N.J.A.C. 18:24 - State of New Jersey

N.J.A.C. 18:24 - State of New Jersey
PROPOSALS
TREASURY — TAXATION
SUBCHAPTER 5. FACSIMILE FILING SERVICE
17:35-5.1 Filing service
(a) The Filing Office shall offer a [telecopy] facsimile filing service
[(hereafter termed facsimile filing service)] for any business entity or
related document type submitted to the Filing Office, which [can be
processed through facsimile transmission] the Filing Office determines
is suitable for facsimile filing. This service may include the
transmission of filed documents and related data to persons
requesting such content. The Filing Office shall publish which filings
and related data are suitable for facsimile filing, along with the
approved facsimile filing methods, on its web site at
www.nj.gov/treasury/revenue.
(b) (No change.)
(c) Documents delivered via the facsimile filing service [shall] may be
processed as non-expedited work with no specific turnaround service
level, or be processed on one of the following accelerated service
levels: [the] same work day received; [or] within 8.5 business hours of
receipt[,]; one business-hour of receipt[,]; or two business-hours of
receipt[, based on the service level chosen]. The service level shall be
indicated on a covering communication approved by the Filing Office
by persons who deliver the documents via the facsimile [transmission]
filing service.
17:35-5.2 Definitions
The following words and terms, as used in this subchapter, shall have
the following meanings:
“Delivered” means submitted to the Filing Office via [direct] a
facsimile transmission in accordance with a format and processing
method approved by the Filing Office[, or to any other location
designated by the Filing Office].
“Filing Office” means the Department of the Treasury, Division of
Revenue and Enterprise Services[, Bureau of Business Support
Services].
“Processed” means that a facsimile document submitted via [the] a
facsimile [filing service] transmission in accordance with a format and
processing method approved by the Filing Office that is reviewed by
the Filing Office and accepted or rejected with the appropriate
acknowledgment being sent back to the submitter, [that is] including, as
applicable, a rejection notice or stamped copy of an approved [facsimile
document] filing.
17:35-5.3 Exceptions
Services pursuant to this subchapter shall be rendered as soon as
possible[, but]. However, turnaround times may extend beyond [the]
requested accelerated service levels [timeframe,] if the computer
systems, [facsimile devices and/or] or communications devices/systems
utilized by the Filing Office malfunction, or if the Filing Office
experiences other difficulties beyond its control, making a timely
response impossible. In such cases, upon resuming normal operations, the
Filing Office will [first] process facsimile filing service requests on a
first-in first-out basis, in the following priority order: one business-hour;
two business-hour; [and] same day; and 8.5 business hours. These
requests will be given priority over mail-in requests.
17:35-5.4 Fees
The fees for facsimile filing services shall be: $15.00 for each 8.5
business hours request; $50.00 for each same day service request;
$1,000 for each one-business-hour service request; and $500.00 for each
two-business-hour service request. The filing fee shall be in addition to
the basic statutory filing fee usually charged for filing a document.
17:35-5.5 Methods of payment for facsimile filing service
(a) All fees assessed pursuant to this subchapter may be paid via a prepaid deposit account, provided the delivery process allows for the use
of such accounts, or charged against a major credit card held by the
service user [of the facsimile filing service]. An electronic method
approved by the Filing Office is also an acceptable payment method.
1. When a credit card or electronic payment method acceptable to
the Filing Office is utilized as a method of payment, the user may be
charged a separate fee to cover reasonable [bank] service fees that are
incurred [by the Filing Office] in processing the credit [charge] card or
electronic payment. [If no bank fees are incurred in processing the
charges, no separate fee shall be charged.]
2. (No change.)
__________
TREASURY — TAXATION
(a)
DIVISION OF TAXATION
Sales and Use Tax Act
Proposed Readoption with Amendments: N.J.A.C.
18:24
Proposed Repeals and New Rules: N.J.A.C. 18:2431.5 and 33.1
Proposed Repeals: N.J.A.C. 18:24-2.2, 4.7, 5.15, 5.18,
12.4, 18, 22.4, 22.5, and 32.7
Proposed Recodification: N.J.A.C. 18:24-2.14 as 8.6
Authorized By: Dennis Shilling, Acting Director, Division of
Taxation.
Authority: N.J.S.A. 54:32B-24 and 54:50-1.
Calendar Reference: See Summary below for explanation of
exception to calendar requirement.
Proposal Number: PRN 2015-153.
Submit written comments by February 5, 2016, to:
Elizabeth J. Lipari
Administrative Practice Officer
Division of Taxation
50 Barrack Street
PO Box 240
Trenton, NJ 08695-0240
Email: [email protected]
The agency proposal follows:
Summary
In accordance with the sunset provisions of Executive Order No. 66
(1978) and N.J.S.A. 52:14B-5.1, the Division has evaluated the rules at
N.J.A.C. 18:24, Sales and Use Tax Act, scheduled to expire on October
28, 2015, and has determined that they are necessary, reasonable, and
proper for the purpose for which they were originally promulgated. The
Division of Taxation (Division) proposes to readopt the rules with
technical changes, such as grammar and formatting, as well as
substantive changes in order to properly reflect current statutory
provisions. As the Division has filed this notice of readoption prior to the
expiration date, the rules are extended 180 days to April 25, 2016,
pursuant to N.J.S.A. 52:14B-5.1.c(2).
The proposed amendments, new rules, a recodification, and repeals
will increase ease of use and consistency. Certain language, phrasing, and
formatting inconsistencies have been addressed. The following technical
changes have been proposed: examples have been restructured without
substantive changes; gender-specific pronouns have been amended to
eliminate gender designations or to provide gender-neutral phrasing;
stated numbers have been replaced with digits where appropriate;
grammatical changes have been made; incorrect punctuation has been
corrected; extraneous words and punctuation have been eliminated;
references to Resale Certificate (Form ST-3), Certificate of Exempt
Capital Improvement (Form ST-8), Farmer’s Exemption Certificate
(Form ST-7), and Exempt Use Certificate (Form ST-4) have been
amended to follow with “or other approved form”; “vendor(s)” has been
changed to “seller(s)” to reflect the terminology used in the Sales and Use
Tax Act; peculiar words or phrases have been replaced with plain
language; the phrase “digital property” was changed to “specified digital
product” to correspond with a statutory change; “personal property” or
“goods” were changed to “tangible personal property” to correspond with
the statute; references to other rules as authority were replaced by the
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2919)
TREASURY — TAXATION
PROPOSALS
appropriate statutory citations; the introduction to definition sections
were made consistent; generic taxpayers were given specific names in
examples; references to public laws have been deleted, and typographical
errors were corrected.
Effective October 1, 2005, through the enactment of P.L. 2005, c. 126,
New Jersey joined a national coalition of states in conforming the New
Jersey Sales and Use Tax Act to the provisions of the Streamlined Sales
and Use Tax Agreement (“SSUTA” or “Agreement”). As a member state,
New Jersey is required to be in compliance with the SSUTA through the
incorporation of its provisions into New Jersey law, rules, and policies.
The SSUTA was developed over the course of several years through the
joint effort of the many states participating in the Streamlined Sales and
Use Tax Project (Project). The underlying purpose of the SSUTA is to
simplify and modernize the administration of the sales and use tax laws
of the member states in order to assist in tax administration and
compliance. New Jersey chose to participate in the SSUTA in order to
help New Jersey businesses that operate in multiple states because the
SSUTA simplifies the sales and use tax burdens for such businesses. New
Jersey has been involved as a participating state since 2001, when the
State Treasurer was authorized, pursuant to N.J.S.A. 54:32B-44 et seq., to
enter into multistate discussions concerning the SSUTA to provide a
streamlined sales tax system. The two parts to the Project’s proposed
streamlines sales tax system are: a uniform sales and use tax
administration system to reduce the burden of tax compliance for all
sellers and all types of commerce; and a sales tax law simplification and
uniformity system. These simplifications apply to all sellers.
The rules proposed for readoption with amendments, new rules, a
recodification, and repeals implementing the Sales and Use Tax Act
contains the following 37 subchapters:
Subchapter 1. Forms and General Definitions.
Subchapter 2. Retention of Records By Sellers.
Subchapter 3. Hotel Room Occupancy Subject to Sales Tax.
Subchapter 4. Manufacturing, Processing, Assembling, and Refining
Industries.
Subchapter 5. Contractors and Services Performed on Real Property.
Subchapter 6. Sales of Clothing, Footwear, and Protective Equipment
and Services Performed on Clothing.
Subchapter 7. Motor Vehicles.
Subchapter 8. Exempt Nongovernmental Organizations.
Subchapter 9. Requirements Relating to Exempt Private
Organizations.
Subchapter 10. Issuance and Acceptance of Exemption Certificates.
Subchapter 11. Obligation to Collect and Pay Sales Tax or
Compensating Use Tax.
Subchapter 12. Receipts from the Sale of Food, Food Ingredients, and
Prepared Food.
Subchapter 13. Garbage Removal Service.
Subchapter 14. Taxability of Hospital Sales and Services.
Subchapter 15. Laundry and Dry Cleaning Services.
Subchapter 16. Coin-Operated Vending Machines; Sales of Tangible
Personal Property; Sales of Food and Drink.
Subchapter 17. Specific Rules for Vendors Who Sell Tangible
Personal Property Through Vending Machines at 25 Cents or Less.
Subchapter 18. Taxability of Motor Fuels
Subchapter 19. Sales of Tangible Personal Property and Services Used
on Farms.
Subchapter 20. Commercial Advertising Film Negatives, Original
Production Video Tape, and Similar Materials.
Subchapter 21 is reserved.
Subchapter 22. Sales Made by Floor Covering Dealers.
Subchapter 23. Bad Debts.
Subchapter 24 is reserved.
Subchapter 25. Sales of Software and Related Services.
Subchapter 26. Solar Energy Devices or Systems; Exemption From
Sales and Use Taxation.
Subchapter 27. Transportation of Persons and Tangible Personal
Property.
Subchapter 28. Race Horses.
Subchapter 29. Disposable Household Paper Products: Exemption
from Sales and Use Tax.
(CITE 47 N.J.R. 2920)
Subchapter 30 is reserved.
Subchapter 31. Urban Enterprise Zones Act.
Subchapter 32. Leases and Rentals of Tangible Personal Property.
Subchapter 33. Massage, Bodywork, and Somatic Services.
Subchapter 34. Investigation and Security Services.
Subchapter 35. Information Services.
Subchapter 36. Sales Price.
Subchapter 37. Medical.
Specifically, the following changes are proposed:
N.J.A.C. 18:24-1.1 is proposed for amendment to delete obsolete
forms and to amend form names to correspond to the names of forms
currently in use. An “*” was added after the Streamlined Sales and Use
Tax Agreement Certificate of Exemption (Form ST-SST) to indicate that
it may be used as an alternative form in approved circumstances.
At N.J.A.C. 18:24-1.2, definitions of “Director” and “seller” are
added. The definition of “certified service provider” is proposed to be
amended, by deleting “certified jointly by the states that are signatories to
the Agreement to perform all of the seller’s sales tax functions” and by
adding “certified under the Agreement to perform all the seller’s sales
and use tax functions, other than the seller’s obligation to remit tax on its
own purchases,” to reflect the definition used in the Streamlined Sales
and Use Tax Agreement. The definition of “person” is proposed to be
amended by deleting “estate, fiduciary, partnership, limited liability
company, limited liability partnership, corporation, or any other legal
entity” and by adding “individual, trust, partnership, limited partnership,
limited liability company, society, association, joint stock company,
corporation, public corporation or public authority, estate, receiver,
trustee, assignee, referee, fiduciary, and any other legal entity,” to reflect
the definition used in the Sales and Use Tax Act.
The definition of “retail sale” is proposed to be amended by including
additional information on what qualifies as a sales for resale; such as the
conversion of natural gas into another product, telecommunications
services to a telecommunications service provider as a component part of
telecommunications service provided to a customer, and a product
transferred electronically for further commercial broadcast, rebroadcast,
transmission, retransmission, licensing, relicensing, distribution,
redistribution, or exhibition of the product, in whole or in part, to another
person. This addition is necessary to reflect the definition used in the
Sales and Use Tax Act.
The definition of “sale, selling, or purchase” is proposed to be
amended by adding “conditional or otherwise” to reflect the definition
used in the Sales and Use Tax Act, which was amended to conform to the
definition used in the SSUTA.
The definition of “sales price” is proposed to be amended by adding
“which personal property or services are sold, leased, or rented, valued in
money, whether received in money or otherwise,” and by deleting
“installation charges; and the value of exempt personal property given to
the purchaser where taxable and exempt personal property have been
bundled together and sold by the seller as a single product or piece of
merchandise,” in order to reflect the definition used in the Sales and Use
Tax Act which was amended to conform to the definition used in the
SSUTA. The definition of “Sales price” is further proposed to be
amended by adding information concerning consideration received by the
seller from third parties to conform to the definition used in the Sales and
Use Tax Act as amended by the SSUTA. The definition of “sales price”
is further proposed to be amended by adding information on bundled
transactions involving telecommunications services to reflect the
definition used in the Sales and Use Tax Act, as amended by the SSUTA.
N.J.A.C. 18:24-2.1 is proposed to be amended for clarity to delete
“promulgated by the Director of Taxation pursuant to authority vested in
him under N.J.S.A. 54:32B-1 et seq.,” as it is not necessary.
N.J.A.C. 18:24-2.2 is proposed for repeal as the definitions were
relocated to N.J.A.C. 18:24-1.2, since they apply to the entire chapter.
In N.J.A.C. 18:24-2.3, 2.4, 2.5, and 2.9, “or guest check” was added
after “individual sales slips, invoices, receipts, statements, memoranda of
price and cash register tapes.”
N.J.A.C. 18:24-2.3(a) is proposed for amendment by adding “both
retail and wholesale” to the types of records that must be maintained and
“and purchase for lease” is proposed for deletion because a purchase is
defined in the law as including a lease. N.J.A.C. 18:24-2.3(b) is proposed
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
for amendment by replacing the outdated phrase “microfilm
reproductions” with the current phrase “photocopies or electronically
stored copies.” N.J.A.C. 18:24-2.3(b)4 is proposed for amendment by
deleting the outdated term “modern projectors” and replacing it with the
current phrase “computer hardware and software.” At N.J.A.C. 18:242.3(c), an amendment is proposed to add “and date of issuance” to each
invoice. At N.J.A.C. 18:24-2.3(d)3, the sentence “[t]he general ledger
should coincide with the financial reports” is proposed to clarify the
information required to be maintained by taxpayers.
N.J.A.C. 18:24-2.4(a) is proposed for amendment to change 90 days to
four years to conform with N.J.S.A. 54:32B-16. N.J.A.C. 18:24-2.4(a)
and (b) and 2.5(a) are proposed for amendment by deleting the phrase
“(or monthly)” because sales tax audits are conducted based on quarterly
filings, so the Division requires records for the entire quarter in the audit
period. N.J.A.C. 18:24-2.4(a) is further proposed for amendment to delete
the three cross-references as they are unnecessary.
At N.J.A.C. 18:24-2.5(a), “[a]ll resale and exemption certificates must
be contemporaneously dated, and all supporting documentation must be
retained by the seller” is proposed for clarity. N.J.A.C. 18:24-2.5(b) is
proposed for amendment to add “any resale” certificate to clarify that a
retail certificate is a type of exemption certificate.
N.J.A.C. 18:24-2.6(a)1 is proposed for amendment to replace “catered
event” with “catering charge” for clarity.
N.J.A.C. 18:24-2.8(a)4 is proposed for amendment to add “including
quantity, description of item, and purchase price of each individual item”
for clarity.
N.J.A.C. 18:24-2.9(c)1 is proposed for amendment to add “and
payment (if payment is made on a date different from the purchase date).”
N.J.A.C. 18:24-2.9(c)2 is proposed for amendment to add “and a detailed
description of such use.” N.J.A.C. 18:24-2.9(c)4v is proposed for
amendment to add “if applicable” for clarity. N.J.A.C. 18:24-2.9(d) is
proposed for amendment by replacing the word “disposal” with
“retention” because that is the phrase used in N.J.A.C. 18:24-2.11.
N.J.A.C. 18:24-2.11(a)1 is proposed for amendment to add “including
the specific period for which the seller wishes to dispose of records.”
N.J.A.C. 18:24-2.14 is proposed for recodification without amendment as
N.J.A.C. 18:24-8.6 because Subchapter 8 pertains to exempt
nongovernmental organizations.
N.J.A.C. 18:24-2.16(a) is proposed for amendment to change “within
three days after” to “at least 15 days before” commencing business, in
order to conform with the general registration requirements found in
N.J.S.A. 54:32B-15. This subsection is further proposed for amendment
by adding “and Enterprise Services” after “Division of Revenue” to
reflect the proper name of the agency.
N.J.A.C. 18:24-3.3 is proposed for amendment to delete language
describing “permanent resident” (as being someone who is in residence
for at least 90 consecutive days) because that term is already defined in
N.J.A.C. 18:24-3.2.
Throughout Subchapter 4, Manufacturing, Processing, Assembling,
and Refining Industries, the word “exempt” is proposed for addition to
references of “capital improvement” to reflect the statute at N.J.A.C.
18:24-4.4(e)2, (e)2i, (e)6, and (e)7.
At N.J.A.C. 18:24-4.3(a)4, the final sentence defining the term year is
proposed for deletion because it is a defined term in N.J.A.C. 18:24-4.2.
At N.J.A.C. 18:24-4.6, “as well as services otherwise taxable” was
deleted because this phrase caused confusion.
N.J.A.C. 18:24-4.7, addressing services not subject to tax, is proposed
for repeal, as the section is not compatible with the subchapter and this
information is found in other subchapters throughout the chapter.
N.J.A.C. 18:24-5.8(a) is proposed for amendment to add “or repair” to
properly describe the listed examples of tax on materials.
At N.J.A.C. 18:24-5.12(b), the phrase “taxable receipt” is proposed to
be replaced with “sales price” for consistency with the statutory term.
N.J.A.C. 18:24-5.15 and 5.18 are proposed for repeal as they were
deemed unnecessary because the sections are similar to the information
found in Subchapters 2 and 10.
At N.J.A.C. 18:24-5.16(a)2, language regarding data elements
necessary for claiming an exemption is proposed for deletion because it is
redundant with language found in Subchapter 10. N.J.A.C. 18:245.16(a)7i, regarding use of the Contractor’s Exempt Purchase Certificate
(Form ST-13), is proposed for deletion and replacement for clarity
without any substantive change, other than the removal of the crossreference to “(a)3 above,” as the cross-reference to a different form is not
applicable.
No change was made to N.J.A.C. 18:24-5.1.
At N.J.A.C. 18:24-6.2, the statutory definition of “fur” found in
N.J.S.A. 54:32B-8.4 is proposed for addition.
N.J.A.C. 18:24-6.3 is proposed for amendment to exclude “fur
clothing” from the clothing exemption as provided for by N.J.S.A.
54:32B-8.4.
The phrase “not exempt” is proposed for deletion from the headings of
N.J.A.C. 18:24-6.5, Sales of accessories and 6.6, Sales of sport or
recreational equipment. The word “equipment” is proposed for deletion
from N.J.A.C. 18:24-6.5, because this section refers to accessories.
N.J.A.C. 18:24-6.5(b) is proposed for deletion because this sentence was
duplicative of N.J.A.C. 18:24-6.5(a).
N.J.A.C. 18:24-6.6(b)15 is proposed for amendment to replace “or”
with “and” for grammatical consistency.
At N.J.A.C. 18:24-7.1, the definitions of “dealer of manufactured and
mobile homes, trailers or housetrailers,” “first sale,” “gross vehicle
weight rating,” “lease or rental,” “manufactured or mobile home,”
“manufacturer’s invoice price,” “new manufactured or mobile home,”
“place of abode,” “semitrailer,” “trailer,” “truck,” “truck tractor,”
“vehicle used in combination therewith,” and “used manufactured or
mobile home,” were relocated from various other sections within the
subchapter in order to have all of the definitions in one section. At
N.J.A.C. 18:24-7.1, the term “Director” is proposed for deletion, as it is
relocated to N.J.A.C. 18:24-1.2.
At N.J.A.C. 18:24-7.3(c), “unless the purchaser issues the dealer or
seller a fully completed exemption certificate” is proposed for addition to
clarify when the tax need not be collected.
N.J.A.C. 18:24-7.4(c)4 is proposed for amendment to delete “in
amount” for clarity.
N.J.A.C. 18:24-7.5(a) is proposed for amendment by relocating the
phrase “regardless of whether they are separately stated upon the
customer’s invoice” from paragraph (a)2, to clarify that the charges listed
follow the taxability of the motor vehicle whether or not they are
separately stated on the invoice to the customer.
N.J.A.C. 18:24-7.6 is proposed for amendment to add “fair market
value of such property, which shall form the” for clarity and to change
“true value” to “fair market value” as there is not legal meaning to “true
value.”
At N.J.A.C. 18:24-7.8(b)1, the definition of “place of abode” is
proposed for deletion as it was relocated to the subchapter definitions
section.
N.J.A.C. 18:24-7.10(a) is proposed for amendment to add “Motor
Vehicle Sales and Use Tax Exemption Report” to identify the title of
Form ST-10. An extraneous note was deleted from N.J.A.C. 18:247.10(a)4 because the information it contained was not relevant to the
section. Subsection (b) is proposed for amendment to delete “A resale
certificate may be accepted from a lessor registered for sales tax purposes
in New Jersey” since it is redundant with the previous sentence, as
proposed for amendment. This subsection is further proposed for
amendment to add “and each invoice must include the date of the
transaction.” The list of certificates not ordinarily accepted in N.J.A.C.
18:24-7.10(e) is proposed for deletion because it was deemed
unnecessary. N.J.A.C. 18:24-7.10(f) is proposed for amendment to delete
the final two sentences since they no longer state the current practice of
the industry.
N.J.A.C. 18:24-7.12(f) is proposed for amendment to replace the
outdated terms “wrecker or tow car” with the current terms “wrecker
truck or tow truck.”
Throughout N.J.A.C. 18:24-7.14, “automobile” is proposed for
replacement with “motor vehicle” for consistency with the statutory term.
Subsection (b) is proposed for amendment to add “employed by the
dealership” to conform with language used in N.J.A.C. 18:24-7.14(c).
Paragraph (b)2 is proposed for amendment to add the word “new” to the
first sentence to clarify that the tax treatment described applies to new
motor vehicles withdrawn from a dealer’s inventory.
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2921)
TREASURY — TAXATION
PROPOSALS
At subsection (a), the definition of “lease or rental” is proposed for
deletion as it was relocated to the subchapter definitions section. N.J.A.C.
18:24-7.15(c)2 was rephrased for clarity. N.J.A.C. 18:24-7.15(d) is
proposed for deletion as it refers to an obsolete law.
Existing N.J.A.C. 18:24-7.18(b) through (g) are proposed for deletion
as the subsections contain definitions that were relocated to N.J.A.C.
18:24-7.1. Recodified N.J.A.C. 18:24-7.18(c) is proposed for amendment
to delete the word “type” after “nonconventional” because this word
caused confusion.
References to obsolete dates were deleted from N.J.A.C. 18:24-7.19.
