................. T
Preserves ....................................................... E          Soap Pads ...................................................... T
Pretzels (unheated) ....................................... E                Soups, Soup Mixes ....................................... E
Propane ......................................................... E          Spaghetti ....................................................... E
Prosthetic Aids .............................................. E             Spices ............................................................ E
Puddings ....................................................... E           Sponges ......................................................... T
Pumpkins:                                                                    Stain and Spot Remover ............................... T
    Used for food .......................................... E               Starch:
    Used for decoration ................................ T                       Corn ........................................................ E
Rainhoods ..................................................... E                Laundry ................................................... T
Rock Salt ...................................................... T           Static Remover ............................................. T
Rogaine® ....................................................... E6          Stationery ...................................................... T
Rubber Gloves .............................................. E               Steel Wool ..................................................... T
Rug Cleaners and Shampoos ........................ T                         Stirrers (wood, plastic).................................. T

     The taxability of certain items changed on October 1, 2005. Refer to the following definitions for more information.
1                                           3                            5
  Food and food ingredients, page 5.            Candy, page 5.             Grooming and hygiene products, page 5.
2                                           4                            6
  Dietary supplements, page 5.                  Soft drinks, page5.        Prescription drugs and over-the-counter (OTC) drugs, page 5.
                                                                         7
                                                                           Clothing, page 20.

12                                                                                                                                      Rev. 12/06
                                                                                                   New Jersey Sales Tax Guide



Straws:                                                                     Trashbags and Liners .................................... T
    Paper for household use ............................... E               Undergarments, Disposable .......................... E
    Plastic ..................................................... T         Underpads, Disposable-Paper ....................... E
Sugar and Sugar Substitutes ......................... E                     Upholstery Cleaners...................................... T
Sunburn Relief Products ............................... E                   Vacuum Cleaner Bags:
Sunglasses ..................................................... T              Cloth, Plastic ........................................... T
Sunscreens .................................................... T               Paper for household use ............................... E
Surgical Adhesive ......................................... T               Vaporizer Tablets .......................................... T
Table Covers:                                                               Vaseline® ....................................................... T
    Paper for household use ............................... E               Vegetables ..................................................... E
    Plastic ..................................................... T         Vitamins ........................................................ E
Tampons (and like products) ........................ E                      Wart Removers ............................................. E
Tape .............................................................. T       Water:
Tea (prepackaged, dry, or instant) ................. E                          Unsweetened ........................................... E
Tears, Artificial ............................................. E               Sweetened ............................................... T4
Teething Lotions ........................................... E              Water Conditioners ....................................... T
Telephone Calling Cards (prepaid):                                          Water Pills..................................................... E
    Sale of Card ............................................ T             Water Repellent ............................................ T
    Additional Minutes ................................. T                  Wax ............................................................... T
Tenderizers .................................................... E          Wax Remover ............................................... T
Thermometers ............................................... T              Waxed Paper for household use ........................ E
Tile Cleaners ................................................. T           Wheelchairs .................................................. E
Tissue (facial and toilet) for household use ..... E                        Whipped Cream ............................................ E
Tobacco ......................................................... T         Whiteners, Laundry ...................................... T
Toilet Bowl Cleaners .................................... T                 Wigs .............................................................. T
Toilet Bowl Deodorizers ............................... T                   Window Cleaning Liquids ............................ T
Tooth Ache Relievers .................................... E                 Windshield Washer Solution ........................ T
Tooth Desensitizers ....................................... T5              Wipes:
Tooth Polish .................................................. T               Handi-Wipes (rayon) .............................. T
Toothbrushes ................................................. T            Witch Hazel .................................................. E
Toothpaste ..................................................... T          Wool Washes ................................................ T
Toothpicks .................................................... T           Wrapping Paper, Bows ................................. T
Towelettes for household use .......................... E                   Wraps:
Towels:                                                                         Foil, Plastic ............................................. T
    Cloth ....................................................... T             Paper for household use ............................... E
    Paper for household use ............................... E


    The taxability of certain items changed on October 1, 2005. Refer to the following definitions for more information.
1                                          3                            5
  Food and food ingredients, page 5.           Candy, page 5.             Grooming and hygiene products, page 5.
2                                          4                            6
  Dietary supplements, page 5.                 Soft drinks, page 5.       Prescription drugs and over-the-counter (OTC) drugs, page 5.
                                                                        7
                                                                          Clothing, page 20.

Rev. 12/06                                                                                                                                      13
Bulletin S&U-4



