Tax Topic Bulletin S U-4, New Jersey Sales Tax Guide

Tax Topic Bulletin S U-4, New Jersey Sales Tax Guide
T
New Jersey Division of Taxation
AX
OPIC
Contents
New Jersey Sales Tax Guide
Introduction ........................................................... 1
Important Changes............................................ 1
Streamlined Sales and Use Tax Agreement ....... 3
Sales Tax Law ........................................................ 3
Urban Enterprise Zones .................................... 3
Salem County Reduced Sales Tax ..................... 4
Use Tax .................................................................. 4
Grocery, Drug, and Household Items ................... 5
Services ................................................................ 14
Coupons ............................................................... 19
Prepared Food ..................................................... 19
Newspapers, Magazines, and Books ................... 20
Digital Property .................................................. 20
Clothing and Footwear ....................................... 20
Exempt Clothing and Footwear ...................... 21
Protective Equipment ...................................... 22
Sport or Recreational Clothing and
Footwear/Equipment .................................. 22
Accessories ...................................................... 23
Yarn Goods, Yarns, Sewing Equipment,
and Supplies ................................................ 23
Leasing ................................................................ 23
Claim for Refund of Sales Tax ............................. 24
Businesses Collecting Sales Tax:
Registering a Business .................................... 24
Keeping Records ............................................. 25
Bookkeeping Methods ..................................... 25
Accounting Methods ....................................... 25
Sales Records .................................................. 25
Sales and Use Tax Returns .............................. 26
Exemption Certificates .................................... 26
Sales to Government Agencies ........................ 26
Out-of-State Sales ........................................... 27
Retention of Records ....................................... 27
Microfilm Records ........................................... 27
Data Processing Records ................................ 28
Other Taxes and Fees:
Atlantic City Luxury Sales Tax........................ 28
Cape May County Tourism Sales Tax ............. 28
Domestic Security Fee .................................... 29
Hotel/Motel Occupancy Fee and
Municipal Occupancy Tax .......................... 29
Motor Vehicle Tire Fee.................................... 29
Tobacco Products Wholesale Sales
and Use Tax .................................................. 29
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New Jersey Sales Tax Guide
Bulletin S&U-4
Introduction
This bulletin has been designed as a guide to
New Jersey sales tax and the taxability of certain items and services sold at retail. The lists
of taxable and exempt items given throughout
this publication are not meant to be allinclusive. If after reading this bulletin you are
unsure of whether or not an item is taxable,
contact the New Jersey Division of Taxation.
(For information on contacting the Division of
Taxation see page 30 of this publication.)
Important Changes
P.L. 2006, c.44 made the following changes to
the Sales and Use Tax Act.
Effective July 15, 2006
The sales and use tax rate increased from 6% to
7% on all retail sales of taxable merchandise or
services.
Effective October 1, 2006
Sales and use tax was extended to charges for
the following services and property, including
the new category “digital property”:
• Space for storage;
• Tanning services;
• Massage services, unless prescribed by a
doctor;
• Tattooing, including permanent body art and
permanent cosmetic makeup;
• Investigation and security services, including
detective services, patrol services, armored car
services, and security system services;
• Information services;
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Limousine services originating and taking
place wholly within this State, except as provided in connection with funeral services;
Membership fees for most athletic, sporting,
health and fitness, and shopping clubs and
organizations, except charges made by New
Jersey State and local government entities and
qualified exempt organizations;
Parking, storing, or garaging a motor vehicle,
excluding charges for residential parking, certain employee parking, municipal parking,
parking subject to any other law or ordinance,
the $3 minimum fee imposed on parking at
Atlantic City casino hotels;
Digital property, which means electronically
delivered music, ringtones, movies, books,
audio and video works and similar products,
where the customer is granted a right or license
to use, retain, or make a copy of such item; and
Magazines and periodicals, except those sold
by subscription and membership periodicals
which are distributed by nonprofit
organizations.
The taxability of certain property and services
was changed as follows:
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Software. The current exemption for prewritten software delivered electronically is
limited to electronically delivered software
that is used directly and exclusively in the
conduct of the purchaser’s business, trade or
occupation. Thus, electronically delivered
software sold to individuals is subject to tax.
Delivery Charges. The law modified the exclusion for delivery charges that are separately
stated from the sales price of an item on the invoice, bill, or similar document given to the
purchaser. The law provides for tax to be imposed on delivery charges for taxable items and
no tax to be imposed on delivery charges for
nontaxable items.
•
Laundering. The sales tax exemption for laundering, dry cleaning, tailoring, weaving, and
pressing is limited specifically to providing
those services to clothing. The exemption does
not apply to items such as draperies, carpets,
blankets, comforters, slipcovers, tablecloths,
napkins, dust cloths, mats, mops, industrial
wiper cloths, fender covers, bed linens, hospital linens, table linens, linen supply towels, and
other cloths.
•
Floor Covering Installation Services. The
exemption for the installation of floor covering that resulted in capital improvement to real
property was eliminated. Thus, the labor
charge to install floor covering (e.g., carpeting, linoleum, tile, and padding) is now taxable. Businesses that provide floor covering
installations are still treated as contractors under the law.
•
Landscaping Services. The exemption for
landscaping services that result in a capital
improvement to land was eliminated. Labor
charges for landscaping services, such as seeding, sodding or grass plugging of new lawns;
planting trees, shrubs, hedges, plants; and
clearing and filling land are now taxable.
For more information on changes effective October 1, 2006, visit the Division’s Web site at:
www.state.nj.us/treasury/taxation/salestaxbase.shtml
The law also made two technical changes. First,
it included a provision that clarified the sales and
use tax collection responsibility of a corporation
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New Jersey Sales Tax Guide
that does not maintain a place of business in New
Jersey but, through another corporation that is
related through common ownership, conducts
business activity in New Jersey through the
­actions of the related New Jersey agent corporation in furtherance of common marketing,
promotion, selling, or service activity. Second,
it incorporated several rate change provisions of
the Streamlined Sales and Use Tax Agreement
into the New Jersey Sales and Use Tax Act.
For more information on the taxability of boats,
see Notice – Sales and Use Tax Partial Exemp-
tion and Maximum Sales and Use Tax Imposition
Amount for Sales and Uses of Boats and Vessels;
Establishes Grace Period for Use Tax Imposition
on Certain Boats and Vessels used by Resident
Purchasers.
Streamlined Sales and Use Tax
­Agreement (SSUTA)
The Streamlined Sales and Use Tax Agreement
affects the New Jersey sales tax treatment of
certain products and services, including, but not
limited to, candy, soft drinks, prepared food, certain clothing and foot­wear, grooming and h­ ygiene
products, and lease transactions.
For more information regarding the streamlined
sales and use tax changes that took effect October 1, 2005, visit the Divi­sion’s Web site at:
www.state.nj.us/treasury/­taxation/streamchanges.
htm
Sales Tax Law
The New Jersey Sales and Use Tax Act imposes
a tax of 7% upon the receipts from every retail
sale of tangible personal property, digital property, and the sale of certain services, except as
otherwise provided in the Act. Tangible personal
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property is defined to include prewritten computer software delivered electronically. In addition,
most services performed upon tangible personal
property are taxable unless they are specifically
exempted by law. Exempt items include: most
food sold as grocery items, most clothing and
footwear, dis­posable paper products for household use, prescription drugs, and over-the-counter drugs.
Urban Enterprise Zones
New Jersey has established Urban Enterprise
Zones in a number of economically depressed
cities in the State. Within these zones, qualified businesses having a UZ-2 certificate may
charge 3.5% sales tax on sales of merchandise
qualified for the reduced rate. In order for the
qualified UEZ seller to offer this reduced rate,
the purchaser must place the order in person at
the seller’s place of business in the zone, and the
seller must deliver the goods from the vendor’s
location in the zone, not from another location.
P.L. 2006, c.34, made changes to the Urban Enterprise Zones Act. The UEZ law providing a
purchase exemption for certain sales made to a
qualified business remained effective; however,
procedural amendments to the law required sales
tax to be collected on sales made to qualified
businesses on and after July 15, 2006, unless the
business was a “small qualified business” (annual gross receipts less than $1 million in the prior
annual tax period). A qualified business other
than a small qualified business had to pay the tax
at the time of purchase and apply for a r­ efund.
P.L. 2007, c.328, enacted January 13, 2008, allows qualified businesses with annual gross
receipts less than $3 million in the prior annual
tax period to obtain the exemption at the point of
purchase.
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Businesses must first apply for exemption by filing Form UZ-5-SB-A. Upon approval, small
qualified businesses are issued an exemption certificate (Form UZ-5-SB) which is administered
in the same manner as the original Form UZ-5. A
business that does not qualify as a “small qualified business” will be required to pay sales tax or
self-assess use tax, but may apply to the Division
for a refund within one year of the invoice date.
For more information on Urban Enterprise Zones
visit the Division’s Web site at:
www.state.nj.us/treasury/taxation/uez.shtml.