N.J.A.C. 18:24-7.19(a)1 is proposed for deletion as all terms were
relocated to the subchapter definitions section. At N.J.A.C. 18:247.19(b)3i, “taxable receipt” is proposed for replacement with “sales
price” for consistency with the term in this section. N.J.A.C. 18:247.19(b) is proposed for amendment to add “pursuant to N.J.S.A. 54:41.7” to state the statutory authority. N.J.A.C. 18:24-7.19(d) is proposed
for amendment to replace “exempt from” with “not subject to” since that
is the correct terminology. N.J.A.C. 18:24-7.19(e)1 is proposed for
amendment to delete the extraneous word “permanent” from the
paragraph, pertaining to records. N.J.A.C. 18:24-7.19(f) is proposed for
amendment to replace the phrase “as provided for” with “in the same
manner as” for clarity.
New N.J.A.C. 18:24-7.20(d) and 7.21(e) are proposed to provide
guidance on the appropriate exemption forms.
N.J.A.C. 18:24-8.5 is proposed for amendment to clarify the phrase
“personal and private interests.”
Existing N.J.A.C. 18:24-9.10(c)3 is proposed for amendment to
relocate the examples as new paragraph (c)4. N.J.A.C. 18:24-9.10(f) is
proposed for deletion as the subsection is unnecessary. N.J.A.C. 18:249.11(d)1ii and (d)3 are proposed for amendment to include “online” and
“online store,” respectively.
At N.J.A.C. 18:24-10.2(b), the final sentence is proposed for deletion
because it was deemed unnecessary. N.J.A.C. 18:24-10.5(b) and (f) are
proposed for amendment to add the appropriate form number of the
Streamlined Sales and Use Tax Agreement Certificate of Exemption New Jersey and the New Jersey Resale Certificate for Non-New Jersey
Sellers.
N.J.A.C. 18:24-11.3(a) is proposed for amendment by deleting “or
purchase tangible personal property for lease,” as unnecessary. N.J.A.C.
18:24-11.3(b) is proposed for deletion as it is unnecessary. New
subsection (b) is proposed as an introduction to the examples in the
section for clarity. The examples in N.J.A.C. 18:24-11.3(b) are proposed
for amendment to reflect current dates, and to codify they as paragraphs
to the subsection.
At N.J.A.C. 18:24-12.2A(b)2, “fountain beverages” was added as an
example of a food item received in a cup.
At N.J.A.C. 18:24-12.3(b), the phrase “for consumption on or off the
premises” was deleted because it is irrelevant and in the list of examples,
the outdated phrase “soda fountains” was replaced with “juice bars.”
N.J.A.C. 18:24-12.4 is proposed for repeal because this section simply
reiterates the statutory exemption.
The examples at N.J.A.C. 18:24-12.6 are proposed with technical
amendments for clarity.
At N.J.A.C. 18:24-13.2(c)6, the conjoining word “or” connecting
paragraphs (c)1 through 6 is changed to “and.”
At N.J.A.C. 18:24-14.2, the cross-reference to N.J.A.C. 18:24-14.1
was changed to the statutory cross-reference of N.J.S.A. 54:32B-(b)(1).
At N.J.A.C. 18:24-15.1 the final sentence is proposed for deletion as it
is an explanation of the prior law, which was repealed October 1, 2005.
N.J.A.C. 18:24-15.3 is proposed for amendment to include “cleaning”
and for consistency with the rest of the chapter.
At N.J.A.C. 18:24-15.5 and in the heading of Subchapters 16 and 17,
the term “coin-operated” is proposed for deletion because it is outdated.
At N.J.A.C. 18:24-16.6, the cross-reference to N.J.A.C. 18:24-17 is
proposed for deletion because the statutory exemption (N.J.S.A. 54:32B8.9) is already stated in this section and the statute provides the authority
for the exemption.
The heading of N.J.A.C. 18:24-17.1 is proposed for amendment to
properly describe the subject matter it addresses. Instead of “statutory
basis,” the heading is proposed to read “sales of tangible personal
(CITE 47 N.J.R. 2922)
property through vending machines at $.25 or less.” The first sentence is
proposed for deletion as unnecessary.
N.J.A.C. 18:24-17.2 is proposed for amendment to revise the
definition of “primarily engaged” for clarity.
N.J.A.C. 18:24-18 is proposed for repeal as it merely restates the law.
Throughout N.J.A.C. 18:24-19, the word “enterprise” is replaced with
the term “farming enterprise” for consistency with the regulatory
definition. Several technical changes were for clarity.
At N.J.A.C. 18:24-19.4(e)1, an unnecessary statutory cross-reference
is proposed for deletion. At paragraph (f)2, “information services” was
added to an example of possible non-qualifying purchases made by a
farmer. Throughout subsection (g), the term “promotional or advertising
materials” was replaced with “printed advertising material” to reflect
current law.
The heading of N.J.A.C. 18:24-19.7 was amended to add the word
“Form” before “ST-7.”
At N.J.A.C. 18:24-19.8(a)2, the examples are proposed for amendment
to be reworded for clarity.
N.J.A.C. 18:24-20.2(a) is proposed for deletion and replacement to be
reworded for clarity. The word “protection” was replaced by
“production” to correct the typographical error.
N.J.A.C. 18:24-22.1 is proposed for amendment to include “epoxy”
and “laminate” to the list of floor covering examples.
Throughout Subchapter 25, the word “computer” is proposed to be
added before the word “software” to reflect proper terminology.
The definition of “first available for transmission” is proposed to be
relocated from N.J.A.C. 18:24-25.8(a)5i to 25.1A.
N.J.A.C. 18:24-26 states that solar energy systems and devices must
meet certain technical sufficiency standards. Those standards had been
outlined in rules issued by the Department of Environmental Protection.
This role has been transferred to the Board of Public Utilities (Board), but
the rules cross-referenced in N.J.A.C. 18:24-26.2 (N.J.A.C. 14:25)
expired effective February 23, 2000. N.J.A.C. 18:24-26 has been
amended to reflect the transfer of this function to the Board and to
explain that the Division will make exemption decisions on a case-bycase basis until rules are promulgated by the Board. N.J.A.C. 18:24-26.4
is also proposed for amendment to delete the cross-reference to N.J.A.C.
18:24-26.2, for the reasons noted above. N.J.A.C. 18:24-26.4 is also
proposed for amendment to add “and written clearly on the certificate”
for clarity.
Throughout Subchapter 27 minor changes are proposed to the
examples for clarity. Geographic references were added throughout the
section.
N.J.A.C. 18:24-28.4 is proposed for amendment to clarify that use tax
would be imposed on the use of a race horse purchased outside of the
State.
N.J.A.C. 18:24-29.4(a) is proposed for amendment to be reformatted
to be consistent with other provisions within the chapter.
N.J.A.C. 18:24-31.1 is proposed with technical amendments that do
not change the meaning of the section and the final sentence in subsection
(a) is proposed for deletion as it is unnecessary.
At N.J.A.C. 18:24-31.2, the definition of “enterprise zone” is proposed
to be relocated so that all of the terms are alphabetized as required in the
Administrative Code standards. The definition of “qualified business” is
proposed for amendment for clarity. The word “programs” is proposed to
be added following the reference to “New Jersey public assistance” to
accurately reflect the benefits offered. Chapter law references are
proposed for deletion from subparagraph 2iii in the definition of qualified
business and were replaced with the correct citation for the Workforce
Investment Act.
N.J.A.C. 18:24-31.3 was reworded for clarity, with no substantive
change proposed. N.J.A.C. 18:24-31.3(a) is proposed for amendment to
add “specified digital products” as an exclusion from the exemption.
N.J.A.C. 18:24-31.3(a) is further proposed for amendment so that
tangible personal property eligible for exemption is listed separately from
services that qualify for exemption. Subsection (b), which is proposed for
recodification as paragraph (a)1, is proposed for amendment to add
“when used or consumed exclusively within the enterprise zone” for
clarity. Numerical references of exemption forms (“Form UZ-5” and
“Form UZ-4”) are proposed for addition in recodified N.J.A.C. 18:24-
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
31.3(a)3 and 31.6 for consistency with the rest of the chapter. Application
instruction information is proposed for addition to recodified N.J.A.C.
18:24-31.3(c).
N.J.A.C. 18:24-31.4 is proposed for amendment to clarify the ordering
and delivery requirements to qualify for the partial sales tax exemption.
Subsection (d) is proposed for amendment to include “online” as a
method of conducting business.
N.J.A.C. 18:24-31.5 is proposed for addition to state the prohibition of
sales of taxable services from the partial sales tax exemption.
Throughout Subchapter 32, references to prior tax treatment under the
Sales Tax and Use Tax Act are proposed for elimination.
At N.J.A.C. 18:24-32.1, a reference to a statutory change in 2005 is
proposed for deletion.
The definition of “transportation equipment” is proposed for relocation
from N.J.A.C. 18:24-32.6 to 32.2. A further amendment properly locates
the defined term “long-term lease or rental” alphabetically.
At N.J.A.C. 18:24-32.4(b)2 and 4 is proposed for amendment by
replacing “customer” with “lessee” for clarity.
N.J.A.C. 18:24-32.7 is proposed for repeal because the section
reflected an obsolete version of the law.
Proposed new N.J.A.C. 18:24-33.1 is added to state the scope of
Subchapter 33.
The heading of N.J.A.C. 18:24-33.3 is proposed for amendment to
delete “of massage, bodywork, and somatic services” for consistency
with other headings in the chapter. N.J.A.C. 18:24-33.3(b)1 is proposed
for amendment to change “O.D.” to “D.O.” since that is the proper
designation.
N.J.A.C. 18:24-33.6(a) is proposed for amendment to be rewritten for
clarity.
N.J.A.C. 18:24-34.3(c)4 and 5 are proposed for amendment to replace
“real-life” with “in-person” for clarity. Subsection (g) is proposed for
amendment to replace the phrase “video cassettes” with the phrase
“DVDs” to update the language.
At N.J.A.C. 18:24-35.2, the definition of “information services” is
proposed for replacement to include the actual definition, rather than the
statutory cross-reference.
An error in the statutory cross-reference at N.J.A.C. 18:24-35.5(a) and
(b) is proposed to be corrected.
Throughout Subchapter 36, the word “receipt” and the phrase “taxable
receipt” were replaced by the phrase “sales price” for consistency with
the statutory term.
At N.J.A.C. 18:24-36.2(e), the phrase “any person” is proposed for
replacement with “a manufacturer, distributor, or any other third party.”
Also throughout N.J.A.C. 18:24-36.2 amendments are proposed to follow
a common structure within the subchapter.
The definition of “transferred to the patient” is proposed for relocation
from N.J.A.C. 18:24-37.9 to 37.2, for consistency with the rest of the
chapter.
N.J.A.C. 18:24-37.5(a), (b) and (c) are proposed for amendment to
delete “home use,” since durable medical equipment is already described
by that term in subsection (a). Paragraph (e)21 is proposed for
amendment to add “for medical use” after “monitors” for clarity.
N.J.A.C. 18:24-37.9(c) is proposed for amendment to delete the final
sentence because it is not relevant to the subject matter.
As the Division has provided a 60-day comment period for this notice
of proposal, this notice is excepted from the rulemaking calendar
requirements pursuant to N.J.A.C. 1:30-3.3(a)5.
Social Impact
The rules proposed for readoption with amendments, new rules, a
recodification, and repeals will have a positive social impact because they
reflect the Division’s current guidance on the application of the Sales and
Use Tax Act. Clearer and more uniform rules should result in increased
voluntary compliance. The rules proposed for readoption with
amendments, new rules, a recodification, and repeals will potentially
affect all businesses, public entities, private organizations, and individual
consumers in New Jersey, including out-of-State individuals and entities
doing business in New Jersey or making purchases here. These rules also
affect accountants; tax practitioners and advisors; and writers, editors,
and publishers of books, websites, newsletters, software, articles, and
other published information about tax information matters.
Economic Impact
Enactment of the rules proposed for readoption with amendments, new
rules, a recodification, and repeals would be revenue neutral since the
Division is clarifying statutory definitions, impositions, and exemptions
set forth in the Sales and Use Tax Act. In the long term, the rules
proposed for readoption with amendments, new rules, a recodification,
and repeals will protect the current sales tax base and will result in an
increased ability to collect sales tax that is due to the State, since taxpayer
compliance will be facilitated by explaining statutory definitions,
impositions, and exemptions.
Federal Standards Statement
A Federal standards analysis is not required because the authority for
rules proposed for readoption with amendments, new rules, a
recodification, and repeals is based on N.J.S.A. 54:32B-24. The rules
proposed for readoption with amendments, new rules, a recodification,
and repeals are, therefore, independent from any Federal standards or
requirements.
Jobs Impact
It is not expected that the rules proposed for readoption with
amendments, new rules, a recodification, and repeals will result in the
creation or loss of jobs in New Jersey.
Agriculture Industry Impact
The rules proposed for readoption with amendments, new rules, a
recodification, and repeals will not have an impact on the agriculture
industry beyond the general impact imposed on all taxpayers in the State.
Regulatory Flexibility Analysis
The rules proposed for readoption with amendments, new rules, a
recodification, and repeals impose reporting, recordkeeping, and
compliance requirements on all businesses, including those employing
fewer than 100 full-time employees, which are defined as small
businesses under the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et
seq. However, the reporting, recordkeeping, and compliance requirements
do not differentiate based on business size.
The rules impose requirements regarding the proper use of exemption
certificates and require that sellers of taxable property, services, or fees
maintain specific records, for example, copies of invoices, receipts, or
cash register tapes. Furthermore, all sellers of taxable property, taxable
services, and taxable fees are required by the Sales and Use Tax Act to
register with the Division of Taxation for collection of tax and must file
quarterly sales and use tax returns (Form ST-50) with the Division of
Taxation on or before the 20th day of the month following the quarter
covered by the return. When the seller’s tax liability exceeds $500.00 for
the first or second month of a quarterly filing period, it must file a
monthly remittance statement (Form ST-51) and pay the tax. The return
and payment are due on or before the 20th day of the month following the
month in which the seller’s liability exceeds $500.00. Credit is given on
the quarterly return for payments made on a monthly remittance
statement. Because only sellers whose liability exceeds $500.00 for the
month are required to file a monthly return and remittance, sellers who
meet the definition of “small business” in the Regulatory Flexibility Act
tend to be subject to a reduced reporting requirement. However, because
small businesses are less likely to be multistate sellers they may not
derive any benefits from the uniform definitions that must be included in
the rules in order for New Jersey to be in compliance with the
Streamlined Sales and Use Tax Agreement (SSUTA).
Instead, proposed amendments implementing changes in the Sales and
Use Tax Act may be more burdensome to small businesses that are not
linked to large corporations with their own in-house accounting and legal
personnel. These small businesses, especially those that sell food and
food ingredients, may need to increase their use of outside professional
services providing tax advice in order to learn about the sometimes
complex statutory sales and use tax obligation. Many businesses will
incur costs of accounting, legal, and other professional services in order
to comply with the sales and use tax law. There may also be some capital
costs, such as accounting software and cash registers.
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2923)
TREASURY — TAXATION
PROPOSALS
The discretion of the Division of Taxation in implementing the
SSUTA is limited, since it must conform to the SSUTA and must apply
the rules uniformly to taxpayers, regardless of size. However, the rules
proposed for readoption with amendments, new rules, a recodification,
and repeals are designed to ease the burden on small businesses by
providing detailed guidance and numerous examples in plain language, so
that, if necessary, a small business that prefers to analyze changes in its
tax collection obligations on its own might do so by using the rules as its
guide.
The Division has reviewed rules proposed for readoption with
amendments, new rules, a recodification, and repeals with a view to
minimizing the impact of the rules on small businesses to the extent
permissible by law.
The Division is required to administer the State’s tax laws uniformly,
equitably, and efficiently to maximize State revenues to support public
services, and to ensure voluntary compliance with tax statutes without
creating an impediment to economic growth. The Division has reviewed
the application of the Regulatory Flexibility Act to the rules proposed for
readoption with amendments, new rules, a recodification, and repeals and
because the tax rules must be applied uniformly and equitably, the
Division cannot develop and apply special rules for small businesses
different from the rules applied to all taxpayers.
...
ST-16
ST-SST
...
ST-18
...
[ST-20A
ST-20
ST-20A
ST-21
DTF-24
DTF-17.1
...
UZ-5[-SB]
...
Smart Growth Development Impact Analysis
The rules proposed for readoption with amendments, new rules, a
recodification, and repeals would not result in a change in the housing
production within Planning Areas 1 or 2, or within designated centers,
under the State Development and Redevelopment Plan. The basis for this
finding is that the rules proposed for readoption with amendments, new
rules, a recodification, and repeals do not involve housing production,
either within Planning Area 1 or 2, or within designated centers, or
anywhere in the State of New Jersey. The rules proposed for readoption
with amendments, new rules, a recodification, and repeals concern State
tax administration.
Full text of the rules proposed for readoption may be found in the
New Jersey Administrative Code at N.J.A.C. 18:24.
Full text of the rules proposed for repeal may be found in the New
Jersey Administrative Code at N.J.A.C. 18:24-2.2, 4.7, 5.15, 5.18, 12.4,
18, 22.4, 22.5, 31.5, 32.7, and 33.1.
Full text of the proposed amendments and new rules follows
(additions indicated in boldface thus; deletions indicated in brackets
[thus]):
SUBCHAPTER 1. FORMS AND DEFINITIONS
18:24-1.1 Sales and Use Tax Act forms enumerated
The following list reflects sales and use tax forms currently available
for use under N.J.S.A. 54:32B-1 et seq.
REGISTRATION APPLICATIONS
...
[UZ-1
Urban Enterprise Zone Application for Reduced Sales
Tax Collection
UZ-5-SB-A
Application for Exemption from Sales Tax on Purchases
of Goods and Materials for Exclusive Use or
Consumption within an Urban Enterprise Zone]
UZ-1
Application for Reduced Sales Tax Collection For
Qualified Urban Enterprise Zone Retail Businesses
SPECIALIZED USE FORMS
...
ST-8
Certificate of Exempt Capital Improvement
ST-10
Motor Vehicle [Dealer] Sales and Use Tax Exemption
Report
(CITE 47 N.J.R. 2924)
SALES AND USE TAX RETURNS
Use Tax [Return]
Worksheet for Computing New Jersey/New York
Deductions]
ATLANTIC CITY LUXURY TAX
...
Housing Affordability Impact Analysis
The rules proposed for readoption with amendments, new rules, a
recodification, and repeals would not result in a change in the average
costs associated with housing. The rules proposed for readoption with
amendments, new rules, a recodification, and repeals would have no
impact on any aspect of housing.
Exemption Certificate for Student [Books] Textbooks
Streamlined Sales and Use Tax Agreement Certificate of
Exemption* (may be used as an alternative form in
approved circumstances)
[NEW JERSEY/NEW YORK COOPERATIVE TAX
PROGRAM
New Jersey/New York Combined Sales Tax and Use Tax
Return
Worksheet for Computing New Jersey/New York
Deductions
New Jersey/New York Combined State Sales and Use
Tax Remittance
Application for New Jersey and New York Simplified
Sales and Use Tax Reporting
Business Description (used in computing form DTF-24)]
URBAN ENTERPRISE ZONE FORMS
Urban Enterprise Exempt Purchase Certificate
CAPE MAY COUNTY TOURISM TAX
...
SALEM COUNTY
...
18:24-1.2 Definitions
The following words and terms, [as] when used in this chapter, shall
have the following meanings, unless the context clearly indicates
otherwise:
...
[“Certified service provider” means an agent certified jointly by the
states that are signatories to the Agreement to perform all of the seller’s
sales tax functions.]
“Certified service provider” means an agent certified under the
Agreement to perform all the seller’s sales and use tax functions,
other than the seller’s obligation to remit tax on its own purchases.
“Director” means the Director of the Division of Taxation of the
State Department of the Treasury, or any officer, employee, or
agency of the Division of Taxation in the Department of the Treasury
duly authorized by the Director (directly, or indirectly by one or
more redelegations of authority) to perform the functions mentioned
or described in the Sales and Use Tax Act.
“Magazine” or “periodical” means any publication that appears at
stated intervals at least four times per year, each issue of which contains
news or information of general interest to the public or to some particular
organization or group of persons. Each issue must bear a relationship to
prior or subsequent issues with respect to continuity of literary character
or similarity of subject matter and there must be some connection
between the different issues of the series in the nature of the articles
appearing in them. Each issue must be sufficiently similar in style and
format to make it evident that it is one of a series. The publication must
qualify for the second class mailing rate or as a controlled circulation
publication under U.S. postal laws and regulations.
[This definition] Magazine or periodical does not include books
complete in themselves, even those issued at stated intervals; paperback
books, a new one of which may be issued once a month or some other
interval; or so-called “one-shot” magazines that have no literary or
subject matter connection or continuity between prior or subsequent
issues. [This definition] Magazine or periodical does not include
circulars, flyers, guides or handbooks, catalogs, programs, scorecards,
handbills, maps, real estate brokers’ listings, price or order books, printed
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
sales messages, shopping guides, or corporate reports issued to
stockholders.
“Newspaper” means those publications[, which] that are commonly
understood to be newspapers and which are printed and distributed
periodically at daily, weekly, or other short intervals for the
dissemination of news of a general character and of a general interest to
the public. The main purpose of a newspaper is to distribute news of
current events (political, sports, entertainment, etc.). A newspaper may
also contain other material, such as articles on a variety of topics,
photographs, illustrations, legal notices, comic strips, cartoons, editorials,
etc. A newspaper is available for circulation among the public. [For
purposes of this definition, advertising] Advertising is not considered to
be news of a general character and of a general interest.
[This definition] Newspaper does not include books complete in
themselves, even those issued at stated intervals; paperback books, a new
one of which may be issued once a month or some other interval; or socalled “one-shot” magazines that have no literary or subject matter
connection or continuity between prior or subsequent issues. [The
definition] Newspaper does not include circulars, flyers, guides or
handbooks, catalogs, programs, scorecards, handbills, maps, real estate
brokers’ listings, price or order books, printed sales messages, shopping
guides, or corporate reports issued to stockholders.
“Person” means an individual, trust, [estate, fiduciary,] partnership,
limited partnership, limited liability company, [limited liability
partnership,] society, association, joint stock company, corporation, [or]
public corporation or public authority, estate, receiver, trustee,
assignee, referee, fiduciary, and any other legal entity.
“Purchaser” means a person to whom a sale of tangible personal
property, [or] specified digital [property] product, or a sale of a service
is made; or a person liable for the payment of any amusement charge,
hotel room occupancy charge, fees or dues for access or use of the
property or facilities of a fitness, athletic, sporting, or shopping club or
organization, [or] charges for storage, or for parking or garaging a motor
vehicle.
“Receipt” means the amount of the sales price of any tangible personal
property, specified digital [property] product, or service taxable under
the Sales and Use Tax Act. See also [“]sales price[“] below.
[“Retail sale” means any sale, lease, or rental for any purpose other
than for resale, sublease, or subrent. A sale is for “resale, sublease, or
subrent” if it is for resale as is; for resale as a component part of a product
that the purchaser produces for sale; for use by the purchaser in
performing taxable services, if the property purchased becomes a
physical component of the tangible personal property on which the
services are performed or is actually transferred to the purchaser’s
customer in conjunction with the performance of the taxable service.