Services                                              software that is used directly and exclusively in
                                                      the conduct of the purchaser’s business, trade or
The New Jersey Sales and Use Tax Act specifi-
                                                      occupation. Thus, electronically delivered soft-
cally imposes tax on the receipts from retail sales
                                                      ware sold to individuals is subject to tax.
of the following services:
1. Producing, fabricating, processing, installing,    Laundering (N.J.S.A. 54:32B-3(b)(2))
   maintaining, repairing, storing, and servicing     The law specifically limits the sales tax exemp-
   tangible personal property;                        tion for laundering, dry cleaning, tailoring, weav-
                                                      ing, and pressing to providing these services to
2. Maintaining and repairing real property ex-        clothing. As a result, all of these services will be
   cept for maintaining, servicing, or repairing a    taxable when performed on property such as
   residential heating system serving not more        draperies, carpets, blankets, comforters, slipcov-
   than three families living independently of        ers, tablecloths, napkins, dust cloths, mats, mops,
   each other and doing their own cooking on          industrial wiper cloths, fender covers, bed linens,
   the premises;                                      hospital linens, table linens, linen supply towels,
                                                      and other cloths.
3. Sales of restaurant and catered meals;
4. Rental of hotel and motel rooms;                   Installing Floor Coverings (N.J.S.A. 54:32B-
                                                      3(b)(2)) See Tax Note on this topic.
5. Direct-mail advertising processing services        Previously, certain floor covering installation
   in connection with advertising or promo-           services that resulted in a “capital improvement”
   tional material distributed in New Jersey;         were exempt. The law eliminated the exemption
                                                      for the installation of floor covering, which in-
6. Certain admission charges;
                                                      cludes carpeting, linoleum, tile, and padding, so
7. Storage charges for tangible personal prop-        now the labor is taxable. Businesses that provide
   erty not held for sale;                            floor covering installations are still treated as
                                                      contractors under the law.
8. Telecommunications services charged to a
   New Jersey address; and                            Landscaping Services (N.J.S.A. 54:32B-3(b)(2))
                                                      See Tax Note on this topic.
9. Utility service (natural gas, electricity) pro-
                                                      The law defines “landscaping services” as ser-
   vided to customers in New Jersey.
                                                      vices that result in a capital improvement to land,
                                                      other than structures of any kind whatsoever,
As of October 1, 2006, P.L. 2006, c.44 changed        such as: seeding, sodding, or grass plugging of
the taxability of the following:                      new lawns; planting trees, shrubs, hedges, plants;
Prewritten Computer Software Delivered                and clearing and filling land. (N.J.S.A. 54:32B-
Electronically (N.J.S.A. 54:32B-8.56)                 2(ww)). Previously, certain landscaping services
The law limits the current exemption for pre-         that resulted in a capital improvement were
written computer software delivered electroni-        exempt. The law eliminated the capital improve-
cally to electronically delivered computer            ment exemption for landscaping services, so now




14                                                                                              Rev. 12/06
                                                                       New Jersey Sales Tax Guide



the labor is taxable. Businesses that provide         The law defines “space for storage” as secure
landscaping services are still treated as contrac-    areas, such as rooms, units, compartments, or
tors under the law.                                   containers, whether accessible from outside or
                                                      from within a building, that are designated for
Delivery Charges for Taxable Goods and Ser-           the use of a customer, where the customer has
vices (N.J.S.A. 54:32B-8.11; 54:32B-2(oo)(1)(D))      free access within reasonable business hours, or
The law modified the exemption for delivery           upon reasonable notice to the furnisher of the
charges that are separately stated from the pur-      space, to store and retrieve property. Space for
chase price of an item on the invoice, bill, or       storage does not include the lease or rental of an
similar document given to the purchaser. The law      entire building, such as a warehouse or airplane
provides for the taxation of delivery charges on      hangar.
taxable items and retains the exemption for de-
livery charges on nontaxable items like clothing,     Tanning Services (N.J.S.A. 54:32B-3(b)(8))
goods purchased for resale, and goods covered         Tanning services, including the application of a
by any other statutory exemption provision.           temporary tan provided by any means.

The law defines “delivery charges” as charges by      Massage Services (N.J.S.A. 54:32B-3(b)(9))
the seller for preparation and delivery to a loca-    See Tax Note on this topic.
tion designated by the purchaser of personal          Massage, bodywork, or somatic services, except
property or services including, but not limited to,   such services provided pursuant to a doctor’s
transportation, shipping, postage handling, crat-     prescription.
ing, and packing. If a shipment includes both ex-
empt and taxable property, the seller should          Tattooing (N.J.S.A. 54:32B-3(b)(10))
allocate the delivery charge by using: (1) a per-     Tattooing, including all permanent body art and
centage based on the total sales price of the tax-    cosmetic make-up applications.
able property compared to the total sales price of    Investigation and Security Services (N.J.S.A.
all property in the shipment; or (2) a percentage     54:32B-3(b)(11)) See Tax Note on this topic.
based on the total weight of the taxable property     The law defines “investigation and security ser-
compared to the total weight of all property in       vices” as:
the shipment. N.J.S.A. 54:32B-2(rr). Thus, only
the portion of the delivery charge that relates to    1. Investigation and detective services, including
the taxable property or services is subject to tax.      detective agencies and private investigators,
                                                         and fingerprint, polygraph, missing person
As of October 1, 2006, P.L. 2006, c.44 imposed           tracing, and skip tracing services;
sales and use tax on the following services:
                                                      2. Security guard and patrol services, including
Space for Storage (N.J.S.A. 54:32B-3(b)(3))              bodyguard and personal protection, guard dog,
See Tax Note on this topic.                              guard, patrol, and security services;
Furnishing of space for storage of tangible per-
                                                      3. Armored car services; and
sonal property, by a person engaged in the busi-
ness of furnishing space for such storage.


Rev. 12/06                                                                                             15
Bulletin S&U-4