Salem County Reduced Sales Tax
Certain sales made by businesses located in
Salem County are subject to sales tax at 50% of
the regular rate. Although there are certain
exceptions, the 3.5% reduced rate applies solely
to retail sales of tangible personal property. The
following are not eligible for the reduced rate:
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Motor vehicles
Alcoholic beverages
Cigarettes
Mail-order, catalog, or Internet sales
Sales of services (e.g., maintenance and/or
repairs)
Prepared food, meals, and beverages
Telephone and electronically communicated
sales
Sales made from locations outside the county
Charges for admissions or amusements
Charges for room occupancy
larly operated by the vendor for the purpose of
making retail sales. In addition, the purchaser
must accept delivery at the vendor’s place of
business in Salem County, or the vendor must
deliver the goods to the purchaser from the
vendor’s location in Salem County.
Use Tax
A use tax liability may be incurred when taxable
goods or services are purchased for use in New
Jersey but sales tax was not collected, or was
collected at a rate less than the New Jersey sales
tax rate. In these instances the purchaser is liable
for payment of use tax at the New Jersey sales
tax rate. Thus, when taxable items are purchased
from Internet retailers or mail-order catalog companies that do not collect New Jersey sales tax,
the purchaser is required to remit the use tax directly to the State of New Jersey.
Example: Frank Smith, a New Jersey resident, ordered a $3,000 pool table over the
Internet from a company based in another
state. The company sent the pool table to
Mr. Smith’s home in New Jersey and did
not charge him any sales tax. It is Mr.
Smith’s responsibility to remit use tax, in
the amount of $210 ($3,000 ! 7%), directly
to the State of New Jersey.
For more information about use tax, see publication ANJ-7, Use Tax in New Jersey.
To qualify for the reduced rate, the sale must be
made in person from a place of business regu-
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New Jersey Sales Tax Guide
Grocery, Drug, and
Household Items
Most items of food and drink purchased in a
food store (supermarket, grocery store, produce
market, bakery, etc.) are not subject to sales tax.
Food and food ingredients (exempt) means substances, whether in liquid, concentrated, solid,
frozen, dried, or dehydrated form, that are sold
for ingestion or chewing by humans and are consumed for their taste or nutritional value. This
term does not include tobacco, alcoholic beverages, candy, or soft drinks.
Dietary supplements (exempt) are any products
required by the Federal government to be labeled
as a dietary supplement, and that are identifiable by the “Sup­plement Facts” box on the label.
Many items that are commonly marketed as
health supplements, energy bars, or meal replacement bars do not fall within the definition
of ­“dietary supplements.” These items could be
taxable as candy if they meet the definition b­ elow.
Candy (taxable) means a preparation of sugar,
honey, or other natural or artificial sweeteners in
combination with chocolate, fruits, nuts, or other
ingredients or flavorings in the form of bars,
drops, or pieces. Any preparation containing
flour or requiring ­refrigeration is not considered
“candy.”
Soft drinks (taxable) are nonalcoholic beverages
in liquid form that contain natural or artificial
sweeteners. Beverages that contain milk or milk
products; soy, rice, or similar milk substitutes;
or more than 50% fruit or vegetable juice are not
considered “soft drinks” and are not subject to
sales tax.
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Prescription drugs and over-the-counter (OTC)
drugs are also exempt from tax provided there is
a label identifying the product as a drug, such as
a “Drug Facts” panel or a statement of active ingredients. The OTC drug exemption does not apply to any grooming and hygiene product, which
means a soap or cleaning solution, shampoo,
toothpaste, mouthwash, antiperspirant, suntan lotion, or ­sunscreen.
Diabetic supplies, prosthetic devices, durable
medical equipment for home use, and mobility
enhancing equipment are exempt from tax. Repair and replacement parts for such devices and
equipment are also exempt.
Examples of “prosthetic devices” include: hearing aids, pacemakers, heart valves, prescription
eyeglasses and contact lenses, artificial limbs.
Examples of “durable medical equipment”­
­include: bed pans, blood pressure machines
and cuffs, heating pads, ice packs. Examples of
“mobility enhancing equipment” include: canes,
crutches, wheelchairs, wheelchair lifts, hand controls for ­vehicles.
The following is a list of items commonly found
in a retail store, with an indication of whether the
item is taxable (T) or exempt (E) from sales tax
when sold to an individual consumer.
Some items found on the list may become taxable if sold as prepared food. See the definition
of prepared food on page 19. For additional
information, see the Notice regard­ing food and
food products. Food and beverages that are eligible to be purchased with food stamps are exempt from sales tax. Thus, taxable items such as
candy and soft drinks are not subject to tax when
purchased with food stamps.
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Sales of disposable household paper products
such as towels, napkins, toilet tissue, p­ aper
plates, and paper cups are exempt from sales tax.
This exemption does not apply to the sale of dis­
posable paper products for industrial, com­mer­
cial, or other business use.
Acne Products:
Creams or Lotions.....................................E
Cleansers or Soaps....................................T
Air Fresheners.................................................T
Alcohol, Rubbing............................................E
Alcohol, Swabs and Pads................................E
Alcoholic Beverages (prepackaged
or by the drink)..........................................T
Allergy Relief Products...................................E
Aluminum Foil................................................T
Ammonia.........................................................T
Anesthetics......................................................E
Antacids..........................................................E
Antibiotics.......................................................E
Antifungals......................................................E
Antihistamines................................................E
Antinauseants..................................................E
Antiperspirants................................................T
Arch Supports.................................................E
Arthritis Relievers...........................................E
Artificial Tears.................................................E
Aspirins and Combinations.............................E
Asthma Preparations.......................................E
Astringents......................................................E
Athlete’s Foot Treatments...............................E
Baby Bath Soaps-Liquid, Bar.........................T
Baby Food.......................................................E
Baby Formulas................................................E
Baby Lotions...................................................T
Baby Pants......................................................E
Baby Powder...................................................T
Baby Shampoos..............................................T
Baby Wipes.....................................................E
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Bags:
Cloth, Plastic.............................................T
Paper for household use............................E
Baked Goods ..................................................*
*Taxability depends on how product is sold.
See Prepared Foods, page 19.
Baking Cups:
Foil............................................................T
Paper for household use............................E
Baking Powder................................................E
Baking Soda....................................................E
Balloons..........................................................T
Bandages.........................................................T
Band Aids........................................................T
Bar Mixes (Liquid):
Sweetened.................................................T
Unsweetened.............................................E
Bath Beads, Oils, Sachets...............................T
Bathing Caps...................................................E
Bathroom Cleaners..........................................T
Batteries..........................................................T
Batteries-Hearing Aid.....................................E
Bed Linens......................................................T
Bed Pans for home use....................................E
Bee Sting Relievers.........................................E
Beverage Flavorings/Enhancers (liquid,
concentrated).............................................E
Beverage Powders (Kool-Aid,
lemonade, iced tea)...................................E
Beverage Syrups:
Flavored....................................................E
Soda..........................................................E
Beverages, Sweetened:
Containing milk, milk products, or
milk substitutes (soy, rice, etc.).............E
Containing more than 50% juice...............E
Containing no milk products and
containing 50% or less juice.................T
Beverages, Unsweetened ...............................E
Bibs.................................................................E
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New Jersey Sales Tax Guide
Bird Food ...................................................... T
Birth Control Preparations ............................ E
Biscuits, Crackers ......................................... E
Blankets (except baby
receiving blankets) .................................. T
Bleach-Liquid, Dry ....................................... T
Blistex® (medicated) .................................... E
Blood Pressure Cuffs for home use .................. E
Books (except certain textbooks
approved by the school) .......................... T
(see also Newspapers, Magazines, and
Books, and Digital Property, page 20)
Bottled Water:
Unsweetened ........................................... E
Sweetened ............................................... T
Braces-Ankle, Knee ...................................... E
Bread and Rolls ............................................ E
Breast Cream ................................................ T
Breast Pump .................................................. T
Breast Shells, Bra Pads ................................. E
Breath Freshener ........................................... T
Bubble Bath .................................................. T
Butane ........................................................... E
Cake Mixes ................................................... E
Calling Cards, Telephone (prepaid):
Sale of Card ............................................ T
Additional Minutes ................................. T
Camera Lens and Eyeglass Cleaner
Tissues .................................................... T
Candles ......................................................... T
Candy ............................................................ T
Taxable unless product contains
flour (e.g., Nestle Crunch) or
requires refrigeration
Canes ............................................................ E
Canker Sore Preparations ............................. E
Rev. 5/08
Canned Goods:
Fruits ....................................................... E
Meats, Fish (except pet food) ................ E
Milk ........................................................ E
Soup ........................................................ E
Vegetables ............................................... E
Car Wash and Wax ........................................ T
Carbonated Beverages (see Beverages)
Carpet Cleaners............................................. T
Carpet Deodorizers ....................................... T
Castor Oil ...................................................... E
Cat Food ....................................................... T
CDs, Cassettes, DVDs .................................. T
Cereal Bars ................................................... *
*Taxability depends on ingredients.
See Candy, page 5.
Cereals .......................................................... E
Chapstick® (medicated) ............................... E
Charcoal, Charcoal Briquets ......................... E
Cheese, Cheese Spreads ............................... E
Chewing Gum ............................................... T
Chewing Tobacco ......................................... T
Chips-Chocolate, Butterscotch, etc.