“Retail sale” includes sales of tangible personal property to all
contractors, subcontractors, or repairmen of materials or supplies used in
erecting structures for others, or building on, or otherwise improving,
altering, repairing, maintaining, or servicing real property of others.]
“Retail sale” means any sale, lease, or rental for any purpose,
other than for resale, sublease, or subrent. A sale is for “resale,
sublease, or subrent” if it is a sale:
1. For resale either as such or as converted into or as a component
part of a product produced for sale by the purchaser, including the
conversion of natural gas into another intermediate or end product,
other than electricity or thermal energy, produced for sale by the
purchaser;
2. For use by that person in performing a service subject to tax
under N.J.S.A. 54:32B-3(b) where the property so sold becomes a
physical component part of the property upon which the services are
performed or where the property so sold is later actually transferred
to the purchaser of the service in conjunction with the performance
of the service subject to tax;
3. Of telecommunications service to a telecommunications service
provider for use as a component part of telecommunications service
provided to an ultimate customer; or
4. To a person who receives by contract a product transferred
electronically for further commercial broadcast, rebroadcast,
transmission, retransmission, licensing, relicensing, distribution,
redistribution, or exhibition of the product, in whole or in part, to
another person, other than rights to redistribute based on statutory
or common law doctrine, such as fair use.
The term retail sale includes: sales of tangible personal property
to all contractors, subcontractors, or repairmen of materials and
supplies for use by them in erecting structures for others, or building
on, or otherwise improving, altering, or repairing real property of
others.
“Sale, selling, or purchase” means [the] any transfer of title or
possession or both, including by exchange or barter, rental, lease, or
license to use or consume, conditional or otherwise, in any manner and
by any means, for consideration. It also includes the rendering of a
taxable service for consideration[. It also includes] and any agreement for
such transfers of title or possession, or for such rendering of service, or
for any other transactions that are taxable pursuant to N.J.S.A. 54:32B-3.
“Sales price” means the same as [“]receipt.[”] It is the measure subject
to sales tax[,] and means the total amount of consideration, including
cash, credit, property, and services, for [the purchase of personal
property, services, amusement admissions, taxable club dues, storage,
parking, and other taxable transactions. “Sales price” is] which personal
property or services are sold, leased, or rented, valued in money,
[regardless of] whether received in money or [in other form of
consideration] otherwise, without any deduction for any of the following:
1.-2. (No change.)
3. Charges by the seller for any services necessary to complete the
sale; and
4. Delivery charges[;].
[5. Installation charges; and
6. The value of exempt personal property given to the purchaser where
taxable and exempt personal property have been bundled together and
sold by the seller as a single product or piece of merchandise.]
[“]Sales price[”] does not include:
1.-3. (No change.)
4. The amount of the sales price for which food stamps have been
properly tendered in full or part payment pursuant to the Federal Food
Stamp Act of 1977, [Pub.L. 95-113 (]7 U.S.C. [§§2011] §§ 2011 et
seq.[)]; or
5. (No change.)
Sales price includes consideration received by the seller from third
parties if:
1. The seller actually receives consideration from a party other
than the purchaser and the consideration is directly related to a price
reduction or discount on the sale;
2. The seller has an obligation to pass the price reduction or
discount through to the purchaser;
3. The amount of the consideration attributable to the sale is fixed
and determinable by the seller at the time of the sale of the item to
the purchaser; and
4. One of the following criteria is met:
i. The purchaser presents a coupon, certificate, or other
documentation to the seller to claim a price reduction or discount
where the coupon, certificate, or documentation is authorized,
distributed, or granted by a third party with the understanding that
the third party will reimburse any seller to whom the coupon,
certificate, or documentation is presented;
ii. The purchaser identifies himself or herself to the seller as a
member of a group or organization entitled to a price reduction or
discount; provided, however, that a preferred customer card that is
available to any patron does not constitute membership in such a
group; or
iii. The price reduction or discount is identified as a third-party
price reduction or discount on the invoice received by the purchaser
or on a coupon, certificate, or other documentation presented by the
purchaser.
In the case of a bundled transaction that includes a
telecommunications service, an ancillary service, internet access, or
an audio or video programming service, if the price is attributable to
products that are taxable and products that are nontaxable, the
portion of the price attributable to the nontaxable products is subject
to tax unless the provider can identify by reasonable and verifiable
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2925)
TREASURY — TAXATION
PROPOSALS
standards, such portion from its books and records, that are kept in
the regular course of business, including non-tax purposes.
“Seller” means a person making sales, leases, or rentals of tangible
personal property, specified digital products, or services, the receipts
from which are subject to tax.
“Tangible personal property” means personal property that can be
seen, weighed, measured, felt, or touched, or that is perceptible in any
other manner to the senses [in any other manner]. It includes electricity,
water, gas, steam, and prewritten computer software[,] including
prewritten computer software delivered electronically.
SUBCHAPTER 2. RETENTION OF RECORDS BY SELLERS
18:24-2.1 Scope of subchapter
This subchapter[, promulgated by the Director of Taxation pursuant to
authority under N.J.S.A. 54:32B-1 et seq.,] is intended to set forth certain
records required to be kept by [vendors under] sellers pursuant to the
Sales and Use Tax Act, [(]N.J.S.A. 54:32B-1 et seq.[).]
18:24-2.2
(Reserved)
18:24-2.3 General requirements
(a) A true copy of all sales slips, invoices, receipts, statements,
memoranda of price, [or] cash register tapes, or guest checks issued to
any customer by a seller who is required to be registered pursuant to the
provisions of the Sales and Use Tax Act, [(]N.J.S.A. 54:32B-1 et seq.[)]
and records of every purchase, [and purchase for lease] both retail and
wholesale, must be available for inspection and examination at any time
upon demand by the Director[, Division of Taxation,] or his or her duly
authorized agent or employee and shall be preserved for a period of four
years from the filing date of the quarterly period for the filing of sales tax
returns to which such records pertain.
(b) [Microfilm reproductions] Photocopies or electronically stored
copies of general books of account, such as cash books, journals, voucher
registers, ledgers, etc., are not acceptable in lieu of original records.
However, [microfilm reproductions] photocopies or electronically
stored copies of supporting records of details, such as sales invoices,
purchase invoices, credit memoranda, etc., may be maintained
[providing] provided the following conditions are met:
1. Appropriate facilities are provided for preservation of the [films]
copies for the periods required.
2. [Microfilm rolls] Copies are indexed, cross referenced, labeled to
show beginning and ending numbers or beginning and ending
alphabetical listing of documents included, and are systematically filed.
3. The taxpayer agrees to provide transcriptions of any information
contained [on microfilm] in copies, which may be required for purposes
of verification of tax liability.
4. Proper facilities are provided for the ready inspection and location
of the particular records, including [modern projectors] computer
hardware and software for viewing and copying the records.
(c) A posting reference and date of issuance must be on each invoice.
Credit memoranda must carry a reference to the document evidencing the
original transaction. Documents necessary to support claimed exemptions
from tax liability, such as bills of lading and purchase orders, must be
maintained in an order by which they [readily] can be readily related to
the transactions for which exemption is sought.
(d) An automatic data processing tax accounting system must have
built into its program a method of producing visible and legible records,
which will provide the necessary information for verification of the
taxpayer’s tax liability.
1. [Machine-sensible] Machine-readable data media, such as
punch[ed] cards, magnetic tape, and disks are deemed to be records
within the meaning of N.J.S.A. 54:32B-16 and must be retained in
accordance with said statute.
2. Automatic data processing records must provide an opportunity to
trace any transaction back to the original source or forward to a final
total. If [detail] printouts are not made of the transaction[s] details at the
time they are processed, then the system must have the ability to
reconstruct these transactions.
3. A general ledger with source references will be [written out]
maintained to coincide with financial reports for tax reporting periods.
(CITE 47 N.J.R. 2926)
The general ledger should coincide with the financial reports. In cases
where subsidiary ledgers are used to support the general ledger accounts,
the subsidiary ledgers should also be [written out] maintained
periodically.
4. The [audit trail] seller’s records should be designed so that the
details underlying the summary accounting data may be identified and
made available on request. The system should be so designed that
supporting documents, such as sales invoices, purchase invoices, credit
memoranda, etc., are readily available.
5. A description of the automatic data processing portion of the
accounting system should be available. The statements and illustrations
as to the scope of operations should be sufficiently detailed to indicate the
following:
i. (No change.)
ii. The procedures employed in each [participation] application
(which, for example, might be supported by flow charts, block diagrams,
or other [unsatisfactory] description of the input or output procedures);
and
iii. The controls used to [insure] ensure accurate and reliable
processing.
6. (No change.)
18:24-2.4 Summary sales records
(a) Where summary records are maintained[, which] that show, by
sales location, total receipts and taxable receipts, the seller [may dispose
of] must maintain individual sales slips, invoices, receipts, statements,
memoranda of price, [or] cash register tapes, [except as provided in
N.J.A.C. 18:24-2.5, Resale and exemption certificates, N.J.A.C. 18:242.6, Records for out-of-State sales, and N.J.A.C. 18:24-2.8, Purchase
records, after the lapse of a period not less than 90 days] or guest checks
for a period of four years from the last date of the most recent quarterly
[(or monthly)] period for the filing of sales tax returns to which such
individual sales documents pertain.
(b) In all instances, summary sales records as described [herein] in
this section shall be retained for a period of not less than four years from
the last date of the quarterly [(or monthly)] period for the filing of sales
tax returns to which the summary records pertain.
18:24-2.5 Resale and exemption certificates
(a) In the case of sales upon which no tax has been collected [by virtue
of] due to the acceptance of a [duly] fully completed resale or exemption
certificate by the seller in lieu of collecting the sales tax, [pursuant to
such rules as may have been promulgated,] individual sales slips,
invoices, receipts, statements, memoranda of price, [or] cash register
tapes, or guest checks recording such sales shall be retained for a period
of not less than four years from the last date of the quarterly [(or
monthly)] period for the filing of sales tax returns to which individual
sales records pertain.[.] All resale and exemption certificates must be
contemporaneously dated, and all supporting documentation must be
retained by the seller.
(b) Summary records will not be considered to be adequate evidence
of the accuracy of any resale or exemption certification.
18:24-2.6 Records for out-of-State sales
(a) In the case of sales upon which no tax has been collected because
of delivery or performance outside of New Jersey, the seller shall retain
records, which show for each such sale:
1. The nature of the item sold, the service(s) performed, the
amusement charge[s], or the [catered event] catering charge;
2.-4. (No change.)
(b) Such records shall[, in all cases,] be retained for a period of not
less than four years.
18:24-2.7 Records presumed representative of accounting practices
It shall be presumed where a seller elects to dispose of individual sales
records prior to the end of the statutory four-year period pertaining to the
retention of such records, that those records[, which in all cases] that are
required to be retained by this subchapter are representative of the seller’s
accounting practices for such four-year period, unless the seller [shall
have] has notified the Director, by certified mail, of a change in
accounting practice.
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
18:24-2.8 Purchase records
(a) In all instances, sellers are required to retain for a period of four
years, detailed purchase records[, which] that disclose the following:
1.-3. (No change.)
4. The nature of the items or services purchased, including quantity,
description of item, and purchase price of each individual item.
18:24-2.9 Direct payment permit holder’s records
(a) (No change.)
(b) A holder of a Direct Payment Permit may not dispose of sales
slips, invoices, receipts, statements, memoranda of price, [or] detailed
cash register tapes, guest checks, individual or summary sales or
purchase records, or any other record of sale, purchase, or use prior to the
expiration of a period of four years after the filing date for the quarterly
filing period to which such records pertain.
(c) [In all instances, a] A holder of a valid Direct Payment Permit shall
maintain, in addition to all other records required by this subchapter,
records that disclose the following:
1. The amount of every purchase, the name and address of the seller
from whom the purchase was made, a description of the property
purchased, and the exact date of the purchase and payment (if payment
is made on a date different from the purchase date);
2. The date upon which purchased property was put to use, whether or
not such use was taxable, the amount of the property put to use, and a
detailed description of the property put to use and a detailed
description of such use;
3. (No change.)
4. Summary records, maintained by calendar quarter, including:
1st Quarter
JAN.
FEB.
MAR.
2nd Quarter
APR.
MAY
JUN.
3rd Quarter
JUL.
AUG.
SEP.
4th Quarter
OCT.
NOV.
DEC.
which records shall include quarterly summaries of:
i.-iii. (No change.)
iv. Tax paid; and
v. Effective rate of tax paid on taxable uses, if applicable.
(d) A holder of a valid Direct Payment Permit is ineligible for any
reduced record [disposal] retention, except upon written determination of
the Director[, Division of Taxation]. Such determination may be
conditioned upon the seller’s willingness to extend the period for
assessing prior tax liabilities.
(e) A holder of a valid Direct Payment Permit who wishes to surrender
such permit may not do so without prior written permission of the
Director[, Division of Taxation. Rulings]. Determinations in such
matters will be conditioned upon:
1.-3. (No change.)
18:24-2.10 Extended recordkeeping periods
The Director, in his or her discretion, may require a seller, by written
notice, to retain records for such period as he or she may designate other
than as provided in this subchapter.
18:24-2.11 Waiver of recordkeeping requirements
(a) At any time, the Director may, [in] at his or her discretion, consent
to the disposal of individual sales records upon written application of the
seller. Such written application shall include the following:
1. A statement of the reasons why it is impractical for the seller to
retain documents for the periods required, including the specific period
for which the seller wishes to dispose of records;
2.-5. (No change.)
18:24-2.12 Waiver of limitation of time by seller
Where a seller has consented in writing to an extension of the time for
assessment of an additional tax, he or she is required, without further
notice, to retain such records as [may be] required in this subchapter for
the periods required, as well as any period covered by his or her waiver[,
or approval thereof].
(Agency Note: N.J.A.C. 18:24-2.14 is proposed for recodification as
N.J.A.C. 18:24-8.6.)
18:24-2.14
(Reserved)
18:24-2.15 Insufficiency of records
(a) The records of a seller may be deemed incorrect or insufficient if:
1. (No change.)
2. The records are not maintained in accordance with [the general
outline of this chapter] this subchapter.
(b) If the records of a seller are determined to be incorrect or
insufficient, the return(s) filed on the basis of the information obtained
from such records may be deemed to be incorrect or insufficient and the
Director may determine the amount of tax due to the State by using any
information available, whether obtained from the seller[’s place of
business] or from any other source.
18:24-2.16 Admission records and information; promoter registration
(a) Every person who contracts, agrees to, or otherwise arranges to
hold, produce, or sponsor an event, entertainment, or amusement, the
admission to which is subject to tax under N.J.S.A. 54:32B-3(e) of the
Sales and Use Tax Act is deemed to be a promoter, and a person required
to collect sales tax, and shall, [within three days after] at least 15
business days before commencing business, file with the Division of
Revenue and Enterprise Services an application for registration (NJREG) for New Jersey sales tax purposes. When registration is granted, it
will be for an indefinite period. However, the applicant must notify the
Division of Taxation of any change of address, ownership, [and] or
business activity.
(b) (No change.)
(c) Any person who sells admission tickets or collects admission
charges for a promoter is considered the recipient of amusement charges
and is also a person required to register and collect and remit sales tax;
provided, however, that the sales tax collected may be turned over to and
remitted to the Division of Taxation by the promoter for whom the
admissions were sold if all the following requirements are met:
1.-3. (No change.)
4. The ticket sales agent maintains records showing the promoter’s
name, address, telephone number, a copy of the promoter’s New Jersey
Certificate of Authority, the number of tickets sold or admissions granted,
gross receipts from admission ticket sales, sales tax collected for New
Jersey, and such other information as the Director may specify from time
to time; and[,]
5. (No change.)
(d) A person who sells admission tickets or collects admission charges
for a promoter or who rents or leases space for an event, amusement, or
entertainment, the admission to which is subject to tax, shall, upon
request, furnish information to the Division of Taxation concerning any
such New Jersey events, entertainment, or amusements and their
promoters.
SUBCHAPTER 3. HOTEL ROOM OCCUPANCY SUBJECT TO
SALES TAX
18:24-3.2 Definitions
The following words and terms, when used in this subchapter, shall
have the following meanings, unless the context clearly indicates
otherwise:
...
“Occupancy” means the use or possession, or the right to the use or
possession, of any room in a hotel.
“Occupant” means a person who, for a consideration, uses, possesses,
or has the right to use or possess, any room in a hotel under any lease,
concession, permit, right of access, license to use, or other agreement, or
otherwise.
...
18:24-3.3 Taxes on hotel room occupancy
(a) The rent for every occupancy of a room or rooms in a hotel is
subject to sales tax, except that the tax is not imposed upon:
1. A permanent resident [who is in residence for at least 90
consecutive days];
2.-3. (No change.)
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2927)
TREASURY — TAXATION
PROPOSALS
18:24-3.4 Hotels
(a) Hotels are regularly kept open for the purpose of furnishing
sleeping accommodations and related services for pay to tourists,
transients, or travelers. The relationship between the operator of the
establishment and the occupant is that of an innkeeper and guest, not that
of a landlord and tenant, although the signing of a lease cannot overcome
the operation of a facility as a hotel. Examples of a hotel include, but are
not limited to[, the following]:
1. An apartment hotel, bed and breakfast, motel, and inn;
2. (No change.)
3. A condotel (for example, a building [used] operated as both a
condominium and a hotel); and
4. (No change.)
(b)-(c) (No change.)
(d) Services customarily provided by hotels include, but are not
limited to: maid service, linen service, room service, safe storage, and
concierge services.
(e) (No change.)
18:24-3.5 Facilities other than hotels
(a) [The following are examples] Examples of facilities that are not
subject to the tax imposed on rent received for hotel occupancy include,
but are not limited to:
1.-3. (No change.)
4. Campsites available for trailers, recreational vehicles, or tent
camping;
5. (No change.)
6. Furnished or unfurnished private residential property (that is,
condominiums, bungalows, single-family homes, and similar living
units), where no maid service, room service, linen service, or other
common hotel services are made available by the lessor and where the
keys to the property are provided to the lessee at the location of an offsite
real estate broker. The furnishing of linens without the service of
changing the linens does not alter the nontaxable nature of the facility.
(b) (No change.)
18:24-3.6 Permanent residents
(a)-(b) (No change.)
(c) A business can be deemed a permanent resident when it contracts
for a room for use by an employee, customer, client, or other authorized
person[s], as long as the duration meets the 90-day threshold. The
contracting business can maintain its permanent resident status even
where the room or rooms are not occupied by the same party throughout
the rental period.
(d)-(e) (No change.)
18:24-3.7 Guest house
A boarding or rooming house containing fewer than eight units must
be registered, and collect and remit sales tax on taxable occupancies as a
hotel, unless it is held out by the operator and kept open for the residence
of permanent boarders or lodgers. A permanent boarder or lodger is any
person who occupies or has the right to occupy a room or rooms in the
house for at least 90 consecutive days.
SUBCHAPTER 4. MANUFACTURING, PROCESSING,
ASSEMBLING, AND REFINING INDUSTRIES
18:24-4.1 Scope of subchapter
(a) This subchapter is intended to clarify the application of the Sales
and Use Tax Act, [(]N.J.S.A. 54:32B-1 et seq.[)], to:
1.-2. (No change.)
18:24-4.2 Definitions
The following words and terms, when used in this subchapter, shall
have the following meanings, unless the context clearly indicates
otherwise:
...
“Machinery, apparatus, or equipment” means any complex,
mechanical, electrical, or electronic device, mechanism, or instrument
[which] that is adapted to the accomplishment of a production process,
and which is designed to be used, and is used, in manufacturing,
(CITE 47 N.J.R. 2928)
converting, processing, fabricating, assembling, or refining tangible
personal property for sale.
...
“Supplies” means items of tangible personal property used in the
maintenance of a building, work area, or machinery, apparatus, [and] or
equipment, and may include items of tangible personal property
consumed or used in production whose use[s are] is incidental to such
production. Supplies include, but are not limited to[, such items as
lubricants, cleaning materials, boiler compounds and light bulbs.]:
1. Lubricants;
2. Cleaning materials;
3. Boiler compounds; and
4. Light bulbs.
...
18:24-4.3 Tax on purchase or use of certain items
(a) The purchase or use of the following items is subject to tax, unless
otherwise specifically exempted, notwithstanding any use or intended use
in production.
1.-3. (No change.)
4. Parts with a useful life of one year or less. In determining whether a
part has a useful life of one year or less, the purchaser’s own treatment of
the item for accounting purposes should be taken into consideration[. In
addition, the term “year” as used in this rule shall mean a standard
calendar year of 12 months]; and
5. (No change.)
18:24-4.4
Purchase, rental, lease, or use of machinery, apparatus, or
equipment directly in production exempt from tax
(a) The purchase, rental, lease, or use of machinery, apparatus, or
equipment for use or consumption directly and primarily in the
production of tangible personal property by manufacturing, processing,
assembling, or refining is exempt from tax [on or after January 1, 1978].
(b) (No change.)
(c) Machinery, apparatus, or equipment is considered to be directly
used in production only when it is used to initiate, sustain, or terminate
the transformation of raw materials into finished products. In determining
whether property consisting of machinery, apparatus, or equipment is
“directly” used, consideration must be given to the following factors:
1.-2. (No change.)
3. The active causal relationship between the use of the property in
question and the production of a product. The fact that particular property
may be considered essential to the conduct of manufacturing, processing,
assembling, or refining because its use is required either by law or
practical necessity does not, of itself, mean that the property is used
directly in manufacturing, processing, assembling, or refining. For
example, property used to prevent accidents, which may be required by
law, is not considered directly used.
(d) Concerning primary use, where a single unit of machinery,
apparatus, or equipment is put to use in two different activities, one of
which is a “direct use” and the other of which is not, the property is not
exempt from tax unless the manufacturer, processor, assembler, or refiner
makes use of the property more than 50 percent of the time directly in
manufacturing, processing, assembling, or refining operations, except in
those cases where such machinery, apparatus, or equipment is rented,
leased, or used by persons other than the purchaser.
1. (No change.)
(e) The exemption in this section applies to industrial owners,
mechanical contractors, and their suppliers, where an industrial owner
awards a contract to a mechanical contractor to install manufacturing
machinery, apparatus, or equipment, to be used by the owner to produce
tangible personal property for sale. The installation may be made in a
new or existing industrial plant of the owner designed for or currently
used for the manufacture of tangible personal property. For example:
1. Under the above facts where the installation of machinery,
apparatus, or equipment results in an exempt capital improvement to real
property, the labor charges for installation are exempt from tax. In
determining whether the installation of machinery, apparatus, or
equipment results in an exempt capital improvement, such property must
be annexed to a structure to carry out the purposes for which the structure
was erected or designed or to which it has been adapted, with the
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
intention to remain there permanently, and the removal thereof will result
in material injury and does not constitute a taxable capital improvement
under N.J.A.C. 18:24-5.6. The installation would result in a capital
improvement when such improvement results in an increase in the capital
value or in a significant increase in the useful life of the real property.
Where the installed machinery, apparatus, or equipment retains its
character as tangible personal property and has not resulted in a capital
improvement to real property, the labor charges for installation are
subject to tax.