4. Security systems services, including security,     receipts subject to tax imposed by any other law
   burglar, and fire alarm installation, repair, or   or ordinance (e.g., municipal parking taxes).
   monitoring services. N.J.S.A. 54:32B-2(xx).
                                                      The following is a list of common services, with
NOTE: Alarm monitoring service has been sub-          an indication of whether the item is taxable (T)
      ject to tax since July 1, 1990, as a tele-      or exempt (E) from sales tax.
      communications service.
                                                      Accounting Services:
Information Services (N.J.S.A. 54:32B-                   Professional Services .............................. E
3(b)(12)) See Tax Note on this topic.                    Electronic Filing Charges ....................... T
The law defines “information services” as the         Admission Charges (over $0.75):
furnishing of information of any kind, which has         Spectator Sports:
been collected, compiled, or analyzed by the                (baseball games, basketball games,
seller, and provided through any means or                   professional wrestling events, etc.) ..... T
method, other than personal or individual infor-         Participant Sports:
mation which is not incorporated into reports fur-          (bowling, fishing, swimming, etc.) ..... E
nished to other people. N.J.S.A. 54:32B-2(yy).           Places of Amusement:
                                                            (movie theaters, amusement parks,
Limousine Services (N.J.S.A. 54:32B-3(b)(13))               trade shows, craft shows, etc.) ............ T
Transportation services originating in this State     Advertising Services (in general) ................. E
and provided by a limousine operator, as permit-      Alarm Monitoring:
ted by law, except such services provided in con-        Via control station ................................... T
nection with funeral services.                        Animal Boarding .......................................... T
                                                      Animal Grooming ......................................... T
Membership Fees (N.J.S.A. 54:32B-3(h))                Answering Services, Telephone .................... T
See Tax Note on this topic.                           Appliance Repairs......................................... T
Initiation fees, membership fees, or dues for ac-     Appraisals:
cess to or use of the property or facilities of a        (jewelry, real estate, etc.) ........................ E
health and fitness, athletic, sporting, or shopping   Architectural Services (in general) ............... E
club or organization in this State, except for        Armored Car Services .................................. T
membership in a club or organization whose            Automobile Repairs:
members are predominantly age 18 or under.               Inspection Sticker ................................... E
Parking (N.J.S.A. 54:32B-3(i))                           Labor ....................................................... T
The receipts from parking, storing, or garaging a        Parts ........................................................ T
motor vehicle, excluding charges for the follow-      Barber Shop Services .................................... E
ing types of parking: residential parking; em-        Beauty Parlor Services .................................. E
ployee parking, when provided by an employer          Beeper and Paging Services .......................... T
or at a facility owned or operated by the em-         Boat Docking Fees:
ployer; municipal metered parking; and parking           Slip Rentals ............................................. E
                                                         Storage-water or land .............................. T




16                                                                                                              Rev. 12/06
                                                                                             New Jersey Sales Tax Guide



Bookkeeping Services .................................. E             Landscaping Services ................................... T
Cable Television Subscription ...................... E                Laundry Services:
Car Washing .................................................. T          Clothing .................................................. E
Carpet Cleaning ............................................ T            Other ....................................................... T
Catering Services .......................................... T        Lawn Mowing Services ................................ T
Child/Day Care ............................................. E        Limousine Services....................................... T
Cleaning Services (janitorial) ....................... T                  Provided for funeral ................................ E
Computer Maintenance/Repair ..................... T                       Provided solely within NJ ....................... T
Credit Check/Report ..................................... T           Locker Rentals .............................................. T
Credit Repair Services .................................. E           Maintenance Agreements ............................. T
Data Processing Services .............................. E             Manufacturer’s Rebate:
Debt Collection ............................................. E           (automobile, etc.) .................................... T
Delivery Charges:                                                     Massage Services .......................................... T
    On Taxable Items .................................... T               Provided pursuant to doctor’s
    On Nontaxable Items .............................. E                  prescription ............................................. E
Digital Property ............................................ T       Membership Fees*:
Direct-Mail Processing Services for                                       Discount Clubs ....................................... E
    Advertising/Promotional Material:                                     Health/Fitness/Athletic/Sporting Clubs .. T
       Distributed in NJ ................................. T              Shopping Clubs ...................................... T
       Distributed outside NJ ........................ E                  Professional/Social Clubs ....................... E
Disc Jockey ................................................... E     Parking:
Dry Cleaning                                                              Parking, storing, or garaging a
    Clothing .................................................. E           motor vehicle ...................................... T
    Other ....................................................... T       Residential .............................................. E
Electronic Filing Charges ............................. T                 Municipal metered .................................. E
Employment Agency Fees ............................ E                     At facility owned/operated by employer . E
Extended Warranty Agreements ................... T                        Provided to employee by employer ........ E
Facsimile (Fax) Services .............................. T                 Parking receipts subject to tax imposed
Floor Covering Installation ........................... T                   by any other law or ordinance ............. E
Garbage Removal:                                                      Pest Control:
                                                                          Inspection ................................................ E
    Contractual (30 days or more) ................ E
                                                                          Treatment ................................................ T
    Non-Contractual ..................................... T
                                                                      Pet-Sitting ..................................................... E
Home Repairs (except residential
                                                                      Photocopying Services.................................. T
    heating systems as explained above) ...... T
                                                                      Photographer’s Services ............................... T
Information Services ..................................... T
                                                                      Prewritten Computer Software Delivered
Insurance Premiums...................................... E
                                                                          Electronically:
Interior Design .............................................. E
                                                                          Sold to individuals .................................. T
Internet Access Charges ................................ E
                                                                          Used directly in the conduct of the
Investigation and Detective Services ............ T
                                                                            purchaser’s business/trade .................. E
*Tax does not apply to memberships in clubs whose members are predominantly age 18 or under.


Rev. 12/06                                                                                                                                  17
 Bulletin S&U-4