(for use in baking):
Sweetened ............................................... T
Unsweetened ........................................... E
Chips-Potato, Corn, etc. ................................ E
Christmas Trees ............................................ T
Christmas Tree Skirts-Paper, Cloth .............. T
Cigarette Filters ............................................ T
Cigarette Papers ............................................ T
Cigarettes ...................................................... T
Cigars ............................................................ T
Cleaning Liquids, Powders ........................... T
Clothes Lines ................................................ T
Clothes Pins .................................................. T
Clothing (see Clothing and Footwear, page 20)
Cocktail Onions, Olives ................................ E
Cocktail Sauces ............................................ E
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Cocoa, Instant.................................................E
Cod Liver Oil..................................................E
Coffee (beans, packaged, instant)...................E
Coffee Filters-Paper for household use............ E
Coffee Pot Cleaners........................................T
Cold Preparations and Remedies....................E
Cold Sore Preparations...................................E
Combs.............................................................T
Computers: (see also Services, page 14)
Computer Systems....................................T
Hardware Components..............................T
Prepackaged Software...............................T
Condiments (catsup, mustard, etc.).................E
Condoms.........................................................T
Confections (see Candy).................................T
Constipation Products.....................................E
Contact Lens Care Products,
including saline solution...........................T
Contact Lens Cleaner, Solution......................T
Contact Lenses (prescription).........................E
Contraceptive Preparations.............................E
Cooking Wine.................................................E
Copper Cleaner...............................................T
Corn and Callus Pads......................................T
Corn and Callus Removers.............................E
Cornstarch.......................................................E
Cosmetics........................................................T
Costumes.........................................................E
Cottonballs......................................................T
Cough Preparations.........................................E
Cream, Milk, Half and Half............................E
Crepe Paper.....................................................T
Crutches..........................................................E
Cups:
Paper for household use............................E
Plastic, Foam.............................................T
Cuticle Remover.............................................T
Dandruff/Seborrhea Shampoo........................T
Decongestants.................................................E
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Decorations-Paper, Plastic..............................T
Dehydrated Food (hunting, etc.).....................E
Dental Floss....................................................T
Dental Rinse....................................................T
Denture Adhesives, Preparations....................T
Deodorants, Antiperspirants............................T
Deodorizers-Room, Car, Carpet......................T
Depilatories.....................................................T
Detergents.......................................................T
Diabetic Supplies (lancets, needles,
syringes, test strips, wipes, etc.)................E
Diapers (including disposable).......................E
Diaper Liners..................................................E
Diarrhea Aids..................................................E
Digestive Aids.................................................E
Digital Property
(see Digital Property, page 20).................T
Dinnerware:
Paper for household use............................E
Plastic, Foam.............................................T
Dips (cheese, onion, etc.)................................E
Dish Detergents...............................................T
Disinfectants...................................................T
Distilled Water................................................E
Diuretics..........................................................E
Dog Food........................................................T
Doilies-Paper, Foil..........................................T
Douches:
Antiseptic, Anti-Infectious........................E
Cleaning, Deodorizing..............................T
Drain Openers, Cleaners.................................T
Drawer Liners.................................................T
DVDs, CDs.....................................................T
Dyes................................................................T
Ear Preparation, Ache Aids.............................E
Ear Syringes....................................................E
Eczema Preparations.......................................E
Eggs (fresh, dried)...........................................E
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New Jersey Sales Tax Guide
Electrical Supplies..........................................T
Energy Bars.....................................................*
*Taxability depends on ingredients.
See Candy, page 5.
Epsom Salt:
Garden Use................................................T
Medical Use (for humans)........................E
Expectorants....................................................E
Eye Preparations.............................................E
Eyeglass Cleaner Tissues................................T
Eyeglass Frames (fitted with
corrective lenses)......................................E
Eyeglasses (corrective)...................................E
Fabric Softeners..............................................T
Facial Cleansing Pads.....................................T
Feminine Napkins, Tampons...........................E
Fever Blister Aids...........................................E
Fiberglass Cleaner...........................................T
Film, Film Processing.....................................T
Firewood.........................................................E
First Aid Kits...................................................T
First Aid Products:
Bandages...................................................T
Healing Agents, Solutions, etc..................E
Fishing Bait.....................................................T
Flags:
State of New Jersey...................................E
United States of America..........................E
All Others..................................................T
Flashlights.......................................................T
Flatware...........................................................T
Flea Collars.....................................................T
Floor Cleaners and Polishes............................T
Floor Coverings..............................................T
Floor Finishes (Wax).......................................T
Floor Wax Remover........................................T
Flowers............................................................T
Food Coloring.................................................E
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Food Wraps:
Aluminum Foil..........................................T
Paper Freezer Wrap for household use.....E
Plastic Storage Bags..................................T
Plastic Wrap..............................................T
Waxed Paper for household use................E
Foot Care Preparations....................................E
Foot Deodorizers.............................................T
Footwear (see Clothing and Footwear, page 20)
Formica Cleaners and Polishes.......................T
Freezer Packs (blue ice)..................................T
Frozen Foods (see also Ice Cream) ................E
Fruit.................................................................E
Fruit Drinks (containing 50% or less juice)....T
Fuels:
Charcoal....................................................E
Charcoal Lighter.......................................E
Cigarette Lighter Fluid..............................E
Fungicides.......................................................E
Furniture..........................................................T
Furniture Polishes and Cleansers....................T
Fuses...............................................................T
Garbage Pails..................................................T
Garden Supplies..............................................T
Gatorade..........................................................T
Gelatin and Gelatin Desserts...........................E
Gift Certificates...............................................E
Gift Wrap, Bows, Boxes, Tags........................T
Glass Cleaners.................................................T
Gloves.............................................................E
Glucose Meters for home use..........................E
Granola Bars...................................................*
*Taxability depends on ingredients.
See Candy, page 5.
Greeting Cards................................................T
Grenadine........................................................E
Grip Tape.........................................................T
Guest Towels-Paper for household use...........E
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Hair Care Products:
Brushes, Combs........................................T
Conditioners..............................................T
Curler Papers.............................................T
Rinses........................................................T
Rogaine® ..................................................T
Shampoos..................................................T
Halloween Masks............................................T
Hand Cleaners.................................................T
Hand Lotion....................................................T
Hay Fever Aids...............................................E
Headache Relief Aids......................................E
Health/Fitness Equipment (weights,
exercise balls, steps, etc.)..........................T
Heating Pads...................................................E
Hemorrhoid Treatments..................................E
H.I.V. Testing Kits (only when sample is
sent to lab for analysis and report)............E
Hosiery, all types.............................................E
Hot Chocolate, Instant....................................E
Hypodermic Syringes and Needles:
Diabetic Use..............................................E
Disposable (for nondiabetic use)..............T
Reusable (for home use)...........................E
Ibuprofen.........................................................E
Ice..................................................................E
Ice Buckets, Ice Chests...................................T
Ice Cream:
Individually wrapped bars,
sandwiches, popsicles, cones
(single item or by the box)....................E
By the gallon or part thereof.....................E
Ice Cream Cones (hand-dipped).....................T
Iced Tea:
Liquid, sweetened.....................................T
Liquid, unsweetened.................................E
Powder, sweetened or unsweetened..........E
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Icing/Frosting..................................................E
Ingrown Nail Preparations..............................E
Insect Bite and Sting Preparations..................E
Insecticides, Repellents...................................T
Instant Cocoa, Coffee, Tea..............................E
Insulin.............................................................E
Iodine, Tincture of...........................................E
Itch, Rash Relievers........................................E
Jams and Jellies...............................................E
Jewelry Cleaners.............................................T
Juice Drinks:
Containing 50% or less juice....................T
Containing over 50% juice........................E
Keys ..............................................................T
Laundry Soaps and Detergents.......................T
Lawn Bags......................................................T
Laxatives.........................................................E
Leather Cleaners (saddle soap).......................T
Leavening Agents............................................E
Lemonade:
Liquid, sweetened.....................................T
Powdered...................................................E
Lice Treatments (for humans).........................E
Light Bulbs.....................................................T
Lighter Fluid...................................................E
Linens..............................................................T
Liners (garbage can, shelf, etc.)......................T
Lint Removers.................................................T
Lip Balms (medicated)....................................E
Lipstick...........................................................T
Litter Box Liners.............................................T
Lotions:
Cleansing...................................................T
Moisturizing..............................................T
Lunch Bags:
Paper for household use............................E
Plastic........................................................T
Lye..................................................................T
Rev. 5/08
New Jersey Sales Tax Guide
Magazines (or periodicals), qualified:
(see Newspapers, Magazines, and Books,
page 20)
Sold as single copies (hard copies) ......... T
Sold as single copies (electronic) ........... E
Sold by subscription ............................... E
Make-up ........................................................ T
Make-up Remover ........................................ T
Maraschino Cherries ..................................... E
Marshmallow Fluff ....................................... E
Marshmallows .............................................. T
Matches ......................................................... T
Meats ............................................................ E
Medicines (for pets) ...................................... T
Menstrual Cramp Relievers .......................... E
Metal Cleaners and Polishes ......................... T
Mildew Remover .......................................... T
Milk (fresh, dried), Cream,
Half and Half .......................................... E
Mineral Oil ................................................... E
Mineral or Herbal Supplements
(in form of pills, capsules, etc.) .............. E
Mixes for Soups ............................................ E
Mixes for alcoholic beverages:
Powdered ................................................ E
Liquid, unsweetened ............................... E
Liquid, sweetened (see Beverages)
Mops, Mop Handles ..................................... T
Motion Sickness Remedies........................... E
Mouthwash ................................................... T
Movies (see Digital Property, page 20) ........ T
Muscle Ache Relievers ................................. E
Music (see Digital Property, page 20) .......... T
Nail Biting Deterrents ................................... T
Nail Polish .................................................... T
Nail Polish Remover ..................................... T
Napkins, Table-Paper for household use ...... E
Nasal Sprays, Decongestants ........................ E
Newspapers ................................................... E
Rev. 5/08
Nicotine Gum ............................................... E
Nicotine Patch............................................... E
Nursing Bottles, Nipples, Funnels ................ T
Nursing Pads-Paper ...................................... E
Nuts:
Unsweetened ........................................... E
Sweetened (see Candy)
Oil-Cooking, Salad ....................................... E
Olives ............................................................ E
Oral Pain Relievers ....................................... E
Orthopedic Devices ...................................... E
Oven Cleaners............................................... T
Oven Cooking Bags:
Paper for household use .......................... E
Plastic or Aluminum ............................... T
Ovulation Testing Kits .................................. T
Oxygen .......................................................... E
Paint Remover .............................................. T
Paper Bags for household use ....................... E
Paper Goods (plates, towels, etc.)