2. Under the facts above, where the installation, upon completion,
results in [a] an exempt capital improvement, the owner should issue to
the contractor two fully completed certificates:
i. [ST-8,] Certificate of Exempt Capital Improvement [Certificate]
(Form ST-8) or other approved form, to evidence that the job qualifies
as [a] an exempt capital improvement, exempting his or her construction
labor from tax; and
ii. [ST-4,] Exempt Use Certificate (Form ST-4) or other approved
form, to evidence that the machinery, apparatus, or equipment installed
qualifies for exemption in manufacturing, processing, assembling, or
refining activity.
3. In the above examples, to obtain the exemption of machinery,
apparatus, or equipment from tax, the contractor must furnish his or her
supplier with [an ST-4,] a fully completed Exempt Use Certificate
(Form ST-4) or other approved form, properly identifying the job, with
a copy of the owner’s [ST-4] exemption certificate attached.
4. (No change.)
5. Under the above facts, only machinery, apparatus, or equipment
used directly and primarily in the production of tangible personal
property [for sale] by manufacturing, processing, assembling, or refining
is exempt. Items that may qualify for exemption include[,]: vessels,
pumps, mixers, pipe valves, and fittings. Other materials used by the
mechanical contractor for the installation are not exempt from tax.
6. When subcontractors are involved, the mechanical contractor should
treat such subcontractors in the same manner as in dealing with his or her
suppliers, so far as the classification of the job as [a] an exempt capital
improvement and an exempt use is concerned. The use of [the] Form ST8 and Form ST-4 [exemption certificates] or other approved form to
evidence these classifications is also the same.
7. In addition to the above facts, the mechanical contractor also
contracts to install heating, ventilating, and air conditioning, which when
installed will constitute an addition or exempt capital improvement to
real property. The sale to the installing contractor of tangible personal
property from his or her supplier is a retail sale subject to tax [to]. The
tax shall be paid by the contractor either to his or her supplier or directly
to the Division of Taxation. The contractor should be [furnished an ST8,] issued a fully completed Certificate of Exempt Capital Improvement
[Certificate,] (Form ST-8) or other approved form by the owner of the
real property for the purpose of exempting installation charges from tax.
8. Under the above facts, piping, such as air, gas, water, steam, and
condensate, is designed for use in both the manufacturing process and
incidentally in heating the building. The key to this example is the word
“incidentally.” If the system is used [“]directly and primarily[”] for the
production of tangible personal property, and only incidentally to aid the
building environment housing the machinery, apparatus, or equipment,
the exemption will apply to property purchased. For installation charges,
see (e)1 above.
18:24-4.5 Purchase or use of components and catalysts exempt from tax
(a) The purchase or use of tangible personal property is exempt from
tax when it is intended that the property be resold either:
1. In the same form as when purchased or used; [or]
2.-3. (No change.)
(b) (No change.)
18:24-4.6 Services subject to tax
(a) The following enumerated services, purchased or sold by any
person engaged in manufacturing, processing, assembling, or refining, [as
defined in N.J.A.C. 18:24-4.2,] not purchased for resale, that is, not
performed on property offered for sale by the purchaser, are subject to
sales and use [taxes, as well as services otherwise taxable] tax:
1. Producing, fabricating, processing, printing, or imprinting tangible
personal property (with the exception of imprinting services performed
upon machinery, apparatus, or equipment used directly and primarily in
manufacturing, processing, assembling, or refining), performed for a
person who directly or indirectly furnishes the tangible personal property,
not purchased by him or her for resale, upon which such services are
performed.
2.-3. (No change.)
18:24-4.7
(Reserved)
18:24-4.8 Recordkeeping
Any person engaged in the business [including] involving
manufacturing, processing, assembling, or refining is required to maintain
records in compliance with N.J.A.C. 18:24-2, Retention of Records by
[sellers] Sellers.
SUBCHAPTER 5. CONTRACTORS AND SERVICES PERFORMED
ON REAL PROPERTY
18:24-5.2 Definitions
The following words and terms, when used in this subchapter, shall
have the following meanings unless the context clearly indicates
otherwise[.]:
...
“Construction equipment” means any vehicle, machine, tool,
implement, or other device used by a contractor in erecting structures for
others, or building on, or otherwise improving, altering, or repairing
property of others, which does not become a physical component part of
the property upon which work is performed, and which is not necessarily
consumed in the performance of such work. [Construction] Examples of
construction equipment include[s], but [is] are not limited to[, grading]:
1. Grading, lifting, and excavating vehicles[, compressors,];
2. Compressors and scaffolds[, forms, hand];
3. Forms;
4. Hand tools[, and ladders.]; and
5. Ladders.
...
“Construction supplies” means items of tangible personal property
consumed in the fulfillment of a construction contract, which items do
not become a physical component part of the property upon which work
is performed. [Supplies] Construction supplies include, but are not
limited to [lubricants, cleaning]:
1. Lubricants;
2. Cleaning compounds[, polyethylene];
3. Polyethylene covers[, rock];
4. Rock salt[, and rope.]; and
5. Rope.
“Contractor” means any individual, partnership, corporation, or other
commercial entity engaged in any business involving erecting structures
for others, or building, or otherwise improving, altering, or repairing real
property of others. [“]Contractor[”] does not include the owner of the real
property on which services are being performed. For example, a
developer, who owns the land on which construction or landscaping is
taking place, is not a contractor.
...
“Fabricator” means any individual, partnership, corporation, or other
commercial entity engaged in any business involving manufacturing,
processing, or assembling tangible personal property for sale, which
when installed ordinarily becomes a physical component part of real
property.
...
“Garbage” means contained trash and waste[, including,]. Examples
of garbage include, but are not limited to[, construction]:
1. Construction debris[, discarded];
2. Discarded recyclable materials[, hazardous];
3. Hazardous waste[, general];
4. General household trash[, restaurant];
5. Restaurant food waste[, medical];
6. Medical and veterinary waste[, industrial];
7. Industrial waste[, metal];
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2929)
TREASURY — TAXATION
PROPOSALS
8. Metal scraps[, leaves]; and
9. Leaves, lawn clippings, twigs, and brush.
“Landscaping services” means services that result in a capital
improvement to land, but not including construction, erection, alteration,
improvement, repair, or maintenance of structures. [“Landscaping]
Examples of landscaping services[”] include, [for example, planting]
but are not limited to:
1. Planting trees[, laying];
2. Laying sod[, clearing];
3. Clearing and filling land in preparation for new planting[,
removal]; and
4. Removal of trees and stumps.
...
“Property owner” means the owner of real property on which
contractors’ services are performed. [“]Property owner[“] includes a
developer who owns the land and as used in this subchapter, [“]property
owner[”] can also include a commercial tenant who engages the services
of a contractor.
...
“Tangible personal property” means personal property that can be
seen, weighed, measured, felt, or touched, or that is in any other manner
perceptible to the senses. [“]Tangible personal property[”] includes
electricity, water, gas, steam, and prewritten computer software[,]
including prewritten computer software transmitted electronically.
18:24-5.3 Purchase of materials and supplies by contractors
(a) [For the purposes of sales and use tax, sales] Sales of materials and
supplies to contractors for use by them in erecting structures for others, or
building on, or otherwise improving, altering, repairing, or maintaining
the real property of others, including performing landscaping services, are
deemed to be retail sales. Examples of taxable purchases of materials and
supplies [are: grout by a home repair service provider; fertilizer and
pesticides by a lawn service, tree service or other landscaping service;
pipes by a plumber; and lumber by a builder of new houses.] include, but
are not limited to:
1. Grout by a home repair service provider;
2. Fertilizer and pesticides by a lawn service, tree service, or other
landscaping service;
3. Pipes by a plumber; and
4. Lumber by a builder of new houses.
(b) Except as [hereinafter] provided in this subchapter, contractors
purchasing materials and supplies must pay [the] sales tax at the time of
purchase. This subchapter does not apply where:
1. The purchase of materials and supplies is made for exclusive use in
the fulfillment of a contract to improve or repair the real property of an
exempt organization described in N.J.S.A. 54:32B-9(a) and [9(b)] (b) or a
qualified business described in the New Jersey Urban Enterprise Zones
Act, N.J.S.A. 52:27H-29 et seq., or a housing sponsor described in
N.J.S.A. 54:32B-[8.22(c)]8.22.c.
i. For the purpose of [subsection] (b)1 above, [“]exclusive use[”]
means that the supplies purchased will be entirely consumed in use or
lack any residual utility after use and the supplies will not be used on jobs
performed for nonexempt organizations either prior to, simultaneously
with, or after completion of the exempt organization job; or
2. The contractor holds a valid [direct payment permit] Direct
Payment Permit ([form] Form ST-6).
18:24-5.4 Equipment purchase, rental, or use
(a) The purchase, lease, [or] rental, or use of equipment by a contractor
is subject to tax, whether or not the equipment is purchased, leased,
rented, or used in fulfillment of a contract with an exempt organization.
(b) (No change.)
18:24-5.5 Purchase of taxable services by contractors
(a) (No change.)
(b) Services subject to tax include, but are not limited to:
1. (No change.)
2. Installing tangible personal property, for the benefit of the
contractor, rather than the property owner[, for example, installation of
scaffolding, temporary fencing, temporary lighting during construction;].
Examples include, but are not limited to:
(CITE 47 N.J.R. 2930)
i. Installation of scaffolding;
ii. Temporary fencing; and
iii. Temporary lighting during construction;
3. Maintaining, servicing, or repairing real or tangible personal
property[, for example, snow removal, sweeping and removing debris
from a construction site, pest control services;]. Examples include, but
are not limited to:
i. Snow removal;
ii. Sweeping and removing debris from a construction site; and
iii. Pest control services.
4.-5. (No change.)
18:24-5.6 Contractor’s tangible personal property installation services
(a) (No change.)
(b) Treatment of installation services that result in capital
improvements are as follows:
1.-2. (No change.)
3. Charges for installation services that result in capital improvements,
except the [three types of] services listed in (b)1 above, are exempt from
sales tax.
(c) The factors used to determine whether services result in a capital
improvement are as follows:
1. In determining whether an installation of tangible personal property
results in a capital improvement[, the factors include, but are not limited
to, the following, whether] depend upon if:
i. (No change.)
ii. The improvement results in a significant increase in the useful life
of the real property; and
2. [Determination] A determination of whether services result in a
capital improvement for sales tax purposes does not depend upon the
characterization of the work for local property tax purposes.
18:24-5.7
Documentation and application of the capital improvement
exemption
(a) When a contractor has installed property, which, when installed,
results in a capital improvement to real property, other than landscaping
services, floor covering installation, or alarm system installation, he or
she shall obtain from his or her customer a [properly] fully completed
Certificate of Exempt Capital Improvement (Form ST-8) or other
approved form and retain it in his or her permanent records.
(b) When a contractor performs an installation, which results in a
capital improvement to real property, other than landscaping services,
floor covering installation, or alarm system installation, no tax should be
collected from the customer. Payment of the tax on materials used is the
responsibility of the contractor, and therefore materials obtained and
provided by the contractor are not taxable to the property owner. The
installation services [performed by making an installation] are not
subject to tax where the installation results in a capital improvement to
real property, other than landscaping services, floor covering
installations, or alarm system installation.
(c) If a property owner purchases construction materials and supplies
from a retail store or other supplier, instead of having them purchased and
supplied by the contractor, the property owner is liable for sales or use
tax on the construction materials and supplies. The capital improvement
exemption applies only to the charge for services.
18:24-5.8
Contractor services maintaining, servicing, or repairing real
property
(a) Services rendered by a contractor in maintaining, servicing, or
repairing real property, except as hereinafter provided, are subject to tax.
When charging the tax on maintaining, servicing, and repairing real
property, a contractor must charge the sales tax on only that portion of his
or her bill attributable to services. The tax on materials used in
performance of such services is the responsibility of the contractor.
Examples of taxable maintenance or repair services include, but are not
limited to[, mowing lawns, applying lawn chemicals, spraying trees,
weeding, repainting the interior or exterior of a building, patching a roof,
cleaning up oil spills, snow plowing, power-washing a building, removal
of contained garbage (including hazardous wastes), except as provided in
(b)2 below.]:
1. Mowing lawns;
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
2. Applying lawn chemicals;
3. Spraying trees;
4. Weeding;
5. Repainting the interior or exterior of a building;
6. Patching a roof;
7. Cleaning up oil spills;
8. Snow plowing;
9. Power-washing a building; and
10. Removal of contained garbage (including hazardous wastes),
except as provided in (b)2 below.
(b) The following maintenance, service, and repair operations are not
subject to tax:
1. (No change.)
2. Services involving only removal of contained garbage [that has
been placed in a container], performed on a regular contractual basis for a
term of not less than 30 days, or sewer services, performed on a regular
contractual basis for a term of not less than 30 days.
(c) In all instances, sales or use taxes on materials used in maintaining,
servicing, or repairing real property where such materials are provided by
the contractor as part of his or her services, are the responsibility of the
contractor rather than of the contractor’s customer. The contractor should
charge tax only on the separately stated service portion of his or her bill.
18:24-5.9 Fabricator/contractor’s purchase of materials
(a) Where any person is engaged in the business of fabrication of items
of tangible personal property produced for incorporation into real
property as component parts thereof, as well as the business of installing
such property, [such] the person may purchase all component materials
[as defined in N.J.A.C. 18:24-5.2, Definitions,] as purchases for resale.
(b) A fabricator/contractor is not required to pay tax on materials at the
time of purchase. However, the fabricator/contractor does have the option
to pay sales tax at the time of purchase. The fabricator/contractor should
issue a [duly] fully completed Resale Certificate (Form ST-3) or other
approved form when claiming a resale exemption at the time of
purchase.
(c) (No change.)
18:24-5.10 Fabricator/contractor’s sales of completed products
Where a fabricator/contractor sells his or her completed product for
installation by someone other than himself or herself, [for example] such
as, by the property owner or by another contractor, he or she is required
to charge and collect tax on the sales price of the product.
18:24-5.11
Fabricator/contractor sale and installation of completed
products; tax
(a) Where a fabricator/contractor sells his or her fabricated product,
and as a part of that sale [further] agrees to install the product at a
location in this State, he or she may not collect tax from his or her
customer for installation charges [rendered in connection with the
installation] if the installation of his or her product results in [a] an
exempt capital improvement to real property. In such cases, the
fabricator/contractor is, however, required to pay use tax directly to the
Division of Taxation upon the value of his or her product [as hereinafter
set forth]. The use tax shall be computed on:
1.-2. (No change.)
(b) (No change.)
(c) Where a fabricator/contractor sells his or her fabricated product,
and as a part of that sale agrees to install the product at a location outside
this State, he or she is not responsible for [neither] the payment of use tax
as provided in (a) above [nor] or the collection of sales tax on installation
charges as provided in (b) above.
Example: A structural steel fabricator purchases steel which is
delivered to his or her facility in New Jersey. The steel is fabricated as
provided in shop drawing specifications for on-site installation. The
fabricated structural steel is then shipped to a job site located outside this
State. Such fabricated steel is not subject to tax in this State.
18:24-5.12 Subcontractor purchases and services
(a) Contractors who enter into a contract to perform specified
operations for a second contractor are subcontractors. Their purchases
and services are treated as follows:
1. (No change.)
2. Except as provided in (b) below, taxable services (see N.J.A.C.
18:24-5.6) performed by a subcontractor for a prime contractor are not
subject to collection of tax by the subcontractor from the prime
contractor. In such cases, the responsibility for collection of tax is that of
the prime contractor. The subcontractor should maintain records to
substantiate that taxable services were performed for a prime contractor.
Purchases of materials by subcontractors for use in fulfilling service
contracts with prime contractors are subject to tax, except where such
purchases are for exclusive use in fulfilling service contracts with a prime
contractor that is fulfilling a contract with an exempt organization.
3. Services performed by subcontractors for prime contractors
resulting in exempt capital improvements to real property are not subject
to tax. Purchases of materials by subcontractors for use in fulfilling
contracts with prime contractors are subject to tax, except where such
purchases are for exclusive use in fulfilling contracts with a prime
contractor that is fulfilling a contract with an exempt organization. (See
N.J.A.C. 18:24-5.3, 5.4, and 5.5 for procedural requirements on exempt
organization contracts.)
(b) Landscaping services, flooring installation services, and alarm or
security system installation services performed by a subcontractor are
subject to sales tax upon purchase by a prime contractor. A separately
stated charge for the actual cost of materials upon which the
subcontractor has paid New Jersey sales or use tax may be excluded from
the [taxable receipt] sales price, provided, however, that any person
acting as subcontractor who is also acting as a fabricator/contractor or as
a floor covering dealer/installer must impose and collect sales tax on the
charge for materials stated to the prime contractor as required under
N.J.A.C. 18:24-5.10 and 22.2.
18:24-5.13 Performance of contracts out-of-State
(a) Purchases of materials, supplies, and equipment in New Jersey for
use in erecting structures for others, or building on, or otherwise
improving, altering, or repairing real property of others at a location
outside of New Jersey are subject to New Jersey sales and use taxes when
such materials, supplies, and equipment are picked up by the contractor in
New Jersey, except as provided in N.J.A.C. 18:24-5.11(c).
(b) (No change.)
18:24-5.14 Out-of-State purchases
(a) The use in New Jersey of any materials, supplies, equipment, or
services purchased outside of New Jersey is taxable, subject to the comity
provisions of N.J.S.A. 54:32B-11(6).
(b) In such cases, the use tax liability shall be based on the purchase
price of the materials, supplies, equipment, or services, except that in the
case of equipment used outside of New Jersey by the contractor for more
than six months prior to its use within New Jersey, the use tax on such
equipment shall be based upon the current market value of the equipment.
18:24-5.15
(Reserved)
18:24-5.16 Certificate issuance and acceptance procedures
(a) Procedures to be followed by contractors and fabricator/contractors
with respect to the issuance and acceptance of certificate forms are as
follows:
1. Resale [Certificates (Form ST-3)] certificates may not be issued by
a contractor on any purchase of construction materials, supplies,
equipment, or services, except that a fabricator/contractor may issue a
Resale Certificate (Form ST-3) or other approved form to his or her
suppliers on all purchases of materials that become component parts of
the items he or she fabricates.
2. Exempt Use Certificates (Form ST-4) or other approved forms
may be issued by contractors and fabricator/contractors when the
materials purchased are machinery, equipment, apparatus, or other
tangible personal property, exempt at the time of purchase under the
provisions of [section] N.J.S.A. 54:32B-8.13(a), (b), or (d); 8.14; 8.29;
or 8.36 [of the Sales and Use Tax Act], which are purchased for
incorporation into real property. [In those instances where a valid Exempt
Use Certificate (ST-4) may be issued by a contractor or
fabricator/contractor, the certificate must disclose his, her or its business
name, New Jersey taxpayer identification number, the name and taxpayer
identification number of the customer for whom the equipment or other
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2931)
TREASURY — TAXATION
PROPOSALS
tangible personal property is being installed, the nature of the work to be
performed, and the date the work will commence.]
3. (No change.)
4. Direct Payment Certificates (Form ST-6A) may be issued by a
contractor or a fabricator/contractor only when he or she is a holder of a
valid Direct Payment Permit (Form ST-6) and must be used in
accordance with the directions issued for use thereof.
5. Neither Exempt Use Certificates (Form ST-4) nor Farmer’s
Exemption Certificates (Form ST-7) may be issued by a contractor or
fabricator/contractor for his or her purchases of tangible personal
property to be installed [in] at a farming enterprise. A contractor may
accept a Farmer’s Exemption Certificate (Form ST-7) only when
performing exempt production and conservation services for a farming
enterprise. See N.J.A.C. 18:24-19.1.
6. Certificates of Exempt Capital Improvement (Form ST-8) or other
approved forms should be obtained by a contractor, subcontractor, or
fabricator/contractor from his or her customer in any instance where the
performance of his or her work results in [a] an exempt capital
improvement to real property. A contractor or a fabricator/contractor may
accept a Certificate[s] of Exempt Capital Improvement or other
approved form as a basis for exemption from tax on his or her services
only where his or her work has[, in fact,] resulted in an exempt capital
improvement to real property. The nature of the work performed is the
determining factor in determining [deciding] whether to collect tax on a
contractor’s services.
i. “Capital improvement” means an installation of tangible personal
property which results in an increase [of] in the [capital] value of the real
property or a significant increase in the useful life of such property. See
N.J.A.C. 18:24-5.7.
ii. (No change.)
iii. “Maintenance[”] services” are services that preserve the existing
condition of property.
iv. Examples of exempt capital improvements include, but are not
limited to:
(1)-(8) (No change.)
(9) New central air conditioner, installation of;
(10) (No change.)
(11) New heating system, installation of;
(12) (No change.)
(13) New electrical outlets [installed], installation of;
(14)-(17) (No change.)
(18) New [hot] water heater, installation of.
v. Examples of taxable capital improvements include, but are not
limited to:
(1)-(5) (No change.)
vi. The contractor may not accept a Certificate of Exempt Capital
Improvement (Form ST-8) or other approved form for landscaping
services, floor covering installation, or installation of alarm or security
systems.
vii. The use of the Certificate of Exempt Capital Improvement (Form
ST-8) or other approved form is required in all applicable transactions.
7. Contractor’s Exempt Purchase Certificate (Form ST-13).
[i. Form ST-13 must be completed and issued to the supplier of a
contractor in every instance where purchases are made by contractor and
exemption from sales and use taxes is claimed, except as provided in (a)3
above.]
i. A contractor issues Form ST-13 or other approved form to the
supplier when making purchases of materials, supplies, or services
for use in performing work on the real property of an exempt
organization, a New Jersey or Federal governmental entity, or a
qualified housing sponsor.
8. An Exempt Qualified Business Permit/Exempt Purchase Permit
(Form [UZ-4A/5A] UZ-4) must be completed by the contractor when the
contractor purchases materials or supplies exclusively for performing
work for a qualified business at the business’s real property located in an
urban enterprise zone. [The] Form UZ-4 is obtainable only from the
qualified business. After completing [the] Form UZ-4, the contractor
must issue copies to its sellers and its subcontractors. Any subcontractor
receiving [a] Form UZ-4 must attach its name, address, and Certificate of
Authority number (in addition to the name, address, and number of the
(CITE 47 N.J.R. 2932)
contractor) and then give [the] Form UZ-4 and attachments to its sellers.
“Qualified business” means a person or entity that the Urban Enterprise
Zone Authority has certified to be a qualified business according to the
criteria in N.J.S.A. 52:27H-[62c]62.c.
9. If a qualified housing sponsor, as defined in N.J.S.A. 55:14K-3 of
the New Jersey Housing and Mortgage Finance Agency Law of 1983, has
received Federal, State, or local government subsidies, as verified by the
New Jersey Housing and Mortgage Finance Agency on a Certification of
Housing Sponsor form, in addition to New Jersey Housing and Mortgage
Finance Agency financing for the specific housing project, contractors of
the housing sponsor[, pursuant to P.L. 1988, c. 83,] may purchase
materials, supplies, and services tax free for the specific housing project.
The contractor must receive a copy of the housing sponsor’s Letter of
Exemption for his or her records and may then issue a Contractor’s
Exempt Purchase Certificate (Form ST-13) to his or her suppliers to
document his or her exempt purchases for the housing project.