Printing Services ........................................... T       Coupons
Professional Services:
                                                                      The following guidelines apply to retail sale
    (doctor, lawyer, etc.) ............................... E
                                                                      transactions involving the use of coupons.
Restaurant Meals .......................................... T
Safe Deposit Box Rental............................... T              •   When a manufacturer issues a coupon enti-
Scanning (photos, records, etc.) .................... T                   tling a purchaser to pay a reduced price on an
Security Guard and Patrol Services .............. T                       item purchased, and the vendor is reimbursed
Security Systems Services ............................ T                  by the manufacturer, distributor, or other third
Service Contracts:                                                        party, the tax is due on the full regular price of
    (on taxable property) ............................... T               the item. The taxable receipt is composed of
Shoe Repair................................................... E          the amount paid and the amount of the coupon
Silk-Screening, Monogramming,                                             value. The coupon value reflects a payment or
    Embroidering:                                                         reimbursement by another party to the vendor.
    Purchase of Clothing Included ................ E
    Services Only .......................................... T              Example: A store issues a coupon labeled
Snow Removal .............................................. T               “mfr.” entitling the holder to purchase an
Space for Storage .......................................... T              item for $10 less than the regular price.
Storage Service Charges ............................... T                   Regular price                 $ 99.95
Tanning Sessions .......................................... T               7% sales tax                  + 7.00
Tattooing ....................................................... T         Total before discount         $106.95
Telecommunications Services:                                                Manufacturer’s coupon         – 10.00
    (telephone, telegraph, pagers,                                          Customer pays                 $ 96.95
    alarm monitoring, etc.) ........................... T
Telephone Answering Services ..................... T                  •   When a store issues a coupon entitling a pur-
Tips and Gratuities (separately stated                                    chaser to a discounted price on the item pur-
    and paid in full to employees) ................ E                     chased or a free or reduced price on an
Towing .......................................................... E       additional item, and the vendor receives no re-
Transportation (see definition of delivery                                imbursement from the manufacturer or other
    charges, page 15) .................................... E              third party, the sales tax is due from the pur-
Trash Removal:                                                            chaser on only the discounted price, which is
    Contractual (30 days or more) ................ E                      the actual receipt.
    Non-Contractual ..................................... T                 Example: A store issues a coupon entitling
Travel Agency Fees ....................................... E                the holder to purchase a product for 50
Typing Services............................................. E              cents less than the regular price.
Utilities (natural gas, electricity) .................. T †
Videography .................................................. T            Regular price                   $ 2.37
Web Site Design ........................................... E               Store coupon                    – 0.50
Web Site Hosting .......................................... E               Taxable receipt                 $ 1.87
Window Washing .......................................... T                 7% sales tax                    + 0.13
                                                                            Customer pays                   $ 2.00
†Effective 1/1/98, included in rate


18                                                                                                                Rev. 12/06
                                                                          New Jersey Sales Tax Guide



•   When a store issues a coupon entitling a pur-       and foods that contain these raw animal foods
    chaser to pay a reduced price on an item pur-       that require cooking by the consumer are not
    chased, and the vendor is reimbursed by a           treated as prepared food.
    manufacturer, distributor, or other third party,
    the tax is due on the full regular price of the     The following are not treated as prepared food,
    item. The taxable receipt is composed of the        unless the seller provides eating utensils with the
    amount paid and the amount of the coupon            items:
    value.                                              •   Food sold by a seller that is a manufacturer;
•   When a manufacturer or a vendor issues a            •   Food sold in an unheated state by weight or
    coupon involving a third-party reimburse-               volume as a single item; and
    ment, but does not disclose that fact to the pur-   •   Bakery items sold as such, including bread,
    chaser on the coupon or in an accompanying              rolls, buns, bagels, donuts, cookies, muffins,
    advertisement, the vendor will collect from the         etc.
    purchaser only the tax due on the reduced
    price, but will be required to pay the tax appli-   Eating utensils include plates, knives, forks,
    cable to the entire receipt, i.e., the amount of    spoons, glasses, cups, napkins, or straws.
    the price paid and the reimbursement received
    from the manufacturer or other third party.         The sale of prepared food by restaurants, taverns,
                                                        or other establishments engaged in selling food
For more information about coupons, and addi-           that fits within the above definition is subject to
tional examples, see publication ANJ-9, Cou-            sales tax.
pons, Discounts & New Jersey Sales Tax.
                                                        For additional information, see the Notice re-
                                                        garding food and food products.
Prepared Food
Beginning October 1, 2005, the distinction be-
tween whether food is being purchased for con-
                                                        Newspapers, Magazines, and
sumption on-premises or off-premises is no              Books
longer relevant. Sales of prepared food are             Under P.L. 2006, c.44, effective October 1, 2006,
subject to sales tax. Prepared food, which in-          magazines and periodicals, whether or not ac-
cludes beverages, means:                                cessed by electronic means, are subject to tax.
• Food sold in a heated state or heated by the          However, newspapers, magazines and periodicals
   seller; or                                           sold by subscription, and membership periodicals
                                                        are exempt. A “membership periodical” is any
• Two or more food ingredients combined by
                                                        periodical distributed by a nonprofit organization
   the seller and sold as a single item; or
                                                        to its members as a benefit of membership in the
• Food sold with eating utensils provided by the        organization. N.J.S.A. 54:32B-8.5(b). Sales of
   seller.                                              books, both hardback and softback, including
Food that is only cut, repackaged, or pasteurized       sales of the Bible or other sacred scripture are
by the seller, as well as eggs, fish, meat, poultry,    taxable.



Rev. 12/06                                                                                                   19
Bulletin S&U-4



Digital Property                                      Exempt Clothing and Footwear
Under P.L. 2006, c.44, effective October 1, 2006,        Aprons (household and shop)
“digital property” is subject to tax. Digital prop-      Arch Supports
erty is defined as electronically delivered music,       Athletic Supporters
ringtones, movies, books, audio and video                Baby Receiving Blankets
works, and similar products, where the customer          Bathing Caps
is granted a right or license to use, retain, or         Bathing Suits
make a copy of such item.                                Beach Capes and Coats
                                                         Belts and Suspenders
                                                         Bibs
Clothing and Footwear                                    Boots
Sales of articles of clothing and footwear for hu-       Bowling Shirts (if suitable for ordinary
man use are exempt from New Jersey sales tax.               street wear)
Exceptions to this rule include certain athletic         Camp Clothes
equipment.                                               Coats, Jackets, and Wraps (for either
                                                            evening or daytime wear)
Clothing includes footwear, all inner and outer
                                                         Costumes (e.g., Halloween, dance; whether
wear, headgear, gloves and mittens, neckwear,
                                                            for adults or children)
and hosiery normally worn on the human body,
                                                         Diapers (including disposable, whether for
including baby receiving blankets, bunting, dia-
                                                            adults or children)
pers, diaper inserts, and baby pants. Disposable
                                                         Dress Shields
undergarments for adults are also exempt.
                                                         Dresses (including evening wear)
As of October 1, 2005, “protective equipment             Ear Muffs
necessary for the daily work of the user” is spe-        Footlets
cifically exempt. Protective equipment means             Formal Wear
items for human wear and designed as protection          Garters and Garter Belts
of the wearer against injury or disease, or as pro-      Girdles
tections against damage or injury to other per-          Gloves and Mittens (for general use)
sons or property, but not suitable for general use.      Hand Muffs
Examples include protective eye goggles or a             Hats and Caps
protective helmet for work. However, goggles or          Head and Neck Scarves and Bandannas
helmets worn for sports are not exempt.                  Hosiery and Peds
                                                         Incontinence Briefs
NOTE: Beginning July 15, 2006, fur clothing is           Lab Coats
      subject to the Fur Clothing Gross Re-              Leotards and Tights
      ceipts Tax. For additional information,            Neckties
      see the Notice to retail sellers of fur            Overshoes
      clothing.                                          Pantyhose
                                                         Rainwear