for household use .................................... E
Paperback Books .......................................... T
Pedialyte ....................................................... E
Peroxide, Hydrogen (for medical use) .......... E
Pet Foods ...................................................... T
Pet Shampoo ................................................. T
Pet Supplies .................................................. T
Petroleum Jelly ............................................. E
Pets ............................................................... T
Pickles ........................................................... E
Pies, Pie Crusts ............................................. E
Pillows .......................................................... T
Place Mats:
Cloth and plastic ..................................... T
Paper for household use .......................... E
Plants (including fruit, vegetable)................. T
Plastic Items .................................................. T
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Bulletin S&U-4
Plates:
Paper for household use .......................... E
Plastic, Foam .......................................... T
Poison Ivy and Oak Treatment
Preparations ............................................ E
Polishing Cloths and Mitts ........................... T
Popcorn:
Popped, sweetener added ........................ T
Popped, no sweetener added ................... E
Unpopped, any flavor ............................. E
Powdered Beverage Mix .............................. E
Pregnancy Testing Kits ................................. T
Prescription Contraceptives .......................... E
Prescription Drugs ........................................ E
Pre-Soaks, Laundry ....................................... T
Preserves ....................................................... E
Pretzels (unheated) ....................................... E
Propane ......................................................... E
Prosthetic Aids .............................................. E
Puddings ....................................................... E
Pumpkins:
Used for food .......................................... E
Used for decoration ................................ T
Rainhoods ..................................................... E
Ringtones (see Digital Property, page 20).... T
Rock Salt ...................................................... T
Rogaine® ....................................................... E
Rubber Gloves .............................................. E
Rug Cleaners and Shampoos ........................ T
Rug Deodorizers ........................................... T
Salads (potato salad, coleslaw, etc.) ............. *
*Taxability depends on how product is sold.
See Prepared Foods, page 19.
Saliva Substitutes .......................................... E
Salt and Salt Substitutes ............................... E
12
Sandwich Bags:
Paper for household use .......................... E
Plastic ..................................................... T
Sanitary Napkins, Tampons .......................... E
Scouring Pads ............................................... T
Seeds (flower or vegetable) .......................... T
Shampoos ..................................................... T
Shaving Cream ............................................. T
Shelf Liners ................................................... T
Shoe Inserts (Odor Eaters) ............................ E
Shoe Laces .................................................... E
Shoe Polish ................................................... T
Shoes (see Clothing and Footwear, page 20)
Shower Caps ................................................. T
Sinus Relievers ............................................. E
Skin Bleaches ............................................... T
Skin Irritation Relievers ................................ E
Sleep Aids ..................................................... E
Snuff ............................................................. T
Soap .............................................................. T
Soap Pads ...................................................... T
Soup Mixes ................................................... E
Spaghetti ....................................................... E
Spices ............................................................ E
Sponges ......................................................... T
Stain and Spot Remover ............................... T
Starch:
Corn ........................................................ E
Laundry ................................................... T
Static Remover ............................................. T
Stationery ...................................................... T
Steel Wool ..................................................... T
Stirrers (wood, plastic).................................. T
Straws:
Paper for household use .......................... E
Plastic ..................................................... T
Sugar and Sugar Substitutes ......................... E
Sunburn Relief Products ............................... E
Rev. 5/08
New Jersey Sales Tax Guide
Sunglasses ..................................................... T
Sunscreens .................................................... T
Surgical Adhesive ......................................... T
Table Covers:
Paper for household use .......................... E
Plastic ..................................................... T
Tampons (and like products) ........................ E
Tape .............................................................. T
Tea (prepackaged, dry, or instant) ................. E
Tears, Artificial ............................................. E
Teething Lotions ........................................... E
Telephone Calling Cards (prepaid):
Sale of Card ............................................ T
Additional Minutes ................................. T
Tenderizers .................................................... E
Thermometers (reusable) for home use ........ E
Tile Cleaners ................................................. T
Tissue (facial and toilet) for household use .. E
Tobacco ......................................................... T
Toilet Bowl Cleaners .................................... T
Toilet Bowl Deodorizers ............................... T
Tooth Ache Relievers .................................... E
Tooth Desensitizers ....................................... T
Tooth Polish .................................................. T
Toothbrushes ................................................. T
Toothpaste ..................................................... T
Toothpicks .................................................... T
Towelettes for household use ....................... E
Towels:
Cloth ....................................................... T
Paper for household use .......................... E
Trashbags and Liners .................................... T
Undergarments, Disposable .......................... E
Rev. 5/08
Underpads, Disposable-Paper ....................... E
Upholstery Cleaners...................................... T
Vacuum Cleaner Bags:
Cloth, Plastic ........................................... T
Paper for household use .......................... E
Vaporizer Tablets .......................................... T
Vaseline® ....................................................... E
Vegetables ..................................................... E
Vitamins ........................................................ E
Wart Removers ............................................. E
Water:
Unsweetened ........................................... E
Sweetened ............................................... T
Water Conditioners ....................................... T
Water Pills..................................................... E
Water Repellent ............................................ T
Wax ............................................................... T
Wax Remover ............................................... T
Waxed Paper for household use.................... E
Wheelchairs .................................................. E
Whipped Cream ............................................ E
Whiteners, Laundry ...................................... T
Wigs .............................................................. T
Window Cleaning Liquids ............................ T
Windshield Washer Solution ........................ T
Wipes:
Handi-Wipes (rayon) .............................. T
Witch Hazel .................................................. E
Wool Washes ................................................ T
Wrapping Paper, Bows ................................. T
Wraps:
Foil, Plastic ............................................. T
Paper for household use .......................... E
13
Bulletin S&U-4
Services
The New Jersey Sales and Use Tax Act specifically imposes tax on the receipts from retail sales
of the following services:
1. Producing, fabricating, processing, installing,
maintaining, repairing, storing, and servicing
tangible personal property;
2. Maintaining and repairing real property except for maintaining, servicing, or repairing a
residential heating system serving not more
than three families living independently of
each other and doing their own cooking on
the premises;
3. Sales of restaurant and catered meals;
4. Rental of hotel and motel rooms;
5. Direct-mail advertising processing services
in connection with advertising or promotional material distributed in New Jersey;
6. Certain admission charges;
7. Storage charges for tangible personal property not held for sale;
8. Telecommunications services charged to a
New Jersey address; and
9. Utility service (natural gas, electricity) provided to customers in New Jersey.
As of October 1, 2006, P.L. 2006, c.44 changed
the taxability of the following:
Prewritten Computer Software Delivered
Electronically (N.J.S.A. 54:32B-8.56)
The law limits the current exemption for prewritten computer software delivered electronically to electronically delivered computer
14
software that is used directly and exclusively in
the conduct of the purchaser’s business, trade or
occupation. Thus, electronically delivered software sold to individuals is subject to tax.
Laundering (N.J.S.A. 54:32B-3(b)(2))
The law specifically limits the sales tax exemption for laundering, dry cleaning, tailoring, weaving, and pressing to providing these services to
clothing. As a result, all of these services will be
taxable when performed on property such as
draperies, carpets, blankets, comforters, slipcovers, tablecloths, napkins, dust cloths, mats, mops,
industrial wiper cloths, fender covers, bed linens,
hospital linens, table linens, linen supply towels,
and other cloths. Thus, charges for the rental of
laundered items such as table linens, hospital linens, towels, dust cloths, etc. are fully taxable
since both the rental charge and the laundering
charge are subject to tax. Previously, lump-sum
charges for such linen rentals could be reduced
by 668% of the total charge to allow for the
laundering exemption when calculating the
amount of tax due.
Installing Floor Coverings (N.J.S.A. 54:32B3(b)(2)) See Tax Note on this topic.
Previously, certain floor covering installation
services that resulted in a “capital improvement”
were exempt. The law eliminated the exemption
for the installation of floor covering, which includes carpeting, linoleum, tile, and padding, so
now the labor is taxable. Businesses that provide
floor covering installations are still treated as
contractors under the law.
Landscaping Services (N.J.S.A. 54:32B-3(b)(2))
See Tax Note on this topic.