18:24-5.18
(Reserved)
18:24-5.19 Unregistered contractor bonds or reports
(a)-(b) (No change.)
(c) The bond requirement is imposed to secure payment of sales and
use taxes payable with respect to tangible personal property or taxable
services used or consumed under a contract, or of other State taxes, and is
also imposed to assure that all contractors are registered and in
compliance with New Jersey tax law.
SUBCHAPTER 6. SALES OF CLOTHING, FOOTWEAR, AND
PROTECTIVE EQUIPMENT AND SERVICES
PERFORMED ON CLOTHING
18:24-6.2 Definitions
The following words and terms, as used in this subchapter, shall have
the following meanings, unless the context clearly indicates otherwise:
...
“Fur” means any animal skin or part thereof with hair, fleece, or
fur fibers attached thereto, either in its raw or processed state, but
shall not include such skins that have been converted into leather or
suede, or which in processing the hair, fleece, or fur fiber has been
completely removed.
“Fur clothing” means clothing that is required to be labeled as a “fur
product” under 15 U.S.C. [§69] § 69, and in which the value of its fur
components is more than three times the value of the next most valuable
tangible component.
...
18:24-6.3 Exempt sales of clothing and footwear
(a) Receipts from [the] retail sales of clothing[,] are exempt from tax
imposed under the Sales and Use Tax Act.
(b) The exemption in (a) above does not apply to fur clothing,
clothing accessories, sport or recreational equipment, or protective
equipment.
(c) Examples of clothing include, but are not limited to:
1.-4. (No change.)
5. Beach cover-ups, such as beach jackets, sarongs, or shorts;
6. (No change.)
7. Boots, including hiking boots, snow boots, or fashion boots;
8. Bras, girdles, and garter belts;
9. Capes, ponchos, and mantillas;
10.-12. (No change.)
13. Diapers, waterproof diaper pants, or incontinence briefs;
14.-17. (No change.)
[18. Fur clothing;]
Recodify existing 19. and 20. as 18. and 19. (No change in text.)
[21.] 20. Hats, caps, visors, and baby bonnets;
Recodify existing 22.-43. as 21.-42. (No change in text.)
(d) Costume masks, belt buckles, patches, and emblems, when sold
separately, are not clothing and are subject to tax.
18:24-6.4 Sales of protective equipment necessary for the user’s work
(a) (No change.)
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
(b) Sales of items of protective equipment that are not necessary for
the user’s daily work are [not exempt] taxable.
(c) (No change.)
18:24-6.5 Sales of accessories [not exempt]
(a) Clothing accessories [or equipment], which are incidental items
worn on the body, are not deemed to be clothing, and their retail sale is
[therefore] taxable.
[(b) Receipts from the retail sale of clothing accessories or equipment
are not exempt from sales and use tax.]
[(c)] (b) Examples of clothing accessories [and equipment] include,
but are not limited to:
1.-5. (No change.)
6. Hand bags[;], shoulder bags, or tote bags;
7.-12. (No change.)
18:24-6.6 Sales of sport or recreational equipment [not exempt]
(a) Retail sales of items that are worn in conjunction with specific
recreational or athletic activities, but that are not suitable for general use,
do not fall within the clothing exemption and are [therefore] taxable.
(b) Examples[. The following items, when worn in conjunction with
recreational or athletic activities, are treated as taxable] of sport and
recreational equipment, include, but are not limited to:
1.-3. (No change.)
4. Gloves designed for specific sports, such as baseball catchers’ mitts,
boxing gloves, or bowling gloves;
5.-14. (No change.)
15. Waders; [or] and
16. (No change.)
(c) Under some circumstances, items that are usually classified as
sport or recreational equipment may be treated as exempt clothing (work
clothing) or as exempt [“]protective equipment[”] necessary for the user’s
daily work. Examples include: toe shoes worn by a professional ballerina
or by a dance teacher, waders worn by a commercial fisherman, and life
preservers and vests used by water safety and rescue squads.
18:24-6.7 Sewing materials
(a) (No change.)
(b) Receipts from the sale of sewing materials, such as fabric, thread,
yarn, buttons, zippers, facing materials, hem tape, bias tape, trims (for
example, lace, braid, or rickrack), snaps, and hooks and eyes, when
purchased by noncommercial purchasers, for incorporation into clothing,
are exempt from tax.
(c) (No change.)
SUBCHAPTER 7. MOTOR VEHICLES
18:24-7.1 Definitions
The following words and terms, when used in this subchapter, shall
have the following meanings, unless the context clearly indicates
otherwise:
[“Director” means the Director of the Division of Taxation of the State
Department of the Treasury, or any officer, employee or agency of the
Division of Taxation in the Department of the Treasury duly authorized
by the Director, (directly, or indirectly by one or more redelegations of
authority), to perform the functions mentioned or described in the Sales
and Use Tax Act.]
“Dealer of manufactured and mobile homes, trailers, or
housetrailers” means any person who sells manufactured and mobile
homes, trailers, or housetrailers, and other tangible personal
property in New Jersey in the regular course of business and who is
registered as a seller with the Division of Taxation, whether or not
licensed as a motor vehicle dealer with the Motor Vehicle
Commission.
“First sale” means a retail sale as defined by the Sales and Use
Tax Act.
“Gross vehicle weight rating” means the value specified by the
manufacturer as the loaded weight of the single or combination
vehicle and, if the manufacturer has not specified a value for a towed
vehicle, means the value specified for the towing vehicle plus the
loaded weight of the towed unit.
“Lease or rental” means any transfer of possession or control of
tangible personal property, for a fixed or indeterminate term, for
consideration.
“Manufactured or mobile home” means a unit of housing, which
consists of one or more transportable sections that are substantially
constructed off site and, if more than one section, are joined together
on site; is built on a permanent chassis; is designed to be used, when
connected to utilities, as a dwelling on a permanent or nonpermanent
foundation; and is manufactured in accordance with the standards
promulgated for a manufactured home pursuant to the National
Manufactured Housing Construction and Safety Standards Act of
1974, 42 U.S.C. §§ 5401 et seq., and the standards promulgated for a
manufactured or mobile home pursuant to the State Uniform
Construction Code Act, N.J.S.A. 54:27D-119 et seq.
“Manufacturer’s invoice price” means the price charged by the
manufacturer to a purchaser for a new manufactured or mobile
home, including any amount for which credit is allowed by the
manufacturer to the purchaser, the charge for the manufacturerinstalled accessories, options, components, or other taxable tangible
personal property, without any deduction for expenses, early
payment discounts, or the value of a trade-in.
“Motor vehicle” [as defined in the Sales and Use Tax Act and used in
this subchapter includes] means all vehicles propelled [otherwise] other
than by muscular power (except such vehicles [as] that run only upon
rails or tracks), trailers, semitrailers, housetrailers, or any other type of
vehicle drawn by a [motordriven] motor-driven vehicle, and
motorcycles, designed for operation on public highways.
...
“New manufactured or mobile home” means only a newly
manufactured unit.
“Place of abode” means a dwelling place maintained by a person,
or by another for him or her, whether or not owned by such person,
other than on a temporary or transient basis. The dwelling may be a
house, apartment, or flat, a room, including a room in a hotel, motel,
boarding house or club, or at a residence hall operated by an
educational or charitable institution, barracks, billets, or other
housing provided by the Armed Forces of the United States, or a
trailer, mobile home, house boat, or any other premises.
“Semitrailer” means every vehicle with or without motor-driven
power, other than a pole trailer, designed for carrying persons or
property and for being drawn by a motor vehicle and so constructed
that some part of its weight and that of its load rest upon or is carried
by another vehicle.
“Trailer” means every vehicle with or without motor-driven
power, other than a pole trailer, designed for carrying persons or
property, and for being drawn by a motor vehicle, and so constructed
that no part of its weight rests upon the towing vehicle.
“Truck” means every motor vehicle designed, used, or maintained
primarily for the transportation of property.
“Truck tractor” means every motor vehicle designed and used
primarily for drawing other vehicles and not so constructed as to
carry a load other than a part of the weight of the vehicle and load so
drawn.
“Used manufactured or mobile home” means a unit that has
become what is commonly known as “second hand” within the
ordinary meaning thereof.
“Vehicle used in combination therewith” means and includes
motor-drawn vehicles, such as trailers, semitrailers, or pole trailers.
18:24-7.2 Taxability of retail sales receipts
The receipts from every retail sale of any motor vehicle, except as
otherwise provided in [this Subchapter and by] the Sales and Use Tax
Act, [(]N.J.S.A. 54:32B-1 et seq.,[)] are subject to the sales or use tax.
18:24-7.3 Tax payment prerequisite to registration
(a) The purchaser or user of a motor vehicle, as well as the seller
thereof, is responsible for the payment of tax due on the sale at retail or
taxable use of a motor vehicle required to be registered with the Motor
Vehicle Commission.
(b) Under the provisions of N.J.S.A. 54:32B-13, the [Director]
Chairperson of the Motor Vehicle Commission shall not issue a
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2933)
TREASURY — TAXATION
PROPOSALS
registration certificate for any motor vehicle, (except in the case of a
renewal of registration by the same owner) unless proof has been
furnished that the tax, with respect to the sale of the motor vehicle to the
registrant or his or her use thereof has been paid[,] or that no such tax is
due.
(c) [If] Whether or not the motor vehicle is [not] required to be
registered with the Motor Vehicle Commission, [the] a registered motor
vehicle dealer or seller [thereof] must collect the tax from the purchaser,
if any such tax is due, and must remit the same to the Division of
Taxation, unless the purchaser issues the dealer or seller a fully
completed exemption certificate.
18:24-7.6 External tax computation indices
Where, because of affiliation of interests between the seller and
purchaser, or for any other reason, the purchase price stated for a motor
vehicle is not indicative of the [true] fair market value of the property
and the purchaser is unable to prove that a lower price was paid, the
Director may, at his or her discretion, utilize external indices to establish
the fair market value of such property, which shall form the basis
upon which tax shall be assessed and paid.
1. The State of New Jersey, or any of its agencies, instrumentalities,
public authorities, public corporations, or political subdivisions;
2.-3. (No change.)
4. Those organizations described in [subsection] N.J.S.A. 54:32B9(b)(1) [of the Sales and Use Tax Act which] that have obtained and hold
an [exempt organization permit] Exempt Organization Certificate as
provided in [said Act] N.J.S.A. 54:32B-9; provided, however, that such
vehicle is used directly in pursuit of the purposes of the exempt
organization.
(b) Any sale of a motor vehicle to a nonresident of this State is not
subject to tax, provided such nonresident, at the time of delivery, has no
permanent place of abode in this State, is not engaged in carrying on in
this State any employment, trade, business, or profession in which the
motor vehicle will be used in this State, and furnishes to the seller, prior
to delivery, proof supporting his claim from exemption. For the purposes
of this section:
1. Any person who maintains a place of abode in New Jersey is a
resident individual. [A place of abode is a dwelling place maintained by a
person, or by another for him, whether or not owned by such person,
other than a temporary or transient basis. The dwelling may be a house,
apartment or flat, a room, including a room in a hotel, motel, boarding
house or club, or at a residence hall operated by an educational or
charitable institution, barracks, billets or other housing provided by the
Armed Forces of the United States, or a trailer, mobile home, house boat
or any other premises.]
2. Any corporation incorporated under the laws of New Jersey, and
any corporation, association, partnership, or other entity doing business in
New Jersey, or maintaining a place of business in the State, or operating a
hotel, motel, place of amusement, or social or athletic club in the State is
a resident.
3. Any person, corporation, or other entity engaged in carrying on in
New Jersey any employment, trade, business, or profession is deemed a
resident of New Jersey with respect to the use of a motor vehicle in such
employment, trade, business, or profession in the State.
4.-6. (No change.)
(c) (No change.)
(d) The renting, leasing, licensing, or interchanging of trucks, tractors,
trailers, or semitrailers by persons not engaged in a regular trade or
business offering such renting, leasing, licensing, or interchanging to the
public[; provided, however, that] is not subject to tax, so long as such
renting, leasing, licensing, or interchanging is carried on with persons
engaged in a regular trade or business involving carriage of freight by
such vehicles [is exempt from tax].
[(e)] 1. [For purposes of (d) above] As used in this subsection,
“carriage of freight” means property transported by a common or public
carrier, such as regular trucking companies, and does not include the type
of business utilizing rented or leased vehicles to transport its own goods.
For example[, a]: A seller of welding supplies leases trucks from a person
not engaged in the regular trade or business of leasing such vehicles to
the public. The trucks are used to transport [to] the seller’s own goods to
its customers [its own goods]. The exemption from tax does not apply
since the seller is not engaged in the carriage of freight, unless the trucks
qualify for exemption under [subsection] N.J.S.A. 54:32B-8.43. [of the
Sales and Use Tax Act] (see] See N.J.A.C. 18:24-7.18)[..43 of the Sales
and Use Tax Act (see N.J.A.C. 18:24-7.18).]
18:24-7.7 Out-of-State purchase by resident
(a) A motor vehicle purchased by a resident of this State outside of this
State for use outside of this State which subsequently becomes subject to
the use tax imposed under the Sales and Use Tax Act, shall be taxed on
the basis of the purchase price of [said] the motor vehicle; provided,
however, that where a taxpayer affirmatively shows that the motor
vehicle was used outside this State for more than six months prior to its
use within this State, the motor vehicle shall be taxed on the basis of the
current market value [thereof] at the time of its first use within this State.
(b) (No change.)
18:24-7.9 Transfers statutorily excluded from tax
(a) Within the meaning of [subsection (e) Section 2 of the Sales and
Use Tax Act] N.J.S.A. 54:32B-2(e)(4), the following transfers of motor
vehicles are not subject to tax:
1.-4. (No change.)
5. Transfers of motor vehicles in the distribution of property by a
partnership to its partners in whole or partial liquidation; and
6. Transfers of motor vehicles where the purpose of the vendee is to
hold the [thing] property transferred as security for the performance of
an obligation of the [vendor] seller.
18:24-7.8 Sales of motor vehicles specifically exempted
(a) Any sale of a motor vehicle to any of the following shall not be
subject to the sales and use tax:
18:24-7.10 Procedures for motor vehicle dealers; forms and certificates
(a) New Jersey motor vehicle dealers are required to execute and retain
as a part of their records a Motor Vehicle Sales and Use Tax
Exemption Report (Form ST-10) if a purchaser of a motor vehicle:
18:24-7.4 Computation of tax on purchase price; trade-in
(a) Where any person engaged in the business of selling motor
vehicles at retail completes a sale of a motor vehicle, he or she shall
collect the sales or use tax, as may be the case.
(b) (No change.)
(c) A deduction from the purchase price, equal [in amount] to the
amount of a trade-in actually allowed on the purchase, will be permitted,
provided[,] that:
1. (No change.)
2. The trade-in consists of property of the same kind as that purchased
and that is accepted as partial payment. “Property of the same kind” [is
construed to] means any other motor vehicle [as defined in N.J.A.C.
18:24-7.1];
3. (No change.)
4. The dealer obtains the certificate of title of the [trade-in] traded in
vehicle and retains a copy of it as part of the record of the sale
transaction.
18:24-7.5 Charges in tax computation
(a) Where charges are made for the following items in conjunction
with the sale of a motor vehicle, they must be included in the amount
upon which the tax is computed regardless of whether they are
separately stated upon the customer’s invoice:
1. (No change.)
2. Delivery or freight charges for delivery of a vehicle from a
manufacturer or distributor to a dealer [are included regardless of whether
they are separately stated upon the customer’s invoice]. Delivery charges
from the dealer to his or her customer are subject to tax, if the sale of the
vehicle itself is subject to tax;
3. (No change.)
4. Charges for preparation of or additional work upon a motor vehicle;
and[/or]
5. Charges for additional accessories or equipment placed in or
attached to the motor vehicle by the dealer [are included even though the
charges may be separately stated upon the customer’s invoice].
(CITE 47 N.J.R. 2934)
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
1. Is a nonresident of New Jersey; [and]
2. Has no permanent place of abode in New Jersey; and
3. Is not engaged in carrying on in New Jersey any employment, trade,
business, or profession in which the motor vehicle will be used in New
Jersey[;] or [4. Certifies] certifies that the motor vehicle has been
contracted for delivery out-of-State (the state must be designated) and the
dealer affirms that the vehicle has been delivered to the purchaser in [the
aforesaid] such state. In all cases of sales to nonresidents, New Jersey
motor vehicle dealers are required to forward a completed copy of Form
ST-10 to the New Jersey Division of Taxation.
[Note: It is not necessary to complete Form ST-10 for sales of motor
vehicles to New Jersey residents where the dealer collects the tax, or
where, in cases of trade-ins, the information required in item III of Form
ST-10 is set forth in the invoice pertaining to such sale.]
[5.] (b) (No change in text.)
[6.] (c) The sale of a warranty in conjunction with the sale of a motor
vehicle [qualified] which qualifies for exemption under this subsection is
not subject to sales tax.
[(b)] (d) A [Resale Certificate] resale certificate may be accepted by a
dealer or lessor of motor vehicles in cases of [sales to] transactions with
other licensed dealers, where the vehicle is purchased for resale[,] or is
being acquired for rental or leasing purposes. [A Resale Certificate may
be accepted from a lessor registered for sales tax purposes in New
Jersey.] In all such cases, the purchaser’s Certificate of Authority number
[and], name, and address must be shown on each sales invoice, and each
invoice must include the date of the transaction. The certificate itself
[should] must be retained in the dealer’s files.
[(c)] (e) An Exempt Organization Certificate[s] may be accepted by a
motor vehicle dealer where a vehicle is being acquired by an organization
[holding a valid Exempt Organization Permit issued] qualified pursuant
to [the provisions of subsection (b)(1) of Section 9 of the Sales and Use
Tax Act] N.J.S.A. 54:32B-9(b)(1). A statement should be made on the
invoice to the effect that the sale was made to an exempt organization.
The [purchaser’s] Exempt Organization’s [Permit] Tax Identification
Number must be shown on each such sales invoice. The certificate
furnished by the organization [should] must be retained in the dealer’s
files.
[(d)] (f) Purchases of vehicles by the Federal Government or one of its
agencies, or by the State of New Jersey or one of its agencies or political
subdivisions, or by the United Nations or any international organization
of which the United States is a member, are not subject to tax [under the
provisions of subsection (a) of Section 9 of the Sales and Use Tax Act]
pursuant to N.J.S.A. 54:32B-9(a). A statement must be made on the
invoice identifying the governmental agency to which the sale was made.
[(e) The certificates listed below may not ordinarily be accepted by
motor vehicle dealers as a basis for exemption from sales or use taxes:
1. Exempt Use Certificate (Form ST-4);
2. Direct Payment Certificate (Form ST-6A);
3. Farmer’s Exemption Certificate (Form ST-7); or
4. Certificate of Exempt Capital Improvement (Form ST-8).]
[(f)] (g) Prior to titling a motor vehicle, it is required that motor
vehicle dealers indicate on both the new car Manufacturer’s Certificate of
Origin and the used car Dealer’s Certificate of Ownership the fact that the
sales tax has been satisfied. In order to evidence this fact, the [prescribed
“]New Jersey [Sales Tax Satisfied”] sales tax satisfied stamp shall be
used. [On the new car Manufacturer’s Certificate of Origin, the stamp
shall be imprinted on the reverse side of the form above the section
entitled “Third Assignment.” On the used car Dealer’s Certificate of
Ownership the stamp shall be imprinted on the reverse side of the form
above the section entitled “Schedule of Fees.”]
18:24-7.11 Casual sales of motor vehicles
Under the provisions of N.J.S.A. 54:32B-3(a) and [N.J.S.A. 54:32B]8.6, casual sales[,] (as defined in N.J.S.A. 54:32B-2(u)) of motor
vehicles, unless otherwise exempted, are subject to tax.
18:24-7.12 Taxable and exempt services
(a) The following services, except as [hereinafter] provided in this
subsection, sold or purchased by a dealer [in] of motor vehicles, are
subject to tax; provided, however, that where the following services are
performed on tangible personal property held for sale by the purchaser of
such services, the performance of such services is not subject to tax:
1. Installing, maintaining, servicing, or repairing tangible personal
property[;], where such services are sold by a dealer of motor vehicles, or
any other person engaged in the performance of such services[; for
example, detailing, washing, waxing, installing electronic equipment or
repairing transmissions;]. Examples include, but are not limited to:
i. Detailing;
ii. Washing;
iii. Waxing;
iv. Installing electronic equipment; and
v. Repairing transmissions;
2. (No change.)
3. Printing or imprinting tangible personal property, including motor
vehicles[, for]. For example, etching of vehicle identification number.
(b) None of the services in (a) above are subject to tax when rendered
with respect to trucks, tractors, trailers, or [semitrailers] semi-trailers by
a person who is not engaged, directly or indirectly through subsidiaries,
parents, affiliates, or otherwise, in a regular trade or business offering
such services to the public.
(c) Purchases of tangible personal property by any person engaged in
the sale of the services in (a) above for use by that person in the
performance of such services are not subject to tax where the property so
purchased becomes a physical component part of the property upon
which the services are performed or where the property so sold is later
actually transferred to the purchaser of [their] the service in conjunction
with the performance of the service. [Thus] For example, the purchase of
parts, lubricants, brake and transmission fluids, and similar items is not
subject to tax if such items will be transferred in the performance of the
services enumerated in (a) above. The purchaser of such items should
issue a [duly] fully completed Resale Certificate (Form ST-3) or other
approved form to his or her supplier.
(d) The purchase or use by any person engaged in the sale of the
services in (a) above of machinery, apparatus, equipment, tools, or
supplies (not otherwise exempted by the Sales and Use Tax Act) is
subject to tax.
(e) A separately stated and identified charge for a motor vehicle
inspection by an official inspection station to obtain an approval sticker
as provided under N.J.S.A. 39:8-1[,] et seq., is exempt from tax. The
charge for any repairs or adjustments required to obtain an approval
sticker for a motor vehicle as a result of an inspection [rejection] failure
is subject to tax as provided in (a) above.
(f) A separately stated and identified charge for towing a disabled or
illegally parked motor vehicle by a wrecker truck or tow [car] truck is
exempt from tax. The term “towing” includes the use of special
transportation equipment, such as a dolly or tilt bed truck.
Taxability of motor vehicles used by manufacturers before
sale; computation
(a) Manufacturers of motor vehicles who withdraw such vehicles from
inventory or stock for company purposes such as demonstration,
promotional, or executive use, prior to the sale thereof, shall be required
to pay a tax on such uses.
(b) (No change.)
(c) The basis for tax shall be determined by multiplying .25 times the
sum of $500.00 plus the total invoice cost to distributors or dealers of
vehicles of the same make, model, and accessory equipment.
(d) (No change.)
18:24-7.13
18:24-7.14
Taxability of motor vehicles withdrawn from inventory of
motor vehicle dealer; computation
(a) Vehicles actually sold to a salesman, partner, or other official of
the dealer’s company are subject to [the New Jersey Sales Tax] sales tax
on the purchase price, or, if there is a trade-in, on the purchase price less
the trade-in allowance.
(b) Retail dealers of motor vehicles who withdraw such vehicles from
inventory or stock prior to the sale thereof, shall be required to pay a
compensating use tax on such uses unless the vehicle is assigned to and
used by a full-time [automobile] motor vehicle salesperson employed by
the dealership.