20                                                                                         Rev. 12/06
                                                                   New Jersey Sales Tax Guide



     Rubber Gloves (for home or work use)          Sport or Recreational Clothing and
     Rubber Pants                                  Footwear/Equipment
     Safety Clothing (normally worn in             Sport or recreational equipment that is worn only
         hazardous occupations)                    in conjunction with a particular sport is taxable.
     Sandals                                       Articles which can be adapted for general use not
     Shoe Insoles (e.g., Dr. Scholl’s®)            exclusively connected with a sporting activity
     Shoe Laces                                    are exempt from tax.
     Shoes (including safety shoes, sneakers and
         tennis shoes)                             Taxable:
     Shoulder Pads (for dresses, jackets, etc.)        Athletic Shoes (cleated or spiked)
     Ski Masks                                         Ballet and Tap Shoes
     Sleepwear                                         Baseball and Hockey Gloves
     Slippers                                          Bicycle Shorts (padded)
     Socks                                             Bowling Shoes
     Steel-Toed Shoes                                  Fishing Boots (waders)
     Stockings                                         Gloves (e.g., baseball, bowling, boxing,
     Thermal Underwear                                     hockey, golf)
     Underwear                                         Goggles
     Uniforms (athletic, school, scout, work,          Golf Shoes
         etc.)                                         Hand and Elbow Guards
     Wedding Apparel                                   Helmets (sports and motorcycle)
     Work Clothes, Work Uniforms                       Ice Skates
     Yarmulke and Turbans                              Life Preservers and Vests
                                                       Mouth Guards
                                                       Protective Masks
Protective Equipment
                                                       Roller Blades
     Breathing Masks
                                                       Roller Skates (boot and screw-on)
     Clean Room Apparel and Equipment
                                                       Shin Guards and Padding
     Ear and Hearing Protectors
                                                       Shoulder Pads
     Face Shields
                                                       Ski Boots
     Hard Hats
                                                       Skin Diving Suits
     Helmets
                                                       Snorkel and Scuba Masks
     Protective Goggles
                                                       Sweatbands
     Respirators (paint or dust)
                                                       Swim Fins
     Safety Glasses and Goggles
                                                       Track Shoes and Cleats
     Safety Belts
                                                       Waders
     Tool Belts
                                                       Wetsuits and Fins
     Welders’ Gloves and Masks




Rev. 12/06                                                                                        21
Bulletin S&U-4



Exempt:                                             Yarn Goods, Yarns, Sewing Equipment,
   Athletic Supporters                              and Supplies
   Children’s Sports and Play Uniforms (e.g.,       Common wearing apparel materials intended to
       football, baseball, karate)                  be used in either making or repairing clothes are
   Hooded Shirts                                    exempt. These materials include:
   Jogging or Running Shoes, Suits
                                                         Bra and Slip Repair
   Knitted Caps or Hats
                                                         Buttons
   Overshoes, Coats, Mittens, Parkas, and
                                                         Denim and Leather Patches
       Trousers (sometimes sold in the trade as
                                                         Elastic
       hunting, skating, and skiing apparel but
                                                         Fabrics
       suitable for general outdoor wear and
                                                         Lace
       commonly worn other than in a particu-
                                                         Ribbons
       lar sport)
                                                         Seam-Binding and Bias Tape
   Pullovers, Turtlenecks, and Other Sweaters
                                                         Thread
   Ski Masks
                                                         Yarn
                                                         Zippers
Accessories
Accessories are not considered clothing or foot-    NOTE: If these items are used on products other
wear and are taxable. Some of these are:                  than wearing apparel, such as doll
                                                          clothes and afghans, they are taxable.
     Backpacks               Key Rings
     Barrettes               Patches and            Any item that does not become an integral part
     Belt Buckles               Emblems             of the clothing is taxable. Some of these items
         (sold separately)      (sold separately)   are:
     Bobby Pins              Shower Caps
     Briefcases              Sunglasses (non-            Chalk
     Cosmetics                  prescription)            Fabrics and Yarns (used to make items other
     Costume Masks           Handbags                        than apparel such as rugs, pillows, etc.)
         (sold separately)   Handkerchiefs               Instruction Books
     Elastic Ponytail        Sweatbands                  Knitting Needles
         Holders             Umbrellas                   Measuring Tapes
     Hair Bows               Wallets                     Needles
     Hairclips               Watches                     Patterns
     Hairnets                Watch Bands                 Pins
     Headbands               Wigs and Hair               Sewing Machines
     Jewelry                    Pieces                   Scissors
     Key Cases                                           Tape Measures
                                                         Thimbles




22                                                                                          Rev. 12/06
                                                                       New Jersey Sales Tax Guide