Rev. 5/08
New Jersey Sales Tax Guide
The law defines “landscaping services” as services that result in a capital improvement to land,
other than structures of any kind whatsoever,
such as: seeding, sodding, or grass plugging of
new lawns; planting trees, shrubs, hedges, plants;
and clearing and filling land. (N.J.S.A. 54:32B2(ww)). Previously, certain landscaping services
that resulted in a capital improvement were
exempt. The law eliminated the capital improvement exemption for landscaping services, so now
the labor is taxable. Businesses that provide
landscaping services are still treated as contractors under the law.
the shipment. N.J.S.A. 54:32B-2(rr). In these
mixed transactions, if the seller does not allocate
the delivery charge, the entire delivery charge is
taxable.
Delivery Charges for Taxable Goods and Services (N.J.S.A. 54:32B-8.11; 54:32B-2(oo)(1)(D))
The law modified the exclusion for delivery
charges that are separately stated from the sales
price of an item on the invoice, bill, or similar
document given to the purchaser. The law provides for tax to be imposed on delivery charges
for taxable items and no tax to be imposed on delivery charges for nontaxable items like clothing,
goods purchased for resale, and goods covered
by any other statutory exemption provision.
The law defines “space for storage” as secure
areas, such as rooms, units, compartments, or
containers, whether accessible from outside or
from within a building, that are designated for
the use of a customer, where the customer has
free access within reasonable business hours, or
upon reasonable notice to the furnisher of the
space, to store and retrieve property. Space for
storage does not include the lease or rental of an
entire building, such as a warehouse or airplane
hangar.
The law defines “delivery charges” as charges by
the seller for preparation and delivery to a location designated by the purchaser of personal
property or services including, but not limited to,
transportation, shipping, postage handling, crating, and packing. If a shipment includes both exempt and taxable property, the seller should
allocate the delivery charge by using: (1) a percentage based on the total sales price of the taxable property compared to the total sales price of
all property in the shipment; or (2) a percentage
based on the total weight of the taxable property
compared to the total weight of all property in
Tanning Services (N.J.S.A. 54:32B-3(b)(8))
Tanning services, including the application of a
temporary tan provided by any means.
Rev. 5/08
As of October 1, 2006, P.L. 2006, c.44 imposed
sales and use tax on the following services:
Space for Storage (N.J.S.A. 54:32B-3(b)(3))
See Tax Note on this topic.
Furnishing of space for storage of tangible personal property, by a person engaged in the business of furnishing space for such storage.
Massage Services (N.J.S.A. 54:32B-3(b)(9))
See Tax Note on this topic.
Massage, bodywork, or somatic services, except
such services provided pursuant to a doctor’s
prescription.
Tattooing (N.J.S.A. 54:32B-3(b)(10))
Tattooing, including all permanent body art and
cosmetic make-up applications.
15
Bulletin S&U-4
Investigation and Security Services (N.J.S.A.
54:32B-3(b)(11)) See Tax Note on this topic.
The law defines “investigation and security ser­
vices” as:
1. Investigation and detective services, including
detective agencies and private investigators,
and fingerprint, polygraph, missing person
tracing, and skip tracing services;
2. Security guard and patrol services, including
bodyguard and personal protection, guard dog,
guard, patrol, and security services;
3.Armored car services; and
4. Security systems services, including security,
burglar, and fire alarm installation, repair, or
monitoring services. N.J.S.A. 54:32B-2(xx).
Note: Alarm monitoring service has been sub­
ject to tax since July 1, 1990, as a tele­
communications service.
Information Services (N.J.S.A. 54:32B-3(b)
(12)) See Tax Note on this topic.
The law defines “information services” as the
furnishing of information of any kind, which
has been collected, compiled, or analyzed by the
seller, and provided through any means or meth­
od, other than personal or individual information
which is not incorporated into reports furnished
to other people. N.J.S.A. 54:32B-2(yy).
Limousine Services (N.J.S.A. 54:32B-3(b)(13))
Transportation services originating and taking
place wholly within this State and provided by a
limousine operator, as permitted by law, except
such services provided in connection with fu­
neral ­services.
16
Membership Fees (N.J.S.A. 54:32B-3(h))
See Tax Note on this topic.
Initiation fees, membership fees, or dues for
access to or use of the property or facilities of
a health and fitness, athletic, sporting, or shop­
ping club or organization in this State, except
for membership in a club or organization whose
members are predominantly age 18 or under or
when the charges are made by qualified exempt
organizations or New Jersey State or local gov­
ernment entities.
Parking (N.J.S.A. 54:32B-3(i))
See Tax Note on this topic.
The receipts from parking, storing, or garaging
a motor vehicle, excluding charges for the fol­
lowing types of parking: residential parking;
employee parking, when provided by an em­
ployer or at a facility owned or operated by the
employer; parking, storing or garaging provided
by a municipality, county, or municipal or county
parking authority; parking receipts subject to tax
imposed by any other law or ordinance (e.g., mu­
nicipal parking taxes). The $3 minimum parking
fee at Atlantic City casino hotels is also exempt.
The following is a list of common purchases,
with an indication of whether the item is taxable
(T) or exempt (E) from sales tax.
Accounting Services:
Professional Services................................E
Electronic Filing Charges.........................T
Admission Charges:
Spectator Sports:
(baseball games, basketball games,
professional wrestling events, etc.).......T
Participant Sports:
(bowling, fishing, swimming, etc.).......E
Rev. 5/08
New Jersey Sales Tax Guide
Places of Amusement:
(movie theaters, amusement parks,
trade shows, craft shows, etc.) ............ T
Advertising Services (in general) ................. E
Alarm Monitoring:
Via control station ................................... T
Animal Boarding at Seller¶s Facility............. T
Animal Grooming ......................................... T
Answering Services, Telephone .................... T
Appliance Repairs......................................... T
Appraisals (jewelry, real estate, etc.) ............ E
Architectural Services (in general) ............... E
Armored Car Services .................................. T
Automobile Repairs:
Inspection Sticker ................................... E
Labor ....................................................... T
Parts ........................................................ T
Barber Shop Services .................................... E
Beauty Parlor Services .................................. E
Beeper and Paging Services .......................... T
Boat Docking Fees:
Slip Rentals ............................................. E
Storage-water or land .............................. T
Bookkeeping Services .................................. E
Calligraphy ................................................... T
Cable Television Subscription ...................... E
Car Washing .................................................. T
Carpet Cleaning ............................................ T
Catering Services .......................................... T
Child/Day Care ............................................. E
Chimney Sweeping (residential) ................... E
Cleaning Services (janitorial) ....................... T
Computer Maintenance/Repair ..................... T
Credit Check/Report ..................................... T
Credit Repair Services .................................. E
Data Processing Services .............................. E
Debt Collection ............................................. E
Rev. 5/08
Delivery Charges:
On Taxable Items .................................... T
On Nontaxable Items .............................. E
Direct-Mail Processing Services for
Advertising/Promotional Material:
Distributed in NJ ................................. T
Distributed outside NJ ........................ E
Disc Jockey ................................................... E
Dry Cleaning
Clothing .................................................. E
Other ....................................................... T
Electronic Filing Charges ............................. T
Employment Agency Fees ............................ E
Extended Warranty Agreements ................... T
Facsimile (Fax) Services .............................. T
Floor Covering Installation ........................... T
Garbage Removal:
Contractual (30 days or more) ................ E
Non-Contractual ..................................... T
Home Repairs (except residential
heating systems as explained above) ...... T
Information Services ..................................... T
Insurance Premiums...................................... E
Interior Design .............................................. E
Internet Access Charges ................................ E
Investigation and Detective Services ............ T
Jewelry:
Cleaning .................................................. T
Engraving ................................................ T
Sizing ...................................................... T
Landscaping Services ................................... T
Laundry Services:
Clothing .................................................. E
Other ....................................................... T
Lawn Mowing Services ................................ T
Limousine Services....................................... T
Provided for funeral ................................ E
Provided solely within NJ ....................... T
Locker Rentals .............................................. T
17
Bulletin S&U-4
Maintenance Agreements (in general) .......... T
Manufacturer’s Rebate:
(automobile, etc.) .................................... T
Massage Services .......................................... T
Provided pursuant to doctor’s
prescription ......................................... E
Membership Fees*:
Discount Clubs ....................................... E
Health/Fitness/Athletic/Sporting Clubs .. T
Shopping Clubs ...................................... T
Professional/Social Clubs ....................... E
Parking:
Parking, storing, or garaging a
motor vehicle ...................................... T
Residential .............................................. E
Provided by a municipality, county, or
municipal/county parking authority .... E
At facility owned/operated by employer . E
Provided to employee by employer ........ E
Parking receipts subject to tax imposed
by any other law or ordinance ............. E
Atlantic City casino hotel $3
parking fee ........................................... E
Pest Control:
Inspection ................................................ E
Treatment ................................................ T
Pet-Sitting at Owner’s Home........................ E
Photocopying Services.................................. T
Photographer’s Services ............................... T
Prewritten Computer Software Delivered
Electronically:
Sold to individuals .................................. T
Used directly in the conduct of the
purchaser’s business/trade .................. E
Printing Services ........................................... T
Professional Services:
(doctor, lawyer, etc.) ............................... E
Restaurant Meals .......................................... T
Safe Deposit Box Rental............................... T
Scanning (photos, records, etc.) .................... T
Security Guard and Patrol Services .............. T
Security Systems Services ............................ T
Service Contracts (in general) ...................... T
Shoe Repair................................................... E
Silk-Screening, Monogramming,
Embroidering:
Purchase of Clothing Included ................ E
Services Only .......................................... T
Snow Removal .............................................. T
Space for Storage .......................................... T
Storage Service Charges ............................... T
Tanning Sessions .......................................... T
Tattooing ....................................................... T
Telecommunications Services:
(telephone, telegraph, pagers,
alarm monitoring, etc.) ........................... T
Telephone Answering Services ..................... T
Tips and Gratuities (separately stated
and paid in full to employees) ................ E
Towing .......................................................... E
Transportation (see definition of delivery
charges, page 15) .................................... E
Trash Removal:
Contractual (30 days or more) ................ E
Non-Contractual ..................................... T
Travel Agency Fees ....................................... E
Typing Services............................................. E
Utilities (natural gas, electricity) .................. T †
Videography .................................................. T
Web Site Design ........................................... E
Web Site Hosting .......................................... E
Window Washing .......................................... T
*Tax does not apply to memberships in clubs whose members are predominantly age 18 or under or when
charges are made by qualified exempt organizations or New Jersey State or local government entities.