1. (No change.)
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2935)
TREASURY — TAXATION
PROPOSALS
2. The basis for tax shall be determined by multiplying .25 times the
sum of the manufacturer’s suggested list price of the new motor vehicle
plus $500.00. If the motor vehicle is used, the basis for tax shall be
determined by multiplying .25 times the sum of the average retail price
listed for the vehicle in the N.A.D.A. Official Used Car Guide or similar
N.A.D.A. official guides for other categories of used vehicles, for the
year and month of withdrawal, plus $500.00.
3. (No change.)
(c) There shall be no compensating use tax imposed on the use of [an
automobile] a motor vehicle by a retail dealer during a period when the
motor vehicle is assigned to and used by a full-time [automobile] motor
vehicle salesperson employed by the dealership.
1. For purposes of this [section] subsection and (b) above, a [“]fulltime [automobile] motor vehicle salesperson employed by the
dealership[“] means any individual who:
i. Is employed by a retail dealer of [automobiles] motor vehicles;
ii.-iv. (No change.)
v. Derives at least 25 percent of his or her gross income from the
[automobile] motor vehicle dealership as a direct result of the activities
listed in (c)1i through iii above.
2. The use tax exemption shall apply to motor vehicles assigned to and
used by such full-time [automobile] motor vehicle salespersons
employed by the dealership, regardless of whether or not the salesperson
uses the vehicle exclusively for the promotion of the dealership’s
business. There is no exemption for motor vehicles other than
[automobiles] motor vehicles that are withdrawn from inventory for the
use of a full-time salesperson.
(d) In order to be entitled to the exemption provided in (c) above, a
dealer shall file together with the quarterly return, a certification wherein
the dealer certifies the type, assignment, and usage of all company-owned
motor vehicles withdrawn from inventory or stock, [which certificate
shall be] on a form prescribed by the Director of the Division of
Taxation.
18:24-7.15 Leases and rentals of motor vehicles
(a) [Lease or rental means any transfer of possession or control of
tangible personal property, for a fixed or indeterminate term, for
consideration.] A lease or rental agreement may include future options to
purchase the property or to extend the lease or rental. The terms
[“]lease[”] and [“]rental[”] may be used interchangeably[, for leases and
rentals beginning on or after October 1, 2005].
(b) (No change.)
(c) Leases and rentals of motor vehicles [beginning on or after October
1, 2005,] are treated according to [the rules set forth in] N.J.A.C. 18:2432.
1. (No change.)
2. If the rental or lease is for a term of six months or less, the customer
is charged sales tax on [the total of the periodic payments due or the
original purchase price of the property] each periodic payment,
calculated based on either the lessor’s original purchase price for the
motor vehicle or the total of the periodic payments required under
the lease agreement.
3.-5. (No change.)
[(d) Leases for a term of more than 28 days that began before October
1, 2005, are subject to use tax payable by the lessor and are not taxable to
the lessee. (See also N.J.A.C. 18:24-32.7.)
1. Leases that began before October 1, 2005, remain nontaxable to the
lessee.
2. Renewals on or after October 1, 2005, of leases that began before
October 1, 2005, are treated as new leases and are taxable to the lessee,
unless sales tax was paid on the original purchase price of the motor
vehicle.]
18:24-7.17 Retention of records
(a) [In general, motor] Motor vehicle dealers are subject to the
recordkeeping requirements set forth in N.J.A.C. 18:24-2.
(b) All certificates, affidavits, or other documentary evidence accepted
by a motor vehicle dealer as a basis for exemption from any tax imposed
by the Sales and Use Tax Act (N.J.S.A. 54:32B-1 et seq.) shall be
retained by [said] the dealer for a period of not less than four years from
the date of the use of such certificate as a basis for exemption.
(CITE 47 N.J.R. 2936)
(c) (No change.)
18:24-7.18
Exemption for sale, lease, or rental of certain commercial
trucks and vehicles used in combination therewith
(a) Receipts from sales of the following are exempt[ed] from the tax
imposed under the Sales and Use Tax Act:
1. Sales, rentals, or leases of commercial trucks, truck tractors,
tractors, trailers, semi-trailers, and vehicles used in combination
therewith, as defined in N.J.S.A. 39:1-1, which are properly registered as
defined in N.J.S.A. 39:3-6.1, and:
i.-iii. (No change.)
2. Repair parts and replacement parts for such vehicles. Parts shall not
include lubricants, motor oil, or antifreeze.
[(b) For the purposes of this section, “gross vehicle weight rating”
means the value specified by the manufacturer as the loaded weight of the
single or combination vehicle and, if the manufacturer has not specified a
value for a towed vehicle, means the value specified for the towing
vehicle plus the loaded weight of the towed unit.
(c) For the purposes of this section, “truck” means every motor vehicle
designed, used, or maintained primarily for the transportation of property.
(d) For the purposes of this section, “truck tractor” means every motor
vehicle designed and used primarily for drawing other vehicles and not so
constructed as to carry a load other than a part of the weight of the
vehicle and load so drawn.
(e) For the purposes of this section, “trailer” means every vehicle with
or without motive power, other than a pole trailer, designed for carrying
persons or property and for being drawn by a motor vehicle and so
constructed that no part of its weight rests upon the towing vehicle.
(f) For the purposes of this section, “semitrailer” means every vehicle
with or without motive power, other than a pole trailer, designed for
carrying persons or property and for being drawn by a motor vehicle and
so constructed that some part of its weight and that of its load rest upon or
is carried by another vehicle.
(g) For the purposes of this section, “vehicle used in combination
therewith” means and includes motor-drawn vehicles, such as trailers,
semitrailers, or pole trailers.]
[(h)] (b) For the purposes of motor vehicle dealer records indicating
why sales tax has not been collected on sales of motor vehicles exempt
from tax under this section or repair parts and replacement parts therefor,
the dealer is required to [receive] obtain a [properly] fully completed
Exempt Use Certificate (Form ST-4) or other approved form from the
purchaser whether such purchaser is or is not registered with the Division
of Taxation. When the purchaser is not registered with the Division of
Taxation, a Certificate of Authority number is not required. However, an
identification number or New Jersey registration plate number must be
shown on Form ST-4 or other approved form.
[(i)] (c) Nonconventional [type] motor vehicles not designated or used
primarily for the transportation of property and only incidentally operated
or moved over a highway[, such as ditch digging apparatus, well-boring
apparatus, road and general purpose construction and maintenance
machinery, asphalt, spreaders, bituminous mixers, bucket loaders,
ditchers, leveling graders, road rollers, earth-moving carryalls, selfpropelled cranes, earth-moving equipment, bulldozers, road building
machinery, and so forth, vehicles which operate on general registration
plates transferable from vehicle to vehicle and which identify the owner
rather than the vehicle, are not exempt from sales tax.] are not included
within this exemption. Examples include, but are not limited to:
1. Ditch digging apparatus;
2. Well-boring apparatus;
3. Road and general purpose construction and maintenance
machinery;
4. Asphalt spreaders;
5. Bituminous mixers;
6. Bucket loaders;
7. Ditchers;
8. Leveling graders;
9. Road rollers;
10. Earth-moving carryalls;
11. Self-propelled cranes;
12. Earth-moving equipment;
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
13. Bulldozers;
14. Road building machinery; and
15. Vehicles that operate on general registration plates
transferable from vehicle to vehicle and that identify the owner
rather than the vehicle.
[(j)] (d) (No change in text.)
18:24-7.19 Taxation of manufactured and mobile homes
(a) This section is intended to clarify the taxation of manufactured or
mobile homes under [the provisions of P.L. 1983, c. 400, approved
December 22, 1983] N.J.S.A. 54:4-1.2 et seq. This section does not
apply to the sale of modular buildings because they are not on a
permanent chassis.
1. For the purposes of this section, the following term[s] shall have the
following meaning[s]:
[i. “Manufactured or mobile home” means a unit of housing which
consists of one or more transportable sections which are substantially
constructed off site and, if more than one section, are joined together on
site; is built on a permanent chassis; is designed to be used, when
connected to utilities, as a dwelling on a permanent or nonpermanent
foundation; and is manufactured in accordance with the standards
promulgated for a manufactured home pursuant to the “National
Manufactured Housing Construction and Safety Standards Act of 1974,”
Pub. L. 93-383 (42 U.S.C. § 5401, et seq.) and the standards promulgated
for a manufactured or mobile home pursuant to the “State Uniform
Construction Code Act,” P.L. 1975, c. 217 (C. 54:27D-119, et seq.).]
[ii.] i. (No change in text.)
[iii. “Manufacturer’s invoice price” means the price charged by the
manufacturer to a purchaser for a new manufactured or mobile home,
including any amount for which credit is allowed by the manufacturer to
the purchaser, the charge for the manufacturer-installed accessories,
options, components or other taxable tangible personal property, without
any deduction for expenses, early payment discounts or the value of a
trade-in.
iv. “Dealer” means any person who sells manufactured and mobile
homes, trailers or housetrailers and other tangible personal property in
New Jersey in the regular course of business and who is registered as a
seller with the Division of Taxation, whether or not licensed as a motor
vehicle dealer with the Motor Vehicle Commission.
v. “New manufactured or mobile home” means only a newly
manufactured unit.
vi. “Used manufactured or mobile home” means a unit which has
become what is commonly known as “second hand” within the ordinary
meaning thereof.
vii. “First sale” means a retail sale as defined by the Sales and Use Tax
Act.]
(b) [On and after December 22, 1983, the] The first sale of a new
manufactured or mobile home is subject to sales tax based upon the
manufacturer’s invoice price pursuant to N.J.S.A. 54:4-1.7.
1. The sale of a new manufactured or mobile home by the
manufacturer or other seller to a contractor, subcontractor, homeowner,
or other ultimate consumer is a retail sale and the tax must be collected
from the purchaser at the time of sale and remitted to the Division of
Taxation.
2. (No change.)
3. The sale of a new manufactured or mobile home by the
manufacturer to a dealer is a sale for resale, and in the subsequent resale
the tax applies to the manufacturer’s invoice price as follows:
i. Where the dealer sells a new manufactured or mobile home to a
contractor, subcontractor, homeowner, or other ultimate consumer, the
sales tax must be collected from the purchaser by the dealer and remitted
to the Division of Taxation.
Example: Dealer X sells a manufactured home to Y for $30,000. The
manufacturer’s invoice price, including a charge for certain home
furnishings, was $19,500. The cost of freight [into dealer] to Dealer X’s
place of business was $500.00. The [taxable receipt] sales price is
$20,000, and the sales tax is stated to and collected from the purchaser at
the rate of seven percent[, or] ($1,400).
ii. Where the dealer sells a new manufactured or mobile home to a
homeowner or other ultimate consumer and agrees to install the home for
the purchaser, the dealer is acting as a contractor and the tax is due
directly from the dealer. Sales tax is not collected from the purchaser.
Example: Dealer X sells a new manufactured home to Y and agrees to
install the unit in a mobile home park. The manufacturer’s invoice price,
including a charge for certain home furnishings, is $19,500. The cost of
freight [into dealer] to Dealer X’s place of business is $500.00. [The
dealer] Dealer X is liable for the tax on $20,000[, or] ($1,365). No tax on
the manufactured home is stated to or collected from the purchaser.
iii. The sale of a new manufactured home by a dealer or other seller to
a dealer is a sale for resale and the acquiring dealer may issue a [valid
New Jersey] fully completed Resale Certificate (Form ST-3) or other
approved form; however, [that] sales tax is due at the time of retail sale
on the price paid by the acquiring dealer whenever the manufacturer’s
invoice price cannot be ascertained.
(c) The sale of dealer-installed accessories, options, components, or
other taxable tangible personal property for either a new or used
manufactured or mobile home is subject to sales tax based upon the retail
sales price, whether or not the dealer also agrees to install the home for
his or her customer; provided, however, that where the dealer does agree
to install a home for his or her customer, the purchase of the construction
materials, supplies, and equipment is subject to tax as provided by
[subsection] (e) below.
[1. Dealer-installed accessories, options, components or other taxable
tangible personal property are items such as furniture, fixtures,
furnishings, appliances, attachments or similar tangible personal property
which are not included with the home upon sale by the manufacturer or
permanently incorporated as a part of the home at the time of
manufacture. The latter can include items such as air conditioning units,
sinks, cabinets, counter tops, exhaust hoods, water heaters, etc. A
Certificate of Capital Improvement (Form ST-8) cannot be issued by the
purchaser in connection with the purchase of dealer-installed options,
accessories or components.]
1. Examples of dealer-installed accessories, options, components,
or other taxable tangible personal property include, but are not
limited to:
i. Furniture;
ii. Fixtures;
iii. Furnishings;
iv. Appliances;
v. Attachments;
vi. Air conditioning units;
vii. Sinks;
viii. Cabinets;
ix. Counter tops;
x. Exhaust hoods; and
xi. Water heaters.
2. A Certificate of Exempt Capital Improvement (Form ST-8) or
other approved form cannot be issued by the purchaser in connection
with the purchase of dealer-installed options, accessories, or
components.
(d) [On and after December 22, 1983, the] The sale of a used
manufactured or mobile home by any person, including a dealer, is
[exempt from] not subject to sales and use tax, whether or not the home
is located in a mobile home park.
(e) [On and after December 22, 1983, the] The permanent installation
of a new or used manufactured or mobile home results in [a] an exempt
capital improvement to real property, whether or not the home is installed
in a mobile home park. (See N.J.A.C. 18:24-5.7)[.]
1. Services performed by a contractor, subcontractor, manufacturer, or
other seller or dealer acting as a contractor or subcontractor and rendered
in connection with the permanent installation of a new or used
manufactured or mobile home for the purchaser, are exempt from sales
tax; provided, however, that a [duly] fully completed Certificate of
Exempt Capital Improvement (Form ST-8) or other approved form has
been obtained from the purchaser and retained by the contractor or dealer
for his or her [permanent] records.
2. Sales of construction materials, [and] supplies, construction
equipment, or taxable services to a contractor or subcontractor,
manufacturer, or other seller or a dealer acting as a contractor or
subcontractor, for use in the installation of a new or used manufactured or
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2937)
TREASURY — TAXATION
PROPOSALS
mobile home, are subject to sales [tax] or use tax as provided by N.J.A.C.
18:24-5.
(f) The sale of a new or used trailer or housetrailer is subject to sales
tax [as provided for] in the same manner as other motor vehicles in this
subchapter.
(g)-(h) (No change.)
18:24-7.20 Exemption for certain buses
(a)-(b) (No change.)
(c) Charges for repair services, or for repair and replacement parts, for
the buses categorized in (a) or (b) above are exempt from sales and use
tax.
(d) The seller must obtain a fully completed Exempt Use
Certificate (Form ST-4) or other approved form from the purchaser
to document why sales tax has not been collected on exempt
purchases of buses, repair services, or repair parts and replacement
parts.
18:24-7.21 Exemption for limousines
(a) A “limousine” is a motor vehicle that satisfies the following
criteria[, it]:
1.-5. (No change.)
(b) Receipts from the sale of a limousine, to a person licensed under
N.J.S.A. 48:16-17 to operate a limousine service[,] are exempt from sales
and use tax.
(c) Receipts from the sale of repair services, [or] repair parts, or
replacement parts for a limousine, operated by a person licensed under
the laws of New Jersey, or of another state, or of the United States to
operate a limousine service, are exempt from sales and use tax.
(d) A person qualified to claim sales tax exemption under this section
and providing transportation services in this State is presumed to be
providing transportation services that may be subject to sales tax pursuant
to N.J.S.A. 54:32B-3(b)(13). (See N.J.A.C. 18:24-27.3[.])
(e) The seller must obtain a fully completed Exempt Use
Certificate (Form ST-4) or other approved form from the purchaser
to document why sales tax has not been collected on exempt
purchases of limousines, repair services, or repair parts and
replacement parts.
SUBCHAPTER 8. EXEMPT NONGOVERNMENTAL
ORGANIZATIONS
18:24-8.1 General statutory exemption to qualified organizations
(a) N.J.S.A. 54:32B-9(b) provides for exemption from sales and use
taxes on any sale or amusement charge by or to, and any use or
occupancy by certain nonprofit organizations described in N.J.S.A.
54:32B-9(b), [hereinafter referred to as Section 9(b)] where such sales,
charges, uses, or occupancies are directly related to the purposes for
which qualified organizations have been organized.
(b) Specifically, organizational exemption is afforded to any
corporation, association, trust, or community chest, fund, or foundation
organized and operated exclusively:
1. For religious, charitable, scientific, testing for public safety, literary,
or educational purposes;
2. (No change.)
3. As a volunteer fire company, rescue, ambulance, first aid, or
emergency company or squad;
4. As a National Guard organization, post, or association, or as a post
or organization of war veterans, or the Marine Corps League, or as an
auxiliary unit or society of any such post, organization, or association; or
5. (No change.)
(c) Organizational exemption in accordance with (b)1-5 above, is
permitted, provided that no part of the net earnings inures to the benefit
of any private shareholder or individual[,]; no substantial part of the
activities is carrying on propaganda, or otherwise attempting to influence
legislation[,]; and the organization does not participate in, or intervene in
(including the publishing or distributing of statements) any political
campaign on behalf of any candidate for public office.
(d) Organizations seeking to qualify for exempt organization status
must meet the eligibility requirements set forth in this subchapter[,] and
(CITE 47 N.J.R. 2938)
comply with all procedural requirements contained in this subchapter, in
addition to the requirements in (a)-(c) above.
18:24-8.2 Exemption not based on nonprofit status
An organization is not exempt from tax merely because it is a
nonprofit organization. In order to establish this exemption, it is
necessary that every organization claiming exemption[,] file an
Application for Exempt Organization Certificate (Form REG-1E)
with the Division of Taxation [an application Form REG-1E].
18:24-8.3 Reliance on granted exemption; change in status
[Subject to the power of the] The Director[, Division of Taxation, to]
may revoke [rulings] the determination of an organization’s exempt
status because of a change in the law or regulations or for other good
cause[, an]. An organization that has been determined by the [director]
Director to be exempt under [Section 9(b)] N.J.S.A. 54:32B-9(b) may
rely upon such determination, so long as there are no substantial changes
in the organization’s character, purposes, or methods of operation.
18:24-8.4 Application for exemption; information
(a) An organization claiming exemption under [Section 9(b)] N.J.S.A.
54:32B-9(b) shall file the [formal] application (Form REG-1E), in
accordance with the instruction on the [form] application or issued
therewith.
(b) (No change.)
(c) [To each] Each application should [be] have the following
attached:
1.-3. (No change.)
4. The latest financial statement showing the assets, liabilities,
receipts, and disbursements of the organization[.]; and
5. (No change.)
(d) (No change.)
18:24-8.5 Private shareholder or individual defined
The term “private shareholder or individual” in [Section 9(b)] N.J.S.A.
54:32B-9(b) refers to persons having a personal and private interest in the
activities of the organization, such as the creator or the creator’s
family, shareholders of the organization, other designated
individuals, or persons controlled directly or indirectly by such
private interests.
18:24-[2.4]8.6
(No change in text.)
SUBCHAPTER 9. REQUIREMENTS RELATING TO EXEMPT
PRIVATE ORGANIZATIONS
18:24-9.1
Organizational and operational requirements of exempt
organizations
(a) In order to be exempt as an organization described in [Section 9(b)]
N.J.S.A. 54:32B-9(b), an organization must be both organized and
operated exclusively for one or more of the purposes specified in this
subchapter.
(b) (No change.)
18:24-9.3 Organizational tests
(a) [In general.] In general, an organization is exempt if it meets
one of the following:
1. An organization is organized exclusively for one or more exempt
purposes only if its “articles of organization” ([referred to in this section
as its “]articles[”]), as defined in (b) below, limit the purposes of such
organization to one or more exempt purposes; and do not expressly
empower the organization to engage, otherwise than as an insubstantial
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TREASURY — TAXATION
part of its activities, in activities which in themselves are not in
furtherance of one or more exempt purposes.
2. In meeting the organizational test, the organization’s purposes, as
stated in its articles, may be as broad as, or more specific than, the
purposes stated in N.J.S.A. 54:32B-9(b). Therefore, an organization,
which, by the terms of its articles, is formed [“]for literary and scientific
purposes[”] within the meaning of N.J.S.A. 54:32B-9(b) [of the Sales and
Use Tax Act], shall, if it otherwise meets the requirements in this section,
be considered to have met the organizational test. Similarly, articles
stating that the organization is created solely “to receive contributions
and pay them over to organizations, which are exempt from taxation
under N.J.S.A. 54:32B-9(b)” are sufficient for purposes of the
organizational test. Moreover, it is sufficient if the articles set forth the
purpose of the organization to be the operation of a school for adult
education and describe in detail the manner of the operation of such
school. In addition, if the articles state that the organization is formed for
[“]charitable purposes,[”] such articles ordinarily shall be sufficient for
purposes of the organizational test ([See] see (e) below for rules relating
to construction of terms).
3. An organization is not organized exclusively for one or more
exempt purposes if its articles expressly empower it to carry on,
otherwise than as an insubstantial part of its activities, activities which
are not in furtherance of one or more exempt purposes, even though such
organization is by the terms of such articles, created for a purpose that is
no broader than the purposes specified in [Section 9(b)] N.J.S.A. 54:32B9(b). Thus, an organization that is empowered by its articles, [“]to engage
in a manufacturing business,[”] or [“]to engage in the operation of a
social club,[”] does not meet the organizational test regardless of the fact
that its articles may state that such organization is created [“]for
charitable purposes within the meaning of [Section 9(b) of the New
Jersey Sales and Use Tax Act.”] N.J.S.A. 54:32B-9(b).
4. In no case shall an organization be considered to be organized
exclusively for one or more exempt purposes if, by the terms of its
articles, the purposes for which such organization is created are broader
than the purpose specified in [Section 9(b)] N.J.S.A. 54:32B-9(b). The
fact that the actual operations of such an organization have been
exclusively in furtherance of one or more exempt purposes shall not be
sufficient to permit the organization to meet the organizational test.
Similarly, such an organization will not meet the organizational test as a
result of statements or other evidence that the members thereof intend to
operate only in furtherance of one or more exempt purposes.
5. (No change.)
6. An organization should submit a copy of its Internal Revenue Code
[Section] section 501(c)(3) determination letter or ruling issued by the
Internal Revenue Service as prima facie evidence of exemption under
N.J.S.A. 54:32B-9(b)(1) or (2).
(b) [Articles of organization.] Articles of organization. For purposes
of this [Section] section, the term “articles of organization” or “articles”
include the trust instrument, the corporate charter, the articles of
association, or any other written instrument by which an organization is
created.
(c) [Authorization of legislative or political activities.] Authorization
of legislative or political activities. An organization is not organized
exclusively for one or more exempt purposes if its articles expressly
empower it:
1. To devote more than an insubstantial part of its activities to
attempting to influence legislation by propaganda or otherwise; [or]
2. Directly or indirectly to participate in, or intervene in (including the
publishing or distributing of statements), any political campaign on
behalf of, or in opposition to, any candidate for public office; [or]
3. To have objectives and to engage in activities which characterize it
as an [“]action[”] organization as defined in N.J.A.C. 18:24-9.4(c)
[(Operational test)];
4. The terms used in (c)1, 2, and 3 above shall have the meanings
provided in N.J.A.C. 18:24-9.4(c) [(Operational test)].