Leasing                                               expired. Leases (or rentals) that are renewed for
                                                      an additional period are considered new transac-
The streamlined sales and use tax changes affect
                                                      tions to which the new rules apply.
the tax treatment of leases and rentals that are
entered into on or after October 1, 2005. Prior to    For additional information, including informa-
October 1, 2005, a distinction was made between       tion on which state’s tax applies to a transaction,
leases and rentals. A “lease” was a long-term         see the Notice regarding leases and rentals.
transaction with an original contract term longer
than 28 days on which the lessor (owner of the
leased property) was responsible for paying use       Claim for Refund of Sales Tax
tax. A “rental” was a short-term transaction with     Refunds Requested by Individuals From Sell-
an original contract term of 28 days or less on       ers. If nontaxable items are purchased and the
which the renter paid sales tax.                      seller charges sales tax, a request for a refund of
                                                      sales tax paid may be made directly to the seller.
Beginning October 1, 2005, the 28-day contract        If an individual is unable to recover the errone-
term distinction between leases and rentals is no     ously collected tax from the seller, a request can
longer relevant. The lessor must now collect          be made to the Division of Taxation.
sales tax from the lessee (person who leases or
rents property) regardless of the length of the       Refunds Requested by Individuals From the
lease or rental. For leases or rentals with a term    Division of Taxation. To request a refund from
of six months or less, sales tax must be collected    the Division, a Claim for Refund (Form A-3730)
with each periodic payment. For leases or rentals     must be filed within four years from the date of
of more than six months, the full amount of tax is    payment of the sales tax.
due up front in the period in which the lessee
takes delivery of the property.                       Refunds Requested by Businesses From the
                                                      Division of Taxation. Business owners who have
For transactions with a term of more than six         improperly collected and remitted sales tax to the
months, the tax must be calculated using either       State on their monthly return (Form ST-51) may
the original purchase price of the property, or the   correct the error on their quarterly sales tax re-
total of the periodic payments required under the     turn (From ST-50) only if the error is discovered
agreement, including interest charges directly        within the same calendar quarter. If the error is
paid by the lessee. When sales tax is paid on the     discovered after the return for that quarter has
purchase price, it does not have to be paid again     been filed, an Amended Quarterly Return must
if the lease is renewed or if the same property is    be filed with the Division of Taxation. Quarterly
subsequently leased to another party.                 returns can be amended online or by phone
                                                      through the Business Paperless Telefiling Sys-
The changes in the law do not affect the treat-       tem. If the error resulted in an overpayment of
ment of leases or rentals entered into prior to       tax, file a Claim for Refund (Form A-3730).
October 1, 2005, regardless of whether the prop-      Business owners must have records of canceled
erty is removed from or brought into New Jersey       sales, returned goods, or uncollectible receipts to
after October 1, 2005, before the lease or rental



Rev. 12/06                                                                                             23
Bulletin S&U-4



substantiate any claim for a refund of sales tax re-   accuracy of tax returns, and will protect the busi-
mitted to the State.                                   ness owner in the event of an audit or investiga-
                                                       tion by the State.
Businesses Collecting                                  New Jersey retailers are required to keep records
Sales Tax                                              and file New Jersey sales and use tax returns. In
                                                       addition, records must be kept for income tax
Registering a Business                                 and, depending on the nature of the business,
Any person or organization engaged in a busi-          other taxes as well.
ness, trade, profession, or occupation in New Jer-
sey must register with the State for tax purposes      This section contains recordkeeping requirements
by filing a Business Registration Application,         for New Jersey retailers who collect sales tax.
Form NJ-REG, at least fifteen (15) business days
before starting business or opening an additional      Bookkeeping Methods
place of business in this State. Registration en-      The two accepted methods of bookkeeping are
sures that the business will receive all the forms     single-entry and double-entry. The single-entry
and information it needs to comply with New            method is the simpler and easier of the two. Al-
Jersey tax laws. A Public Records Filing may           though the double-entry method is more com-
also be required depending upon the type of            plex, it has the advantage of greater accuracy,
business ownership. More information on Public         and it reduces the chance of errors. A business
Records Filing is available in the New Jersey          owner may choose whichever method best suits
Complete Business Registration Package                 the company’s needs.
(NJ REG) or by calling 609-292-9292.

Form NJ-REG may be filed online from the Divi-         Accounting Methods
sion of Revenue’s New Jersey Business Gateway          The accrual method of accounting must be used
Services Web site at: www.state.nj.us/njbgs/. The      for sales tax records. Under the accrual method,
public records filing required for corporations,       all items of income are included in the gross re-
limited liability companies, limited partnerships,     ceipts when they are earned, although actual
and limited liability partnerships may also be         payment may not be received until later.
completed online from this Web site. (There is a
                                                          Example: Frank Smith, owner of Mr. F’s
fee associated with the Public Records Filing.)
                                                          Appliance Store, sold a television set to a
                                                          customer in March, but did not actually re-
Keeping Records                                           ceive full payment until May. He must in-
Whatever the business, keeping accurate records           clude the amount of the sale in his gross
is essential to success. Keeping records is more          receipts for March and remit sales tax due
than just good business sense — it is a necessary         on the sale with his sales tax return due
part of compliance with both State and Federal            April 20, even though he did not receive
tax laws. Keeping good records will ensure the            payment until May.




24                                                                                               Rev. 12/06
                                                                          New Jersey Sales Tax Guide