†Effective 1/1/98, included in rate
18
Rev. 5/08
New Jersey Sales Tax Guide
Coupons
•
When a store issues a coupon entitling a purchaser to pay a reduced price on an item purchased, and the vendor is reimbursed by a
manufacturer, distributor, or other third party,
the tax is due on the full regular price of the
item. The taxable receipt is composed of the
amount paid and the amount of the coupon
value.
•
When a manufacturer or a vendor issues a
coupon involving a third-party reimbursement, but does not disclose that fact to the purchaser on the coupon or in an accompanying
advertisement, the vendor will collect from the
purchaser only the tax due on the reduced
price, but will be required to pay the tax applicable to the entire receipt, i.e., the amount of
the price paid and the reimbursement received
from the manufacturer or other third party.
The following guidelines apply to retail sale
transactions involving the use of coupons.
•
When a manufacturer issues a coupon entitling a purchaser to pay a reduced price on an
item purchased, and the vendor is reimbursed
by the manufacturer, distributor, or other third
party, the tax is due on the full regular price of
the item. The taxable receipt is composed of
the amount paid and the amount of the coupon
value. The coupon value reflects a payment or
reimbursement by another party to the vendor.
Example: A store issues a coupon labeled
“mfr.” entitling the holder to purchase an
item for $10 less than the regular price.
Regular price
7% sales tax
Total before discount
Manufacturer’s coupon
Customer pays
•
$ 99.95
+ 7.00
$106.95
– 10.00
$ 96.95
When a store issues a coupon entitling a purchaser to a discounted price on the item purchased or a free or reduced price on an
additional item, and the vendor receives no reimbursement from the manufacturer or other
third party, the sales tax is due from the purchaser on only the discounted price, which is
the actual receipt.
Example: A store issues a coupon entitling
the holder to purchase a product for 50
cents less than the regular price.
Regular price
Store coupon
Taxable receipt
7% sales tax
Customer pays
Rev. 5/08
$ 2.37
– 0.50
$ 1.87
+ 0.13
$ 2.00
For more information about coupons, and additional examples, see publication ANJ-9, Coupons, Discounts & New Jersey Sales Tax.
Prepared Food
Sales of prepared food are subject to sales tax.
Prepared food, which includes beverages,
means:
• Food sold in a heated state or heated by the
seller; or
• Two or more food ingredients combined by
the seller and sold as a single item; or
• Food sold with eating utensils provided by the
seller.
Food that is only cut, repackaged, or pasteurized
by the seller, as well as eggs, fish, meat, poultry,
and foods that contain these raw animal foods
that require cooking by the consumer are not
treated as prepared food.
19
Bulletin S&U-4
The following are not treated as prepared food,
unless the seller provides eating utensils with the
items:
• Food sold by a seller that is a manufacturer;
• Food sold in an unheated state by weight or
volume as a single item; and
• Bakery items sold as such, including bread,
rolls, buns, bagels, donuts, cookies, muffins,
etc.
Eating utensils include plates, knives, forks,
spoons, glasses, cups, napkins, or straws.
The sale of prepared food by restaurants, taverns,
or other establishments engaged in selling food
that fits within the above definition is subject to
sales tax.
For additional information, see the Notice regarding food and food products.
Newspapers, Magazines, and
Books
The sales of newspapers are exempt from sales
tax. Magazines and periodicals sold by subscription are exempt whether or not they are accessed
by electronic means. Magazines sold as single
copies are taxable when sold in printed form;
however, they are exempt when delivered electronically. Membership periodicals are also
exempt. A “membership periodical” is any periodical distributed by a nonprofit organization to
its members as a benefit of membership in the
organization. N.J.S.A. 54:32B-8.5(b). For more
information, see ANJ-21, Newspapers, Magazines, Periodicals & New Jersey Sales Tax.
20
Sales of books, both hardback and softback, including sales of the Bible or other sacred scripture are taxable whether the book is delivered in
hard copy or electronically.
Digital Property
Under P.L. 2006, c.44, effective October 1, 2006,
“digital property” is subject to tax. Digital property is defined as electronically delivered music,
ringtones, movies, books, and audio and video
works and similar products, where the customer
is granted a right or license to use, retain, or
make a copy of such item. The imposition of tax
is limited to these five categories of digital property. Digital property may be received on various
types of electronic equipment, such as computers, cellular telephones, or devices that store, organize and play audio or video files. The
products identified as digital property are also
subject to sales tax when delivered in tangible
form (e.g., CD, DVD, or audio/video tape).
The term “digital property” does not include
video programming services, including video on
demand television services; and broadcasting
services, including content to provide such services. The tax is imposed on receipts from the
sale of the digital property listed above. It is not
imposed on other types of property that are delivered electronically, such as digital photographs,
digital magazines, etc. For additional information, see the Tax Note on this topic.
Clothing and Footwear
Sales of articles of clothing and footwear for human use are exempt from New Jersey sales tax.
Exceptions to this rule include certain athletic
equipment.
Rev. 5/08
New Jersey Sales Tax Guide
Clothing includes footwear, all inner and outer
wear, headgear, gloves and mittens, neckwear,
and hosiery normally worn on the human body,
including baby receiving blankets, bunting, diapers, diaper inserts, and baby pants. Disposable
undergarments for adults are also exempt.
“Protective equipment necessary for the daily
work of the user” is specifically exempt. Protective equipment means items for human wear and
designed as protection of the wearer against injury or disease, or as protections against damage
or injury to other persons or property, but not
suitable for general use. Examples include protective eye goggles or a protective helmet for
work. However, goggles or helmets worn for
sports are not exempt.
NOTE: Beginning July 15, 2006, fur clothing is
subject to the Fur Clothing Gross Receipts Tax. For additional information,
see the Notice to retail sellers of fur
clothing.
Exempt Clothing and Footwear
Aprons (household and shop)
Arch Supports
Athletic Supporters
Baby Receiving Blankets
Bathing Caps
Bathing Suits
Beach Capes and Coats
Belts and Suspenders
Bibs
Boots
Bowling Shirts (if suitable for ordinary
street wear)
Camp Clothes
Coats, Jackets, and Wraps (for either
evening or daytime wear)
Rev. 5/08
Costumes (e.g., Halloween, dance; whether
for adults or children)
Diapers (including disposable, whether for
adults or children)
Dress Shields
Dresses (including evening wear)
Ear Muffs
Footlets
Formal Wear
Garters and Garter Belts
Girdles
Gloves and Mittens (for general use)
Hand Muffs
Hats and Caps
Head and Neck Scarves and Bandannas
Hosiery and Peds
Incontinence Briefs
Lab Coats
Leotards and Tights
Neckties
Overshoes
Pantyhose
Rainwear
Rubber Gloves (for home or work use)
Rubber Pants
Safety Clothing (normally worn in
hazardous occupations)
Sandals
Shoe Insoles (e.g., Dr. Scholl’s®)
Shoe Laces
Shoes (including safety shoes, sneakers and
tennis shoes)
Shoulder Pads (for dresses, jackets, etc.)
Ski Masks
Sleepwear
Slippers
Socks
Steel-Toed Shoes
Stockings
21
Bulletin S&U-4
Thermal Underwear
Underwear
Uniforms (athletic, school, scout, work, etc.)
Wedding Apparel
Work Clothes, Work Uniforms
Yarmulke and Turbans
Protective Equipment
Breathing Masks
Clean Room Apparel and Equipment
Ear and Hearing Protectors
Face Shields
Hard Hats
Helmets
Protective Goggles
Respirators (paint or dust)
Safety Glasses and Goggles
Safety Belts
Tool Belts
Welders’ Gloves and Masks
Sport or Recreational Clothing and
Footwear/Equipment
Sport or recreational equipment that is worn only
in conjunction with a particular sport is taxable.
Articles which can be adapted for general use not
exclusively connected with a sporting activity
are exempt from tax.