(d) [Distribution of assets on dissolution.] Distribution of assets on
dissolution. An organization is not organized exclusively for one or more
exempt purposes unless its assets are dedicated to an exempt purpose. An
organization’s assets will be considered dedicated to an exempt purpose,
for example, if, upon dissolution, such assets would, by reason of a
provision in the organization’s articles or by operation of law, be
distributed for one or more exempt purposes, or to the Federal
government, or to a state or local government, for a public purpose, or
would be distributed by a court to another organization to be used in such
manner as in the judgment of the court will best accomplish the general
purposes for which the dissolved organization was organized. However,
an organization does not meet the organizational test if its articles or the
law of the state in which it was created provide that its assets would, upon
dissolution, be distributed to its members or shareholders.
(e) [Construction of terms.] Construction of terms. The law of the
state in which an organization is created shall be controlling in construing
the terms of its articles. However, any organization [which] that contends
that such terms have under state law a different meaning from their
generally accepted meaning must establish such special meaning by clear
and convincing reference to relevant court decisions, opinions of the state
attorney general, or other evidence of applicable state law.
18:24-9.4 Operational test
(a) [Primary activities.] Primary activities. A nonprofit organization
is considered to be operating exclusively for an exempt purpose only if it
engages primarily in activities which accomplish one or more of the
exempt purposes specified in [Section 9(b)] N.J.S.A. 54:32B-9(b). An
organization will not be so regarded if more than an insubstantial part of
its activities is not in furtherance of an exempt purpose.
(b) [Distribution of earnings.] Distribution of earnings. An
organization is not operated exclusively for one or more exempt purposes
if its net earnings inure in whole or in part to the benefit of private
shareholders or individuals. (For the definition of the words “private
shareholder or individual” see [Section 8.5 (Definition) of this Chapter]
N.J.A.C. 18:24-8.5).
(c) [“Action” organizations.] Action organizations are as follows:
1. An organization is not operated exclusively for one or more exempt
purposes if it is an [“]action[”] organization as defined in (c)2, 3, or 4
below;
2. An organization is an [“]action[”] organization if a substantial part
of its activities is attempting to influence legislation by propaganda or
otherwise. For this purpose, an organization will be regarded as
attempting to influence legislation if the organization contacts, or urges
the public to contact, members of a legislative body for the purpose of
proposing, supporting, or opposing legislation; or advocates the adoption
or rejection of legislation. The term “legislation,” as used in this
paragraph, includes action by the Congress, by any state legislature, by
any local council or similar governing body, or by the public in
referendum, initiative, constitutional amendment, or similar procedure.
An organization will not fail to meet the operational test merely because
it advocates, as an insubstantial part of its activities, the adoption or
rejection of legislation.
3. An organization is an [“]action[”] organization if it participates or
intervenes, directly or indirectly, in any political campaign on behalf of or
in opposition to any candidate for public office. The term “candidate for
public office” means an individual who offers himself or herself, or is
proposed by others, as a contestant for an elective public office, whether
such office [be] is national, state, or local. Activities which constitute
participation or intervention in a political campaign on behalf of or in
opposition to a candidate include, but are not limited to, the publication
or distribution of written or printed statements or the making of oral
statements on behalf of or in opposition to such a candidate.
4. An organization is an [“]action[”] organization if it has the
following two characteristics:
i. [First, its] Its main or primary objective or objectives (as
distinguished from its incidental or secondary objectives) may be attained
only by legislation or a defeat of proposed legislation; and
ii. [Secondly, it] It advocates, or campaigns for, the attainment of such
main or primary objective or objectives as distinguished from engaging in
nonpartisan analysis, study, or research and making the results thereof
available to the public. In determining whether an organization has such
characteristics, all the surrounding facts and circumstances, including the
articles and all activities of the organization, are to be considered.
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2939)
TREASURY — TAXATION
PROPOSALS
18:24-9.5 Specific purposes exempt
(a) An organization may be exempt as an organization described in
[Section 9(b)(1)] N.J.S.A. 54:32B-9(b)(1) or 9(b)(2), if it is organized
and operated exclusively for one or more of the following purposes:
1.-7. (No change.)
(b) Since each of the purposes specified in [subsection] (a) [of this
Section] above is an exempt purpose in itself, an organization may be
exempt if it is organized and operated exclusively for any one or more of
such purposes. If, in fact, an organization is organized and operated
exclusively for an exempt purpose or purposes, exemption will be granted
to such an organization regardless of the purpose or purposes specified in
its application for exemption. For example, if an organization claims
exemption on the ground that it is [“]educational[”], exemption will not
be denied if, in fact, it is [“]charitable[”].
18:24-9.6 Exempt organizations must serve public interest
An organization is not organized or operated exclusively for one or
more of the purposes specified in N.J.A.C. 18:24-9.5, [(]Specific
purposes exempt[)], unless it serves a public rather than a private interest.
Thus, to meet the requirement of this section, it is necessary for an
organization to establish that it is not organized or operated for the
benefit of private interests such as designated individuals, the creator or
his or her family, shareholders of the organization, or persons controlled,
directly or indirectly, by such private interests.
18:24-9.7 [“]Charitable[”] defined
(a) The term [“]charitable[”] is used in [Section 9(b)(1)] N.J.S.A.
54:32B-9(b)(1) in its generally accepted legal sense and is, therefore, not
to be construed as limited by the separate enumeration in [Section
9(b)(1)] N.J.S.A. 54:32B-9(b)(1) of other tax exempt purposes which
may fall within the broad outlines of [“]charity[”] as developed by
judicial decisions.
(b) The term includes, but is not limited to:
1.-4. (No change.)
5. Lessening of the burdens of [Government] government;
6.-7. (No change.)
8. Defense of human and civil rights secured by law; and
9. (No change.)
(c) (No change.)
(d) The fact that an organization, in carrying out its primary purpose,
advocates social or civic changes, [or] presents opinion on controversial
issues with the intention of molding public opinion, or [creating] creates
public sentiment to an acceptance of its views, does not preclude such
organization from qualifying under [Section 9(b)(1)] N.J.S.A. 54:32B9(b)(1), so long as it is not an [“]action[”] organization of any one of the
types described in N.J.A.C. 18:24-9.4(c).
18:24-9.8 [“]Educational[”] defined
(a) The term [“]educational[”], as used in [Section 9(b)(1)] N.J.S.A.
54:32B-9(b)(1), relates to:
1.-2. (No change.)
(b) [Examples of educational organizations. The following are
examples of organizations which, if they otherwise meet the requirements
of this Section, are educational:] Examples of educational
organizations include, but are not limited to:
[Example (1):] 1. An organization, such as a primary or secondary
school, or college, or a professional or trade school, which has a regularly
enrolled body of students in attendance at a place where the educational
activities are regularly carried on[.];
[Example (2):] 2. An organization which presents a course of
instruction by means of correspondence or through the utilization of
television or radio[.];
[Example (3):] 3. Museums, zoos, planetariums, symphony orchestras,
and other similar organizations[.]; and
[Example (4):] 4. An organization whose activities consist of
developing in youth, ideals of honesty, loyalty, courage, reverence, or
knowledge of the world in which we live. Organizations [which] that
meet these requirements include, but are not limited to[,]: the Boy Scouts,
Girl Scouts, and 4-H Clubs.
(CITE 47 N.J.R. 2940)
18:24-9.9 [“]Testing for public safety[”] defined
The term [“]testing for public safety[”], as used in [Section 9(b)(1)]
N.J.S.A. 54:32B-9(b)(1), includes the testing of consumer products, such
as electrical products, to determine whether they are safe for use by the
general public.
18:24-9.10 [“]Scientific[”] defined
(a) Since an organization may meet the requirements of [Section
9(b)(1)] N.J.S.A. 54:32B-9(b)(1) only if it serves a public rather than a
private interest, a [“]scientific[”] organization must be organized and
operated in the public interest (see [subsections] (b) and (c) [of this
Section] below). Therefore, the term [“]scientific[”], as used in [Section
9(b)(1)] N.J.S.A. 54:32B-9(b)(1) includes the carrying on of scientific
research in the public interest. Research, when taken alone, is a word with
various meanings; it is not synonymous with [“]scientific[”], and the
nature of particular research depends upon the purpose which it serves.
For research to be [“]scientific[”], within the meaning of [Section 9(b)(1)]
N.J.S.A. 54:32B-9(b)(1), it must be carried on in furtherance of a
[“]scientific[”] purpose. The determination as to whether research is
[“]scientific[”] does not depend on whether such research is classified as
[“]fundamental[”] or [“]basic[”] as contrasted with [“]applied[”] or
[“]practical[”].
(b) Scientific research does not include activities of a type ordinarily
carried on as an incident to commercial or industrial operations, [as,] for
example, the ordinary testing, [or] designing, or construction of
equipment, buildings, and similar structures.
(c) Scientific research will be regarded as carried on in the public
interest if:
1. [If results] Results of such research (including any patents,
copyrights, processes, or formulae resulting from such research) are made
available to the public on a nondiscriminatory basis;
2. [If such] Such research is performed for the United States or any of
its agencies or instrumentalities, or for a state or political subdivision
thereof; or
3. [If such] Such research is directed toward benefiting the public.
[The following are examples of scientific research which will be
considered as directed toward benefiting the public, and, therefore, which
will be regarded as carried on in the public interest:]
(d) Examples of scientific research that are considered directed
toward benefiting the public, and which are regarded as carried on
in the public interest, include, but are not limited to:
Recodify Example (1)-(2) as 1.-2. (No change in text.)
[Example (3):] 3. Scientific research carried on for the purpose of
discovering a cure for a disease; [or] and
[Example (4):] 4. Scientific research carried on for the purpose of
aiding a community or geographical area by attracting new industry to the
community or area or by encouraging the development of, or retention of,
an industry in the community or area. Scientific research, described in
this [paragraph] subsection, will be regarded as carried on in the public
interest even though such research is performed pursuant to a contract or
agreement under which the sponsor or sponsors of the research have the
right to obtain ownership or control of any patents, copyrights, processes,
or formulae resulting from such research.
[(d)] (e) An organization will not be regarded as organized and
operated for the purpose of carrying on scientific research in the public
interest and consequently will not qualify under [Section 9(b)(1)]
N.J.S.A. 54:32B-9(b)(1) as a [“]scientific[”] organization, if:
1. Such organization will perform research only for persons which are
(directly or indirectly) its creators and which are not described in [Section
9(b)(1)] N.J.S.A. 54:32B-9(b)(1); or
2. Such organization retains, directly or indirectly, the ownership or
control of more than an insubstantial portion of the patents, copyrights,
processes, or formulae resulting from its research and does not make such
patents, copyrights, processes, or formulae available to the public. For
purposes of this [Section] section, a patent, copyright, process, or
formula shall be considered as made available to the public if such patent,
copyright, process, or formula is made available to the public on a
nondiscriminatory basis. In addition, although one person is granted the
exclusive right to the use of a patent, copyright, process, or formula, such
patent, copyright, process, or formula shall be considered as made
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
available to the public if the granting of such exclusive right is the only
practicable manner in which the patent, copyright, process, or formula
can be utilized to benefit the public.
[(e)] (f) The fact that any organization (including a college, university,
or hospital) carries on research which is not in furtherance of an exempt
purpose described in [Section 9(b)(1)] N.J.S.A. 54:32B-9(b)(1) will not
preclude such organization from meeting the requirements of [Section
9(b)(1)] N.J.S.A. 54:32B-9(b)(1), so long as the organization meets the
organizational test and is not operated for the primary purpose of carrying
on such research.
[(f) The rules in this Section are applicable with respect to taxable
periods beginning after February 28, 1967.]
18:24-9.11 Organizations carrying on trade or business
(a) An organization may meet the requirements of [Section 9(b)]
N.J.S.A. 54:32B-9(b) although it operates a trade or business as a
substantial part of its activities, if the operation of such trade or business
is in furtherance of the organization’s exempt purpose or purposes and if
the organization is not organized or operated for the primary purpose of
carrying on an unrelated trade or business.
(b) (No change.)
(c) An organization which is organized and operated for the primary
purpose of carrying on an unrelated trade or business is not exempt under
[Section 9(b)] N.J.S.A. 54:32B-9(b) even though it may have certain
exempt purposes, its property is held in common, and its profits do not
inure to the benefit of individual members of the organization.
(d) Any sale, amusement charge, use, or occupancy by an exempt
organization, in the course of a trade or business in substantial
competition with privately operated nonexempt business entities, is not
directly related to the purposes of the exempt organization. Except as
specifically exempted in N.J.S.A. 54:32B-9(e) and (f), such an
organization shall, in the conduct of the trade or business, pay and collect
sales and use taxes in the same manner required of a privately operated
nonexempt business.
1. An exempt organization is considered to be engaged in a trade or
business in substantial competition with privately operated nonexempt
business entities to the extent sales are made as follows:
i. (No change.)
ii. By mail, online, telephone, or facsimile orders accepted by such
organization on a regular, continuous, or [long term] long-term basis; or
iii. (No change.)
2. (No change.)
3. A shop or store as used in (d)1i above includes any place, [or]
establishment, or online store from which goods are sold with a degree
of regularity, frequency, and continuity.
(e) (No change.)
18:24-9.12 Sales of meals and rental of rooms to exempt organizations
(a) Receipts from the sale to exempt organizations of food and drink in
or by restaurants, taverns, or other establishments in the State, or by
caterers, including in the amount of such receipts any cover, minimum,
entertainment, or other charge made to patrons or customers, and rental of
rooms to exempt organizations in a hotel shall be treated in the following
manner:
1. Whenever there is such a sale of food or drink, the seller shall
charge and collect the sales tax thereon unless an organization furnishes
the seller with a valid[, properly executed, exempt organization
certificate] Exempt Organization Certificate (Form ST-5), which has
the name, address, and registration number of the exempt organization
imprinted on the certificate by the Division of Taxation, along with the
signature of the Director;
2. Whenever there is a room occupancy, the hotel shall charge and
collect the sales tax thereon unless an organization furnishes the [vendor]
seller with a valid [properly executed exempt organization certificate
(form ST-5)] Exempt Organization Certificate (Form ST-5), which has
the name, address, and registration number of the exempt organization
imprinted on the certificate by the Division of Taxation, along with the
signature of the Director;
3. In all cases, the exempt organization must pay the bill with
organizational funds and the organization must hold a valid [exempt
organization certificate, which is a tax immunity authorization,] Exempt
Organization Certificate as of the date of the transaction;
4. Any organization holding a valid [exempt organization certificate]
Exempt Organization Certificate, which has paid the sales tax in
accordance with the foregoing procedure, may apply to the New Jersey
Division of Taxation for a refund of the tax, if all the charges on which
the tax was calculated were paid by the organization using organizational
funds.
18:24-9.13 Student organization purchases
(a) Student organizations within a school exempt from tax under
N.J.S.A. 54:32B-9(a) or (b) may be considered integral components of
the school and may make tax exempt purchases for educational purposes,
including school-sponsored fundraising activities, [and] functions, and
events, such as proms and similar activities, provided:
1.-2. (No change.)
3. Documentation is provided to the seller to properly evidence the tax
exempt purchase. The only acceptable documentation for private schools
is a copy of a valid [ST-5] Exempt Organization Certificate (Form ST5). New Jersey public schools are New Jersey governmental entities and
[as such] are not issued [exemption certificates] Exemption
Organization Certificates or exempt organization numbers. A school
contract, letterhead, or purchase order signed by a school official is
sufficient to document the exemption.
(b) School affiliated teacher organizations and parent organizations
that do not qualify as specifically exempted parent-teacher associations
and organizations, student organizations not sponsored by the school, and
other school support groups such as booster clubs and class alumni
associations are not considered integral components of the school. They
are deemed to be separate legal entities and may not use the school’s tax
exempt documentation to make tax exempt purchases. Such organizations
may apply for and receive [exempt organization certificates] an
Exemption Organization Certificate, if qualified for exemption under
N.J.S.A. 54:32B-9(b)(1) [of the Sales and Use Tax Act].
SUBCHAPTER 10.
ISSUANCE AND ACCEPTANCE OF
EXEMPTION CERTIFICATES
18:24-10.1 Scope of [Subchapter] subchapter
This [Subchapter] subchapter shall govern the issuance and
acceptance of any official form of the Division of Taxation, the proper
use of which entitles the issuer to an exemption from sales or use taxes.
18:24-10.2 General requirements
(a) A seller of taxable [goods] tangible personal property, services,
amusement charges, or occupancies is required to collect any tax imposed
by the Sales and Use Tax Act, [(]N.J.S.A. 54:32B-1 et seq.[)], unless the
seller [shall have taken from the purchaser] obtains a fully completed
exemption certificate from the purchaser, signed by the purchaser and
bearing his or her name, address, and certificate of authority number, to
the effect that the [goods] tangible personal property, services,
amusement charges, or occupancies purchased are not subject to the sales
or use tax by virtue of a statutory exemption set forth in such certificate.
(b) In the case of an [exempt organization certificate] Exemption
Organization Certificate (Form ST- 5), a seller may only accept a copy
of Form ST-5, which has the name, address, and registration number of
the exempt organization imprinted on the certificate by the Division of
Taxation, along with the signature of the Director. [Only certificates
issued in accordance with this subsection shall be valid.]
18:24-10.4 Acceptance of exemption certificates
(a) For transactions entered into prior to October 1, 2005, an
exemption certificate is properly accepted if the following conditions are
met:
1. (No change.)
2. A seller is presumed to be familiar with the laws and rules regarding
the business in which he or she deals;
3. In general, a seller who accepts a properly completed exemption
certificate in [“]good faith[”] is relieved of liability for collection or
payment of tax upon transactions covered by the certificate. The question
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2941)
TREASURY — TAXATION
PROPOSALS
of [“]good faith[”] is one of fact and depends upon a consideration of all
the conditions surrounding the transaction;
4.-5. (No change.)
(b) (No change.)
(c) For transactions entered into on and after January 1, 2008, an
exemption certificate is properly accepted and the seller is held harmless
when a purchaser claims an exemption if the certificate is fully
completed.
1. (No change.)
2. The seller’s name and address are not required and are not
considered when determining if an exemption certificate is fully
completed. A seller that enters data elements from a paper exemption
certificate into an electronic format is not required to retain the paper
exemption certificate.
(d) If the seller either has not obtained an exemption certificate, has
obtained an incomplete exemption certificate, or the seller has not
obtained the relevant data elements as provided in (c)1 above, then the
standard is different from that which applies at the point of sale as
described in (c)1 above. The seller shall have at least 120 days after the
Division’s request for substantiation of the claimed exemption to do the
following:
1. From January 1, 2008 to September 30, 2011, obtain a fully
completed exemption certificate from the purchaser, taken in good faith,
which means that the seller is presumed to be familiar with the laws and
rules regarding the business in which he or she deals and the exemption
certificate must not contain any statement or entry that the seller knows is
false or misleading; or
2. (No change.)
(e) (No change.)
18:24-10.5
Exemption certificates; conditions, retention, and
inspection; use of resale certificates by out-of-State sellers
(a) (No change.)
(b) Whenever the sale for resale exemption is claimed by an
unregistered out-of-State seller, either the fully completed [and executed]
resale certificate of another state, or a Division-approved multijurisdictional resale certificate, or the Streamlined Sales and Use Tax
Agreement Certificate of Exemption - New Jersey (Form ST-SST),
including evidence that the purchaser is a licensed seller in one or more
jurisdictions, accepted by the seller, is deemed evidence of exemption,
unless: the person to whom the sale was made and who issued the
certificate was required to be registered in New Jersey under N.J.S.A.
54:32B-2(i) at the time of sale, or the person to whom the sale was made
took delivery of the property at the sale location in New Jersey. If the
person to whom the sale was made was not required to be registered in
New Jersey at the time of sale, and in fact was not registered, but did take
delivery of the tangible personal property at the sale location in New
Jersey, the [only] acceptable evidence of exemption is a New Jersey
[resale certificate for non-New Jersey sellers, accepted by the seller]
Resale Certificate for Non-New Jersey Sellers (Form ST-3NR) or
other approved form.
(c)-(e) (No change.)
(f) The Division shall relieve sellers that follow the requirements
of N.J.A.C. 18:24-10.4 from the tax otherwise applicable if it is
determined that the purchaser improperly claimed an exemption and will
hold the purchaser liable for the nonpayment of tax. This relief from
liability does not apply to a seller who fraudulently fails to collect tax, a
seller who solicits purchasers to participate in the unlawful claim of an
exemption, or a seller who accepts an exemption certificate when the
purchaser claims an entity-based exemption when:
1. (No change.)
2. New Jersey has indicated on the Streamlined Sales and Use Tax
Agreement Certificate of Exemption - New Jersey (Form ST-SST), that
the claimed exemption is unavailable.
(g) (No change.)
(h) The Division shall relieve a seller of the tax otherwise applicable if
the seller obtains a blanket exemption certificate [for] from a purchaser
with which the seller has a recurring business relationship.
Notwithstanding the provisions of (d) above, the Division may not
request from the seller a renewal of blanket certificates or an update[s] of
(CITE 47 N.J.R. 2942)
exemption certificate information or data elements when there is a
recurring business relationship between the buyer and seller. For
purposes of this subsection, a “recurring business relationship” exists
when a period of no more than 12 months elapses between sales
transactions.
(i) (No change.)
SUBCHAPTER 11.
OBLIGATION TO COLLECT AND PAY
SALES TAX OR COMPENSATING USE TAX
18:24-11.1 Seller to collect tax
(a) Every seller of taxable [goods] tangible personal property,
services, or other items subject to sales tax under N.J.S.A. 54:32B-3 that
is required to collect any tax imposed by the Sales and Use Tax Act,
[(]N.J.S.A. 54:32B-1 et seq.[)], is required under the law to collect such
tax [commencing July 1, 1966, irrespective] regardless of whether or not
he or she has received a sales tax [certificate of authority] Certificate of
Authority issued by the Division of Taxation under [Section 15 of the
Act] N.J.S.A. 54:32B-15.
(b) Failure to receive a sales tax [certificate of authority] Certificate
of Authority shall not relieve a seller of taxable [goods] tangible
personal property, services, or other transactions subject to sales tax
under N.J.S.A. 54:32B-3 from the obligation to properly collect, remit,
and account for the [said] tax, and to maintain complete records of all
transactions in the manner provided by law.
18:24-11.2 Filing of monthly remittance and quarterly returns
(a) All sellers required to collect and remit sales and use tax are
required to file a [quarterly return] Sales and Use Tax Quarterly Return
(Form ST-50) with the Division of Taxation on or before the 20th day of
the month following the quarter covered by the return. In calculating the
amount of tax to be remitted to the Division of Taxation for the quarterly
period, the seller shall be entitled to a credit in the amount of tax remitted
as monthly remittances for the months of the quarter covered by the
quarterly return.
(b) Effective July 1, 1996 through August 2, 2009, with respect to
sales and use tax liabilities incurred on and after July 1, 1996 through
August 2, 2009, every seller with liability exceeding $500.00 for the first
or second month of a quarterly filing period shall, on or before the 20th
day of the month following each such month, file with the Director a
[monthly remittance statement] Monthly Remittance Statement (Form
ST-51) and pay an amount equal to its liability for the month. Any
payment due for the calendar months of March, June, September, or
December shall be paid with the quarterly return filed for the quarter in
which such month falls.