Sales Records                                           Sales and Use Tax Returns
Retailers registered to do business in New Jersey       Every business which is on a reporting basis for
are responsible for collecting sales tax and remit-     sales tax purposes must file sales tax returns.
ting it to the State. They may also be accepting        Information on filing requirements and reporting
and issuing New Jersey exemption certificates.          methods is available on the Division of Taxa-
These certificates exempt the purchaser from            tion’s Web site.
paying New Jersey sales and use tax on mer-
chandise and/or services. Exemption certificates        Exemption Certificates
must be retained by the vendor for at least four        New Jersey has exemption certificates which can
(4) years from the date of the last transaction         be used to purchase goods without the payment
covered by the certificate. Certificates must be in     of sales tax in certain situations. Each exemption
the physical possession of the seller and avail-        certificate has a specific use. The New Jersey
able for inspection by the Division of Taxation. It     seller accepting an exemption certificate must
is essential that businesses maintain clear, accu-      always be registered with New Jersey. The most
rate records of all sales.                              common certificates are the Resale Certificate
There are two principles to remember when col-          (Form ST-3), Exempt Use Certificate (Form
lecting sales tax:                                      ST-4), and Exempt Organization Certificate
                                                        (Form ST-5).
1. Vendors hold any sales tax collected in trust
   for the State, and                                   The seller must keep these rules in mind when
2. All receipts are considered to be taxable until      accepting exemption certificates:
   the contrary is established.                         1. Accept an exemption certificate only if:
                                                           — It is filled out completely and correctly;
Keep daily records of the sales made. These
                                                              and
records can be used to make monthly totals
                                                           — There is no reason to doubt that the cus-
showing the following information:
                                                              tomer has the right to make an exempt
•   Gross receipts from sales                                 purchase.
•   Receipts from sales that are not subject to tax     2. Keep exemption certificates for at least four
•   Receipts from taxable sales                            years from the date of the purchase.
•   Purchases that are subject to use tax               Only one exemption certificate is necessary for
•   Lease/rental transactions that are subject to tax   additional purchases of the same general type.
                                                        Keep a record of each sale covered by a blanket
•   Amount of sales tax due the State (whether
                                                        certificate. Retain this certificate for at least four
    collected or billed)
                                                        years from the date of the last purchase covered
Use the figures from these totals to complete the       by the certificate.
monthly and/or quarterly tax returns.




Rev. 12/06                                                                                                  25
Bulletin S&U-4



SSUTA Exemption Certificate. The Stream-                  Certain purchases by foreign diplomatic and con-
lined Sales and Use Tax Agreement provides for            sular personnel residing in the United States are
simplification and standardization in the admin-          also exempt from sales tax. There are two types
istration of exemptions. A uniform Certificate of         of sales tax exemption cards issued by the U.S.
Exemption, which will be accepted by all                  Department of State, Office of Foreign Missions,
SSUTA member states, has been developed. As               that are acceptable as proof of the exemption.
long as the certificate is completed by the pur-          Personal sales tax exemption cards are issued for
chaser and provided to the seller, the seller is          the sole benefit of the individual identified on
relieved of responsibility for collecting sales tax,      the card. Mission tax exemption cards are issued
even if it is later determined that the purchaser         to embassies, consulates, and international orga-
was not eligible for the exemption. The certifi-          nizations for official purchases only and for the
cate with instructions is available on the Divi-          sole benefit of the mission identified on the card.
sion’s Web site at: www.state.nj.us/treasury/             For more information, see Technical Bulletin
taxation/prntsale.shtml                                   TB-53, Diplomat/Consular Sales Tax
                                                          Exemptions.
Sales to Government Agencies
Sales tax should not be collected when a product          Out-of-State Sales
is sold to the Federal government, the United             If taxable items are sold and the items sold are
Nations or any international organization of              delivered out of State to the purchaser, New Jer-
which the United States is a member, and the              sey sales tax should not be collected. If the mer-
State of New Jersey or any of their agencies. In          chandise is shipped out of State to a recipient
transactions with government agencies, the ac-            other than the purchaser (e.g., in a gift transac-
ceptable proof of exemption from sales tax is:            tion), the sale is also exempt from sales tax. Make
•    A copy of a government purchase order, offi-         sure the records show both the out-of-State desti-
     cial contract, or order on official government       nation and the method of delivery to that location,
     letterhead and payment by government check           such as parcel post receipts, bills of lading, etc.
     or payment by a “United States of America”           Sales are taxable, however, if an out-of-State
     SmartPay Visa Card or MasterCard with the            customer picks up the merchandise in New Jer-
     number 0, 6, 7, 8, or 9 as the sixth digit (credit   sey. They are also taxable if the merchandise is
     card charged to and paid directly by the Fed-        delivered to the customer’s location in New Jer-
     eral government, not a card charged to an em-        sey, even though the customer may intend to ship
     ployee who gets reimbursed by the Federal            the merchandise out of State at a later date. How-
     government); or                                      ever, out-of-State purchasers who are registered
•    For government cash purchases of $150 or             with New Jersey and “qualified out-of-State ven-
     less, an ST-4 form signed by a qualified gov-        dors” may make tax-exempt purchases in New
     ernment official (not acceptable for room            Jersey of goods and services purchased for re-
     occupancies).                                        sale. For more information, see publication
                                                          ANJ-10, Out-of-State Sales & New Jersey Sales
                                                          Tax.



26                                                                                                 Rev. 12/06
                                                                        New Jersey Sales Tax Guide