Taxable:
Athletic Shoes (cleated or spiked)
Ballet and Tap Shoes
Baseball and Hockey Gloves
Bicycle Shorts (padded)
Bowling Shoes
Fishing Boots (waders)
Gloves (e.g., baseball, bowling, boxing,
hockey, golf)
22
Goggles
Golf Shoes
Hand and Elbow Guards
Helmets (sports and motorcycle)
Ice Skates
Life Preservers and Vests
Mouth Guards
Protective Masks
Roller Blades
Roller Skates (boot and screw-on)
Shin Guards and Padding
Shoulder Pads
Ski Boots
Skin Diving Suits
Snorkel and Scuba Masks
Sweatbands
Swim Fins
Track Shoes and Cleats
Waders
Wetsuits and Fins
Exempt:
Athletic Supporters
Children’s Sports and Play Uniforms (e.g.,
football, baseball, karate)
Hooded Shirts
Jogging or Running Shoes, Suits
Knitted Caps or Hats
Overshoes, Coats, Mittens, Parkas, and
Trousers (sometimes sold in the trade as
hunting, skating, and skiing apparel but
suitable for general outdoor wear and
commonly worn other than in a particular sport)
Pullovers, Turtlenecks, and Other Sweaters
Ski Masks
Rev. 5/08
New Jersey Sales Tax Guide
Accessories
Accessories are not considered clothing or footwear and are taxable. Some of these are:
Backpacks
Barrettes
Belt Buckles
(sold separately)
Bobby Pins
Briefcases
Cosmetics
Costume Masks
(sold separately)
Elastic Ponytail
Holders
Hair Bows
Hairclips
Hairnets
Headbands
Jewelry
Key Cases
Key Rings
Patches and
Emblems
(sold separately)
Shower Caps
Sunglasses (nonprescription)
Handbags
Handkerchiefs
Sweatbands
Umbrellas
Wallets
Watches
Watch Bands
Wigs and Hair
Pieces
Yarn Goods, Yarns, Sewing Equipment,
and Supplies
Common wearing apparel materials intended to
be used in either making or repairing clothes are
exempt. These materials include:
Bra and Slip Repair
Buttons
Denim and Leather Patches
Elastic
Fabrics
Lace
Ribbons
Seam-Binding and Bias Tape
Thread
Yarn
Zippers
Rev. 5/08
NOTE: If these items are used on products other
than wearing apparel, such as doll
clothes and afghans, they are taxable.
Any item that does not become an integral part
of the clothing is taxable. Some of these items
are:
Chalk
Fabrics and Yarns (used to make items other
than apparel such as rugs, pillows, etc.)
Instruction Books
Knitting Needles
Measuring Tapes
Needles
Patterns
Pins
Sewing Machines
Scissors
Tape Measures
Thimbles
Leasing
Prior to October 1, 2005, a distinction was made
between leases and rentals. A “lease” was a longterm transaction with an original contract term
longer than 28 days on which the lessor (owner
of the leased property) was responsible for paying use tax. A “rental” was a short-term transaction with an original contract term of 28 days or
less on which the renter paid sales tax.
On and after October 1, 2005, the 28-day contract term distinction between leases and rentals
is no longer relevant. The lessor must collect
sales tax from the lessee (person who leases or
rents property) regardless of the length of the
lease or rental. For leases or rentals with a term
of six months or less, sales tax must be collected
with each periodic payment. For leases or rentals
23
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of more than six months, the full amount of tax is
due up front in the period in which the lessee
takes delivery of the property.
For transactions with a term of more than six
months, the tax must be calculated using either
the original purchase price of the property, or the
total of the periodic payments required under the
agreement, including interest charges directly
paid by the lessee. When sales tax is paid on the
purchase price, it does not have to be paid again
if the lease is renewed or if the same property is
subsequently leased to another party.
Leases or rentals entered into prior to October 1,
2005, are not affected by the changes, even if
the property is removed from or brought into
New Jersey on or after October 1, 2005, before
the lease or rental expired. Leases (or rentals)
that are renewed on or after October 1, 2005, for
an additional period are considered new transactions to which the new rules apply.
For additional information, including information on which state’s tax applies to a transaction,
see the Notice regarding leases and rentals.
Claim for Refund of Sales Tax
Refunds Requested by Individuals From Sellers. If nontaxable items are purchased and the
seller charges sales tax, a request for a refund of
sales tax paid may be made directly to the seller.
If an individual is unable to recover the erroneously collected tax from the seller, a request can
be made to the Division of Taxation.
24
Refunds Requested by Individuals From the
Division of Taxation. To request a refund from
the Division, a Claim for Refund (Form A-3730)
must be filed within four years from the date of
payment of the sales tax.
Refunds Requested by Businesses From the
Division of Taxation. Business owners who have
improperly collected and remitted sales tax to the
State on their monthly return (Form ST-51) may
correct the error on their quarterly sales tax return (From ST-50) only if the error is discovered
within the same calendar quarter. If the error is
discovered after the return for that quarter has
been filed, an Amended Quarterly Return must
be filed with the Division of Taxation. Quarterly
returns can be amended online or by phone
through the Business Paperless Telefiling System. If the error resulted in an overpayment of
tax, file a Claim for Refund (Form A-3730).
Business owners must have records of canceled
sales, returned goods, or uncollectible receipts to
substantiate any claim for a refund of sales tax remitted to the State.
Special rules apply to qualified Urban Enterprise
Zone businesses. See Urban Enterprise Zones,
on page 3.
Businesses Collecting
Sales Tax
Registering a Business
Any person or organization engaged in a business, trade, profession, or occupation in New Jersey must register with the State for tax purposes
by filing a Business Registration Application,
Form NJ-REG, at least fifteen (15) business days
before starting business or opening an additional place of business in this State. Registration
Rev. 5/08
New Jersey Sales Tax Guide
ensures that the business will receive all the
forms and information it needs to comply with
New Jersey tax laws. A Public Records Filing
may also be required depending upon the type of
business ownership. More information on Public
Records Filing is available in the New Jersey
Complete Business Registration Package
(NJ REG) or by calling 609-292-9292.
Form NJ-REG may be filed online from the Division of Revenue’s New Jersey Business Gateway
Services Web site at: www.state.nj.us/njbgs/. The
public records filing required for corporations,
limited liability companies, limited partnerships,
and limited liability partnerships may also be
completed online from this Web site. (There is a
fee associated with the Public Records Filing.)
Keeping Records
Whatever the business, keeping accurate records
is essential to success. Keeping records is more
than just good business sense — it is a necessary
part of compliance with both State and Federal
tax laws. Keeping good records will ensure the
accuracy of tax returns, and will protect the business owner in the event of an audit or investigation by the State.
New Jersey retailers are required to keep records
and file New Jersey sales and use tax returns. In
addition, records must be kept for income tax
and, depending on the nature of the business,
other taxes as well.
Bookkeeping Methods
The two accepted methods of bookkeeping are
single-entry and double-entry. The single-entry
method is the simpler and easier of the two. Although the double-entry method is more complex, it has the advantage of greater accuracy,
Rev. 5/08
and it reduces the chance of errors. A business
owner may choose whichever method best suits
the company’s needs.
Accounting Methods
The accrual method of accounting must be used
for sales tax records. Under the accrual method,
all items of income are included in the gross receipts when they are earned, although actual
payment may not be received until later.
Example: Frank Smith, owner of Mr. F’s
Appliance Store, sold a television set to a
customer in March, but did not actually receive full payment until May. He must include the amount of the sale in his gross
receipts for March and remit sales tax due
on the sale with his sales tax return due
April 20, even though he did not receive
payment until May.
Sales Records
Retailers registered to do business in New Jersey
are responsible for collecting sales tax and remitting it to the State. They may also be accepting
and issuing New Jersey exemption certificates.
These certificates exempt the purchaser from
paying New Jersey sales and use tax on merchandise and/or services. Exemption certificates
must be retained by the vendor for at least four
(4) years from the date of the last transaction
covered by the certificate. Certificates must be in
the physical possession of the seller and available for inspection by the Division of Taxation. It
is essential that businesses maintain clear, accurate records of all sales.
There are two principles to remember when collecting sales tax:
25
Bulletin S&U-4
1. Vendors hold any sales tax collected in trust
for the State, and
2. All receipts are considered to be taxable until
the contrary is established.
Keep daily records of the sales made. These
records can be used to make monthly totals
showing the following information:
•
Gross receipts from sales
•
Receipts from sales that are not subject to tax
•
Receipts from taxable sales
•
Purchases that are subject to use tax
•
Lease/rental transactions that are subject to tax
•
Amount of sales tax due the State (whether
collected or billed)
Use the figures from these totals to complete the
monthly and/or quarterly tax returns.
Sales and Use Tax Returns
Every business which is on a reporting basis for
sales tax purposes must file sales tax returns.
Information on filing requirements and reporting
methods is available on the Division of Taxation’s Web site.
Exemption Certificates
New Jersey has exemption certificates which can
be used to purchase goods without the payment
of sales tax in certain situations. Each exemption
certificate has a specific use. The New Jersey
seller accepting an exemption certificate must
always be registered with New Jersey. The most
common certificates are the Resale Certificate
(Form ST-3), Exempt Use Certificate (Form
ST-4), and Exempt Organization Certificate
(Form ST-5).
26
The seller should accept an exemption certificate
only if it is filled out completely and if the certificate does not contain any statement or entry
which the seller knows is false or misleading.
Only one exemption certificate is necessary for
additional purchases of the same general type.
Keep a record of each sale covered by a blanket
certificate. Retain this certificate for at least four
years from the date of the last purchase covered
by the certificate.
SSUTA Exemption Certificate. The Streamlined Sales and Use Tax Agreement provides for
simplification and standardization in the administration of exemptions. A uniform Certificate of
Exemption, which will be accepted by all SSUTA
member states, has been developed. As long as
the certificate is completed by the purchaser and
provided to the seller, the seller is relieved of responsibility for collecting sales tax, even if it is
later determined that the purchaser was not eligible for the exemption. The certificate with instructions is available on the Division’s Web site
at: www.state.nj.us/treasury/taxation/
prntsale.shtml
Sales to Government Agencies
Sales tax should not be collected when a product
is sold to the Federal government, the United
Nations or any international organization of
which the United States is a member, and the
State of New Jersey or any of their agencies. In
transactions with government agencies, the acceptable proof of exemption from sales tax is:
•
A copy of a government purchase order, official contract, or order on official government
letterhead and payment by government check
or payment by a “United States of America”
Rev. 5/08
New Jersey Sales Tax Guide
SmartPay Visa Card or MasterCard with the
number 0, 6, 7, 8, or 9 as the sixth digit (credit
card charged to and paid directly by the Federal government, not a card charged to an employee who gets reimbursed by the Federal
government); or
•
For government cash purchases of $150 or
less, an ST-4 form signed by a qualified government official (not acceptable for room
occupancies).
Certain purchases by foreign diplomatic and consular personnel residing in the United States are
also exempt from sales tax. There are two types
of sales tax exemption cards issued by the U.S.
Department of State, Office of Foreign Missions,
that are acceptable as proof of the exemption.
Personal sales tax exemption cards are issued for
the sole benefit of the individual identified on
the card. Mission tax exemption cards are issued
to embassies, consulates, and international organizations for official purchases only and for the
sole benefit of the mission identified on the card.
For more information, see Technical Bulletin
TB-53, Diplomat/Consular Sales Tax
Exemptions.
Out-of-State Sales
If taxable items are sold and the items sold are
delivered out of State to the purchaser, New Jersey sales tax should not be collected. If the merchandise is shipped out of State to a recipient
other than the purchaser (e.g., in a gift transaction), the sale is also exempt from sales tax. Make
sure the records show both the out-of-State destination and the method of delivery to that location,
such as parcel post receipts, bills of lading, etc.
Rev. 5/08
Sales are taxable, however, if an out-of-State
customer picks up the merchandise in New Jersey. They are also taxable if the merchandise is
delivered to the customer’s location in New Jersey, even though the customer may intend to ship
the merchandise out of State at a later date. However, out-of-State purchasers who are registered
with New Jersey and “qualified out-of-State vendors” may make tax-exempt purchases in New
Jersey of goods and services purchased for resale. For more information, see publication
ANJ-10, Out-of-State Sales & New Jersey Sales
Tax.
Retention of Records
All books, records, certificates, and other documents necessary to determine the tax liability to
New Jersey must be available for inspection by
the Division of Taxation for at least four years.
If adequate records have not been kept, the State
may estimate the tax liability of the business
based on any available information, including
external indicators.
Microfilm Records
Books of account (cash books, ledgers, journals,
etc.) must be retained. Microfilm reproductions
are not acceptable for audit purposes. However,
sales invoices, purchase invoices, credit memoranda, etc. may be reproduced on microfilm to be
retained for inspection. If a business intends to
destroy the originals before the four-year limit,
written permission must be received from the Director of the New Jersey Division of Taxation.
27
Bulletin S&U-4
Data Processing Records
Automatic data processing tax accounting can be
used if it:
•
•
•
•
•
Provides a method of producing visible
records for verification;
Traces any transaction back to the original
source or forward to a final total;
Has the ability to reconstruct transactions that
do not have detailed printouts made at the
time the transactions were processed;
Provides an audit trail designed to identify underlying documents such as sales invoices,
purchase invoices, credit memoranda, etc.; and
Prepares a written general ledger with source
references to coincide with financial reports
for the tax reporting periods.
Retain records such as punched cards, magnetic
tapes, and disks for at least four years.
A description of the business system must be
available and include:
to the extent that the city rate exceeds 6%, and
the maximum combined Atlantic City rate and
New Jersey rate may not exceed 13%. In addition, certain room rentals in Atlantic City are
also subject to a 1% State occupancy fee. (See
Hotel/Motel Occupancy Fee and Municipal Occupancy Tax below.) For more information, see
publication ANJ-17, Atlantic City: Luxury Tax,
New Jersey Sales Tax & Other Fees.
Cape May County Tourism Sales Tax
Certain businesses in Cape May County must
collect a 2% tourism sales tax on predominantly
tourism-related retail sales in addition to the 7%
State sales tax. At present, businesses in Wildwood, Wildwood Crest, and North Wildwood are
required to collect the tourism sales tax.
“Tourism-related sales” include the following (if
also taxable under the Sales and Use Tax Act):
•
Hotel, motel, or boarding house lodging;
•
Food and drink sold by restaurants, taverns,
and other similar establishments for consumption on or off the premises (including
mobile vendors and other sellers of prepared
food), or by caterers (but not including vending machine sales); and
•
Admission charges to any place of amusement, including charges for admission to rides,
sporting events and exhibitions, dramatic or
musical arts performances, movie theaters,
and cover charges to nightclubs and cabarets.
The application being performed;
• The procedures employed (flow charts, diagrams, etc.); and
• The controls used to ensure accuracy.
•
Document important changes in the system and
their effective dates.
Other Taxes and Fees
Atlantic City Luxury Sales Tax
The Atlantic City luxury tax is imposed on certain rentals, sales, and services within Atlantic
City. The luxury tax rate is 9% with the exception
of alcoholic beverages sold by the drink, which
are subject to a rate of 3%. If the item is subject
to both taxes, the State sales tax rate is reduced
28
In addition to the tourism sales tax, the rent for
every occupancy of a room in a hotel, motel, or
similar facility that is subject to the 7% New
Jersey sales tax is also subject to a tourism assessment of 1.85% and a State occupancy fee of
3.15%. (See Hotel/Motel Occupancy Fee and
Municipal Occupancy Tax below.)
Rev. 5/08
New Jersey Sales Tax Guide
Domestic Security Fee
Motor vehicle rental companies doing business
in New Jersey are required to pay a $5.00 per
day Domestic Security Fee for each rental day
a motor vehicle is rented under agreements of
28 days or less. The fee is due for the quarter in
which the rental agreement ends and is separate
from and in addition to any sales tax due on the
rental transaction. For more information, see the
Notice to motor vehicle rental companies.
Hotel/Motel Occupancy Fee
and Municipal Occupancy Tax
An occupancy fee of 5% is imposed on the rent
for every occupancy of a room in a hotel, motel,
or similar facility in most New Jersey municipal­
ities. The fee is imposed at a lower rate in certain
municipalities: 3.15% in Wildwood, Wildwood
Crest, and North Wildwood; 1% in Newark,
­Jersey City, and Atlantic City. The fee applies
to room rentals that are currently subject to the
7% New Jersey sales tax and is in addition to the
sales tax.
A municipal occupancy tax of up to 3% may
also be imposed by any New Jersey municipality
(other than Newark, J­ ersey City, Atlantic City,
Wildwood, Wildwood Crest, and North Wild­
wood) that adopts an ordinance assessing the tax
on occupancies in that municipality.
Rev. 5/08
Motor Vehicle Tire Fee
A fee of $1.50 is imposed on the sale of new
tires, including new tires that are component
parts of a new or used motor vehicle which is
­either sold or leased, if the transaction is sub­
ject to New Jersey sales tax. The $1.50 fee is
­imposed per tire, including the spare tire sold
as part of a motor v­ ehicle, and also applies to
sales of new tires in connection with a repair or
maintenance serv­ice. It does not a­ pply to the sale
of recapped tires. The tire fee must be collected
from the purchaser by the retail vendor, and in
general, must be separately stated on any bill, in­
voice, receipt, or similar document.
Tobacco Products
Wholesale Sales and Use Tax
The Tobacco Products Wholesale Sales and Use
Tax is imposed on the sale, use, or distribution of
tobacco products, other than cigarettes. The tax
paid by the distributor or wholesaler is calculated
on the amount paid by the distributor or whole­
saler to buy the products from the manufacturer.
Cigarettes are exempt from this tax.
29
Bulletin S&U-4
For More Information
By Phone
• Call the Division of Taxation’s Customer
Service Center at 609-292-6400.
• Text Telephone Service (TTY/TDD) for
Hard-of-Hearing Users: 1-800-286-6613
(toll-free within NJ, NY, PA, DE, and MD) or
609-984-7300. These numbers are accessible
only from TTY devices. Submit a text message on any tax matter and receive a reply
through NJ Relay Services (711).
Online
• Division of Taxation Web site:
www.state.nj.us/treasury/taxation/
• E-mail: [email protected]
• Subscribe to NJ Tax E-News, the Division
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
1-800-323-4400 (within NJ, NY, PA, DE, and
MD) or 609-826-4400. Touch-tone phones
only.
• Call NJ TaxFax at 609-826-4500 from your
fax machine’s phone.
• Visit the Division of Taxation’s Web site:
www.state.nj.us/treasury/taxation/
30
Rev. 5/08
STATE OF NEW JERSEY
DEPARTMENT OF THE TREASURY
DIVISION OF TAXATION
TECHNICAL SERVICES
INFORMATION AND PUBLICATIONS BRANCH
PO BOX 281
TRENTON NJ 08695-0281
S&U-4
Rev. 5/08
New Jersey Sales Tax Guide
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