Retention of Records                                   Retain records such as punched cards, magnetic
All books, records, certificates, and other docu-      tapes, and disks for at least four years.
ments necessary to determine the tax liability to
                                                       A description of the business system must be
New Jersey must be available for inspection by
                                                       available and include:
the Division of Taxation for at least four years.
                                                       • The application being performed;
If adequate records have not been kept, the State      • The procedures employed (flow charts, dia-
may estimate the tax liability of the business           grams, etc.); and
based on any available information, including          • The controls used to ensure accuracy.
external indicators.
                                                       Document important changes in the system and
Microfilm Records                                      their effective dates.
Books of account (cash books, ledgers, journals,
etc.) must be retained. Microfilm reproductions        Other Taxes and Fees
are not acceptable for audit purposes. However,
sales invoices, purchase invoices, credit memo-        Atlantic City Luxury Sales Tax
randa, etc. may be reproduced on microfilm to be       The Atlantic City luxury tax is imposed on cer-
retained for inspection. If a business intends to      tain rentals, sales, and services within Atlantic
destroy the originals before the four-year limit,      City. The luxury tax rate is 9% with the exception
written permission must be received from the Di-       of alcoholic beverages sold by the drink, which
rector of the New Jersey Division of Taxation.         are subject to a rate of 3%. If the item is subject
                                                       to both taxes, the State sales tax rate is reduced
Data Processing Records                                to the extent that the city rate exceeds 6%, and
Automatic data processing tax accounting can be        the maximum combined Atlantic City rate and
used if it:                                            New Jersey rate may not exceed 13%. In addi-
                                                       tion, certain room rentals in Atlantic City are
•   Provides a method of producing visible
                                                       also subject to a 1% State occupancy fee. (See
    records for verification;
                                                       Hotel/Motel Occupancy Fee and Municipal Oc-
•   Traces any transaction back to the original
                                                       cupancy Tax below.) For more information, see
    source or forward to a final total;
                                                       publication ANJ-17, Atlantic City: Luxury Tax,
•   Has the ability to reconstruct transactions that
                                                       New Jersey Sales Tax & Other Fees.
    do not have detailed printouts made at the
    time the transactions were processed;
•   Provides an audit trail designed to identify un-   Cape May County Tourism Sales Tax
    derlying documents such as sales invoices,         Certain businesses in Cape May County must
    purchase invoices, credit memoranda, etc.; and     collect a 2% tourism sales tax on predominantly
                                                       tourism-related retail sales in addition to the 7%
•   Prepares a written general ledger with source
                                                       State sales tax. At present, businesses in Wild-
    references to coincide with financial reports
                                                       wood, Wildwood Crest, and North Wildwood are
    for the tax reporting periods.
                                                       required to collect the tourism sales tax.



Rev. 12/06                                                                                             27
Bulletin S&U-4



“Tourism-related sales” include the following (if      or similar facility in most New Jersey municipal-
also taxable under the Sales and Use Tax Act):         ities. The fee is imposed at a lower rate in certain
•    Hotel, motel, or boarding house lodging;          municipalities: 3.15% in Wildwood, Wildwood
                                                       Crest, and North Wildwood; 1% in Newark,
•    Food and drink sold by restaurants, taverns,      Jersey City, and Atlantic City. The fee applies to
     and other similar establishments for con-         room rentals that are currently subject to the 7%
     sumption on or off the premises (including        New Jersey sales tax and is in addition to the
     mobile vendors and other sellers of prepared      sales tax.
     food), or by caterers (but not including vend-
     ing machine sales); and                           A municipal occupancy tax of up to 3% may also
                                                       be imposed by any New Jersey municipality
•    Admission charges to any place of amuse-          (other than Newark, Jersey City, Atlantic City,
     ment, including charges for admission to rides,   Wildwood, Wildwood Crest, and North Wild-
     sporting events and exhibitions, dramatic or      wood) that adopts an ordinance assessing the tax
     musical arts performances, movie theaters,        on occupancies in that municipality.
     and cover charges to nightclubs and cabarets.
In addition to the tourism sales tax, the rent for     Motor Vehicle Tire Fee
every occupancy of a room in a hotel, motel, or        A fee of $1.50 is imposed on the sale of new
similar facility that is subject to the 7% New         tires, including new tires that are component
Jersey sales tax is also subject to a tourism as-      parts of a new or used motor vehicle which is
sessment of 1.85% and a State occupancy fee of         either sold or leased, if the transaction is subject
3.15%. (See Hotel/Motel Occupancy Fee and              to New Jersey sales tax. The $1.50 fee is im-
Municipal Occupancy Tax below.)                        posed per tire, including the spare tire sold as
                                                       part of a motor vehicle, and also applies to sales
Domestic Security Fee                                  of new tires in connection with a repair or main-
Motor vehicle rental companies doing business          tenance service. It does not apply to the sale of
in New Jersey are required to pay a $5.00 per day      recapped tires. The tire fee must be collected
Domestic Security Fee for each rental day a mo-        from the purchaser by the retail vendor, and in
tor vehicle is rented under agreements of 28 days      general, must be separately stated on any bill, in-
or less. The fee is due for the quarter in which       voice, receipt, or similar document.
the rental agreement ends and is separate from
and in addition to any sales tax due on the rental     Tobacco Products
transaction. For more information, see the Notice      Wholesale Sales and Use Tax
to motor vehicle rental companies.                     The Tobacco Products Wholesale Sales and Use
                                                       Tax is imposed on the sale, use, or distribution of
Hotel/Motel Occupancy Fee                              tobacco products, other than cigarettes. The tax
                                                       paid by the distributor or wholesaler is calculated
and Municipal Occupancy Tax
                                                       on the amount paid by the distributor or whole-
An occupancy fee of 5% is imposed on the rent
                                                       saler to buy the products from the manufacturer.
for every occupancy of a room in a hotel, motel,
                                                       Cigarettes are exempt from this tax.



28                                                                                               Rev. 12/06
                                                                    New Jersey Sales Tax Guide



                              For More Information
By Phone                                        Online
• Call the Division of Taxation’s Customer      •   Division of Taxation Web site:
  Service Center at 609-292-6400                    www.state.nj.us/treasury/taxation/
• TTY equipment users call 1-800-286-6613       • E-mail: nj.taxation@treas.state.nj.us
  (within NJ, NY, PA, DE, and MD) or            • Subscribe to NJ Tax E-News, the Division
  609-984-7300 (anywhere)                           of Taxation’s online information service, at:
                                                    www.state.nj.us/treasury/taxation/listservice.shtml

                                  In Writing
                                  New Jersey Division of Taxation
                                  Information and Publications Branch
                                  PO Box 281
                                  Trenton, NJ 08695-0281

                       Order Forms and Publications
•   Call the Forms Request System at            • Call NJ TaxFax at 609-826-4500 from your
    1-800-323-4400 (Touch-tone phones within      fax machine’s phone
    NJ, NY, PA, DE, and MD) or                  • Visit the Division of Taxation’s Web site:
    609-826-4400 (Touch-tone phones anywhere)       www.state.nj.us/treasury/taxation/




Rev. 12/06                                                                                          29

				
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