(c)-(e) (No change.)
18:24-11.3
Filing of use tax returns by registered individuals and
entities not operating as sellers
(a) Every individual, corporation, or unincorporated entity which is
engaged in the conduct of any trade, business, profession, or occupation
within this State, but which does not make sales subject to tax under the
Sales and Use Tax Act, N.J.S.A. 54:32B-1 et seq., [or purchase tangible
personal property for lease,] shall pay compensating use tax, as required
by N.J.S.A. 54:32B-6, and file use tax returns according to the following
procedures:
1. If the taxpayer’s average annual compensating use tax liability for
the previous three calendar years was greater than $2,000, the taxpayer
shall be required to complete and file a Sales and Use Tax Quarterly
Return ([form] Form ST-50) every quarter and pay any use tax due by
the 20th of the month following the end of the quarter in which the
liability was incurred. Taxpayers filing Sales and Use Tax Quarterly
Returns pursuant to this section, whose use tax liability exceeds $500.00
for the first or second month of a quarter, shall also be subject to monthly
filing and payment requirements in accordance with N.J.A.C. 18:2411.2(b).
2. If the taxpayer’s average annual compensating use tax liability for
the previous three calendar years did not exceed $2,000, then, if the
taxpayer incurs a use tax liability during the current calendar year, it shall
file the Annual Business Use Tax Return ([form] Form ST-18B) and pay
the use tax due by May 1 of the calendar year following the year in which
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
the liability was incurred. It shall not be required to file an Annual
Business Use Tax Return for any year in which no use tax liability was
incurred.
[(b) This Section shall be effective with respect to use tax liabilities
incurred on or after January 1, 1995.]
(b) Examples of the filing of use tax returns by individuals and
entities not operating as sellers include, but are not limited to:
[Example 1:] 1. Partnership operating a fruit and vegetable stand sells
no taxable items and is not required to collect and remit sales tax. The
partnership paid its use tax liability of $26.00 in [2005] 2008, $210.00 in
[2006] 2009, and $87.00 in [2007] 2010. It made a few purchases subject
to use tax in [2008] 2011, and its use tax liability for [2008] 2011 is
$12.00. It must file an Annual Business Use Tax Return for [2008] 2011
by May 1, [2009] 2012.
[Example 2: Sole] 2. A sole proprietor [providing] that provides
dressmaking, tailoring, and clothing alteration services and sells no
taxable goods or services [and] is not required to collect and remit sales
tax. The sole proprietor had no use tax liability in [2005] 2008 or [2006]
2009 and paid its $45.00 use tax liability for [2007] 2010. During [2008]
2011, the sole proprietor did not incur any use tax liability. Therefore, no
Annual Business Use Tax Return is due for the [2008] 2011 calendar
year.
[Example 3: Corporation providing] 3. A corporation that provides
professional medical services and sells no taxable goods or services [and]
is not required to collect and remit sales tax. The corporation paid its use
tax liability of $1,500 for [2005] 2008, $5,100 for [2006] 2009, and
$2,300 for [2007] 2010. During [2008] 2011, it incurred no use tax
liability in January, February, March, July, August, or September. It
incurred use tax liability of $200.00 in April, $10.00 in May, $65.00 in
June, $1,000 in October, $600.00 in November and $100.00 in
December. It must file a Sales and Use Tax Quarterly Return (Form ST50) for each quarter, including those quarters when it incurred no use tax
liability. Its second and fourth quarter returns should be accompanied by
payments. It must also file [monthly remittance statements] Monthly
Remittance Statements (Form ST-51) and pay monthly use tax due for
the months of October and November.
SUBCHAPTER 12.
RECEIPTS FROM THE SALE OF FOOD, FOOD
INGREDIENTS, AND PREPARED FOOD
18:24-12.2 Definitions
The following words and terms when used in this subchapter shall
have the following meanings, unless the context clearly indicates
otherwise:
“Candy” 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.
[“]Candy[”] does not include any preparation containing flour or
requiring refrigeration.
...
“Food and food ingredients” 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. [“]Food and food ingredients[”] does not include
alcoholic beverages or tobacco. For purposes of this subchapter, [“]food
and food ingredients[”] may sometimes also be referred to as “food and
drink.”
...
“Prepared food” means:
1. (No change.)
2. Two or more food ingredients mixed or combined by the seller for
sale as a single item, but not including food that is only cut, repackaged,
or pasteurized by the seller; and not including eggs, fish, meat, poultry,
and foods containing these raw animal products when they require[d]
cooking by the consumer, according to the recommendations of the Food
and Drug Administration, in order to prevent food-borne illnesses; or
3. (No change.)
However, [“]prepared food[”] does not include the following, when
sold without utensils provided by the seller: food sold in an unheated
state by weight or volume as a single item; bakery items, such as: breads,
rolls, biscuits, bagels, pastries, donuts, cakes, pies, muffins, cookies, and
tortillas; or food sold by a seller whose primary NAICS classification is
manufacturing, except for bakeries.
“Provided by the seller” means whether utensils are considered to be
[“]provided by the seller[”] and is determined by application of N.J.A.C.
18:24-12.2A.
“Soft drinks” means non-alcoholic beverages that contain natural or
artificial sweeteners. [“]Soft drinks[”] does not include beverages that
contain: milk or milk products; soy, rice, almond, or similar milk
substitutes; or greater than 50 percent of vegetable or fruit juice by
volume.
...
18:24-12.2A
Threshold test for determining whether utensils are
provided by seller
(a) (No change.)
(b) The threshold test for determining whether eating utensils have
been [“]provided by the seller[”] is as follows:
1. Whether eating utensils are deemed to be [“]provided by the
seller[”] depends on whether the seller’s annual sales of certain types of
prepared food make up more than 75 percent of its total sales of food and
food ingredients (excluding alcoholic beverages). [This] The 75 percent
threshold is calculated as follows:
i.-ii. (No change.)
2. Application of the 75 percent threshold test [as] follows[.]:
i. For sellers with a sales percentage of 75 percent or less, utensils are
considered to be [“]provided by the seller[”] if the seller’s practice for the
item (as represented by the seller) is to physically give or hand the utensil
to the purchaser, except that plates, bowls, glasses, or cups necessary for
the purchaser to receive the food (for example, fountain beverages,
dispensed milk, or salad bar) need only be made available.
ii. For sellers with a sales percentage greater than 75 percent, utensils
are considered to be [“]provided by the seller[”] if they are merely made
available to purchasers. Thus, utensils at a kiosk or common area are
treated as utensils [“]provided by the seller.[”]
(1) For sellers who sell items that contain four or more servings
packaged as one item and sold for a single price, an item does not become
prepared food based on the seller having utensils available. However, if
the seller physically gives or hands a utensil to the purchaser, or plates,
bowls, glasses, or cups are necessary for the purchaser to receive the
food, then the item is considered prepared food.
18:24-12.3 Receipts subject to sales tax
(a) Sales tax is imposed on the receipts, including any cover,
minimum, entertainment, or other charge, or the value of a coupon, from
every sale of prepared food of any nature either sold by restaurants,
taverns, bars, cafeterias, and other food establishments in this State
(except as provided in this subchapter), or sold by caterers.
(b) Examples of establishments engaged in the sale of food and drink
[for consumption on or off premises] that are required to collect the tax
on sales of prepared food include:
Cafes
Fast food operators
Pizzerias
Cafeterias
Fish stores that also
Restaurants
Carry-out
sell fish cooked to
Sandwich shops
restaurants
order
Snack bars
Caterers
Food sellers in work
[Soda fountains, j]Juice
Coffee bars and tea
places
bars
parlors
Hamburger and hot
Sports/entertainment
Convenience stores
dog stands
arena food sellers
Delicatessens
Ice cream stands
Sushi bars
Diners
Ice cream trucks
Taverns, grills, and
Lunch bars, counters,
bars
Drive-in restaurants
and rooms
Lunch trucks
Mall food courts
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2943)
TREASURY — TAXATION
PROPOSALS
Oyster and clam bars
(c) Sales of food and drink through vending machines are subject to
sales tax. ([See] see N.J.A.C. 18:24-16 and 17[.])
the amount paid by the employee and the $0.50 paid by Employer E are
taxable receipts from the sale of food and drink.
(e) (No change.)
18:24-12.4
SUBCHAPTER 13.
(Reserved)
18:24-12.5 Receipts exempt from sales tax
(a) The tax imposed on the sale of food and drink shall not apply to the
following:
1. (No change.)
2. Food or drink sold in [an] elementary or secondary schools at a
restaurant or cafeteria located on the premises of such schools;
3. Food or drink sold to an enrolled [post secondary] post-secondary
school student under the terms of a contractual agreement whereby the
student does not pay cash when served. The sales may be made at a
restaurant, tavern, or other establishment on the premises of the school
which is a [post secondary] post-secondary school or in a fraternity,
sorority, or eating club operated in connection therewith;
Example: (No change.)
4. Food or drink sold to an enrolled [post secondary] post-secondary
school student who is not a participant in a student food plan as described
in (a)3 above at a restaurant, tavern, or other establishment on the
premises of the school of his or her enrollment or in a fraternity, sorority,
or eating club operated in connection therewith. A student purchasing
food or drink otherwise subject to the tax can be required to exhibit to the
seller/cashier a valid student identification card at the time of purchase in
order to document the exemption.
5. Food or drink provided as all or part of a food service project
funded by government or by private nonprofit organizations to certain
elderly or disabled persons for:
i. Meals especially prepared for and delivered to homebound elderly,
age 60 or older, and to disabled persons[.]; and
ii. (No change.)
6. Food and drink furnished by an employer to employees for the
employer’s convenience where assigned a money value for purposes of:
inclusion in remuneration, which is the basis for computing the
employer’s contribution to the unemployment insurance fund; social
security; or meeting minimum wage requirements (regarding employees
of hotels and restaurants). To qualify for exemption, no cash may change
hands as payment for the food and drink and the assigned value of such
food and drink cannot be classified as income for Federal or New Jersey
income tax purposes.
7. Food or drink included in the total charges made by a rest home,
residential health care facility, nursing home, and boarding home licensed
by the Department of Health, Department of Human Services, or the
Department of Community Affairs to residents for board, shelter, and
care.
(b) (No change.)
18:24-12.6 Subsidized employee cafeterias and food service operations
(a) An employer, who by contract or otherwise engages a caterer or
food service contractor to provide food and drink or service to employees
at the employer’s expense, is the purchaser of food and drink subject to
the sales tax.
Example: Employer E provides food and drink to his employees
without charge. Employer E contracts with [a food service contractor]
Food Service Contractor F to prepare and serve the food and drink for a
fee to be paid by Employer E. The fee paid by Employer E is subject to
tax as a receipt from the sale of food and drink.
(b) Sales of food, drink, or service to employees through a cafeteria on
an employer’s premises are subject to the sales tax, except as provided in
N.J.A.C. 18:24-14.3(a)6.
Example: (No change.)
(c) (No change.)
(d) If a subsidy based on individual sales of food and drink is paid by
an employer in addition to a specified amount paid by the employees,
both amounts are taxed as the receipt from the sale of food and drink.
Example: Employer E will pay $0.50 to a caterer for each sale of food
and drink to Employer E’s employees. Employer E’s employees will
pay any amount due which exceeds the $0.50 paid by Employer E. Both
(CITE 47 N.J.R. 2944)
GARBAGE REMOVAL SERVICE
18:24-13.2 Garbage removal service defined
(a) “Garbage” means contained, bundled, or piled trash, waste, and
rubbish, including, but not limited to, construction debris, discarded
recyclables, hazardous waste, general household trash, restaurant food
waste, medical and veterinary waste, industrial waste, metal scraps,
leaves, lawn clippings, twigs, and brush.
(b) “Removal” includes only the operation of picking up and
physically removing contained waste from the premises and does not
include activities related to maintaining or servicing property or any
processing of the waste product. [“]Removal[”] does not include, for
example, sweeping parking lots, plowing snow, cleaning up a
construction site, or septic tank cleaning.
(c) Examples of garbage removal service include, but are not limited
to:
1.-5. (No change.)
6. A private company picks up contained recyclable paper from an
office building; [or] and
7. (No change.)
SUBCHAPTER 14.
TAXABILITY OF HOSPITAL SALES AND
SERVICES
18:24-14.1 Hospital sales may be exempt
N.J.S.A. 54:32B-9(b)(1) permits a hospital, which has qualified as an
exempt organization to make sales [which] that are not subject to the
[sales and use] taxes imposed under the [New Jersey] Sales and Use Tax
Act.
18:24-14.2 Taxable hospital sales
(a) The exemption provided in [N.J.A.C. 18:24-14.1] N.J.S.A.
54:32B-9(b)(1) is [modified] limited by N.J.S.A. 54:32B-(9)(c), which
provides in part that the retail sales of tangible personal property by any
shop or store operated by such organization shall be subject to the tax
unless the purchaser is an exempt organization.
(b) [In accordance with the foregoing, the following are examples]
Examples of taxable retail sales include, but are not limited to:
1.-2. (No change.)
18:24-14.3 Hospital sales specifically exempt
(a) [The following] Examples of sales by qualified hospitals that are
not considered retail sales subject to the sales tax[. These may be
considered a guide to the legislative intent with respect to exemption]
include, but are not limited to:
1. Drugs, medicines, and meals furnished to patients and consumed on
the premises;
2. Charges for medical oxygen[,] and human blood and its derivatives
administered to patients;
3.-7. (No change.)
SUBCHAPTER 15.
LAUNDRY AND DRY CLEANING SERVICES
18:24-15.1 Scope of the subchapter
This subchapter is intended to explain the sales and use tax treatment
of laundry and dry cleaning services. [Previously exempt pursuant to
section 3(b)(2)(iv), laundry and dry cleaning services became taxable,
effective October 1, 2006, except as applied to clothing.]
18:24-15.2 Taxability of laundry and dry cleaning services
(a) (No change.)
[(b) Examples of taxable laundry and dry cleaning services include,
but are not limited to: dry cleaning drapes and curtains, steam cleaning
carpets, laundering hotel bed linens and towels, dry cleaning oriental
rugs, steam cleaning upholstered furniture, laundering restaurant
tablecloths and napkins.]
(b) Examples of taxable laundry and dry cleaning services include,
but are not limited to:
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
1. Dry cleaning drapes and curtains;
2. Steam cleaning carpets;
3. Laundering hotel bed linens and towels;
4. Dry cleaning oriental rugs;
5. Steam cleaning upholstered furniture; and
6. Laundering restaurant tablecloths and napkins.
18:24-15.3
[Laundering,] Cleaning, laundering, and dry cleaning[,
and cleaning] of clothing [is exempt]
(a) The cleaning, laundering, and dry cleaning of clothing is an
exception to the taxability of laundry and dry cleaning services, and
receipts for cleaning, laundering, and dry cleaning clothing are not
taxable.
[(b) Examples of nontaxable services of cleaning clothing include, but
are not limited to: dry cleaning sweaters, machine washing underwear
and sleepwear, hand washing shirts, cleaning leather jackets, laundering
work uniforms, cleaning and shining shoes.]
(b) Examples of nontaxable services performed on clothing
include, but are not limited to:
1. Dry cleaning sweaters;
2. Machine washing underwear and sleepwear;
3. Hand washing shirts;
4. Cleaning leather jackets;
5. Laundering work uniforms; and
6. Cleaning and shining shoes.
Receipts for use of self-service washing [and drying]
machines and dryers
Receipts for the use of [coin-operated] washing machines and dryers
in a self-service laundromat or laundry room are not subject to sales tax.
in areas including, but not limited to: student lounges, dormitories,
gymnasiums, libraries, etc., are not deemed located in an eating facility.
(c) In all instances, the receipts from the sale of milk through vending
machines are exempt from tax.
18:24-16.8
Purchase of vending machine contents without tax payment;
resale certificate
A seller may purchase tangible personal property, food, or drink for
sale through [coin-operated] vending machines without payment of the
sales tax provided [he or she issued to his or her] the seller issues a
Resale Certificate (Form ST-3) or other approved form to the
supplier [a Resale Certificate, Form ST-3].
18:24-16.9 Responsibility for tax payment; amount
(a) The owner or operator of vending machines is responsible for the
remittance of [the Sales Tax] sales tax. [He] The seller must pay the tax
on the total receipts, subject to statutory exemptions, without any
deduction whatsoever for any expense incident to the conduct of the
business, such as a commission to the proprietor or the premises in which
the equipment is located.
(b) The tax to be remitted to the State [of New Jersey] by the seller is
the amount of the actual tax collected from all taxable sales, or seven
percent of the taxable sales, whichever amount is greater.
SUBCHAPTER 17.
18:24-15.5
SUBCHAPTER 16.
[COIN-OPERATED] VENDING MACHINES;
SALES OF TANGIBLE PERSONAL
PROPERTY; SALES OF FOOD AND DRINK
18:24-16.2 Registration to operate vending machines
Sellers operating vending machines in the State [of New Jersey] must
register with the [New Jersey] Division [of Taxation] to engage [legally]
in the business of selling tangible personal property at retail[, including
also, food and drink of a kind the receipts from which are subject to the
sales tax].
18:24-16.6 Tax on gross receipts
(a) Sellers operating vending machines [which] that dispense tangible
personal property, other than food and drink, must report and pay to the
State the tax upon the gross receipts from all sales of such items made
through such machines, subject to the exemptions set forth in the Sales
and Use Tax Act, such as items sold through vending machines for $0.25
or less (exempt under N.J.S.A. 54:32B-8.9 [and N.J.A.C. 18:24-17]).
(b) [Effective January 3, 1980 (P.L. 1979, c. 274; N.J.S.A. 54:32B3(c)(4)), sellers] Sellers operating vending machines[, which] that
dispense food and beverages must report and pay to the State the tax upon
vending machine sales as defined in (c) below from all sales of such
items made through such machines subject to the exemptions set forth in
N.J.A.C. 18:24-16.7(b) and (c).
(c)-(e) (No change.)
18:24-16.7 Tax exemptions
(a) Receipts from sales of food or drink [exempted from the tax by
subsection 8.2 of the Sales and Use Tax Act,] exempt pursuant to
N.J.S.A. 54:32B-8.2 are not allowable deductions from gross receipts
derived from sales through vending machines.
(b) Receipts from the sale of food and drink [sold] through vending
machines in a cafeteria of an elementary or secondary school or to
students in an eating facility of an institution of higher education,
fraternity, sorority, and eating club operated in connection with an
institution of higher education are exempt from tax only when located
within such cafeteria or eating facility. Receipts from sale[s] of food and
drink through vending machines located in areas not designed by an
institution of higher education as an eating facility, other than a cafeteria
or eating facility, are subject to tax as provided in N.J.A.C. 18:24-16.6(c).
For purposes of [these rules] this subsection, vending machines located
SPECIFIC RULES FOR [VENDORS] SELLERS
WHO SELL TANGIBLE PERSONAL
PROPERTY THROUGH VENDING
MACHINES AT 25 CENTS OR LESS
18:24-17.1
[Statutory basis] Sales of tangible personal property
through vending machines at $.25 or less
[N.J.S.A. 54:32B-8.9 provides that the following receipts shall be
exempt from the sales tax:]
[“]Tangible personal property sold through [coin-operated] vending
machines at $0.25 or less is exempt from tax, provided the retailer is
primarily engaged in making such sales and maintains records
satisfactory to the Director.[”]
18:24-17.2 Definition of primarily engaged
[The phrase “primarily engaged in making such sales” as used in
N.J.S.A. 54:32B-8.9, refers to sellers engaged in making sales through
coin-operated vending machines, and for this section to be applicable the
seller must show that more than half of the total receipts from his or her
business are derived from sales through coin-operated vending
machines.]
“Primarily engaged” refers to sellers making sales through
vending machines, and for this subchapter to be applicable, the seller
must show that more than half of the total receipts from his or her
business are derived from sales through vending machines.
18:24-17.4 Tax amount payable
The amount of New Jersey sales tax payable is the net taxable receipts
multiplied by .07 [to effectuate application of the seven percent tax rate,]
or the actual tax collected, whichever is greater.
SUBCHAPTER 18. (RESERVED)
SUBCHAPTER 19.
SALES OF TANGIBLE PERSONAL
PROPERTY AND SERVICES USED ON
FARMS
18:24-19.1 Scope of [rules] subchapter
[N.J.A.C. 18:24-19.1 through 19.7 are intended to clarify] This
subchapter clarifies the application of the Sales and Use Tax Act,
[(]N.J.S.A. 54:32B-1 et seq.[)], to the sale, rental, or [leasing] lease of
tangible personal property and the sale of production and conservation
services used directly and primarily at a farming enterprise in the
production[,] and handling and preservation [for sale] of agricultural or
horticultural commodities [at a farming enterprise] for sale. [N.J.A.C.
18:24-19.8 is intended to clarify] This subchapter further clarifies the
application of the Act to sales of containers used in a farming enterprise
and sales of commercial motor vehicles registered as farm vehicles.
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2945)
TREASURY — TAXATION
PROPOSALS
18:24-19.2 Definitions
The following words and phrases, as used in this subchapter, shall
have the following meanings, unless the context clearly indicates
otherwise:
“Agricultural or horticultural commodities” means tangible personal
property produced through the raising of plants or animals useful to
people, with certain categories of exceptions noted below:
1. [The following are examples] Examples of [“]agricultural [and] or
horticultural commodities[”] include, but are not limited to:
i. (No change.)
ii. Fruits, nuts, and berries;
iii.-xv. (No change.)
2. [The following are] Examples of tangible personal property not
deemed to be [“]agricultural [and] or horticultural commodities[”]
include, but are not limited to:
i.-iii. (No change.)
“Aquaculture” means the propagation, raising, and harvesting for sale
of aquatic organisms, in controlled or selected environments in which the
farmer must actively intervene in the rearing process in order to effect,
improve, or increase production for the purpose of sale.
“Automobiles” means motor vehicles designed to be used on public
roadways and required to be registered as motor vehicles, other than
vehicles that qualify for exemption pursuant to N.J.S.A. 54:32B8.43(a)(1), (2), or (3). (See N.J.A.C. 18:24-7.18[.])
“Conservation services” means services performed in order to
conserve soil, water, soil nutrients, or other natural resources useful in the
production of agricultural or horticultural commodities.
1. [“]Conservation services[”] are exempt [under the section] only
when used directly and primarily in the production[,] and handling [or]
and preservation of agricultural or horticultural commodities for sale.
2. [Following are examples] Examples of conservation services
include, but are not limited to:
i.-ii. (No change.)
“Dairy farming” means the business of breeding, feeding, and raising
of cattle and other milk-producing animals, and the production of feed for
them by the owner of such animals, but does not include operations such
as the making of butter, cheese, or ice cream.
...
“Farm animals” means animals that fall within the definition of
[“]agricultural commodities[”] and animals that perform work used
directly and primarily in production[,] and handling and preservation [for
sale] of agricultural [and] or horticultural commodities for sale.
1. [The following are examples] Examples of [“]farm animals[” as
used in this subchapter] include, but are not limited to:
i.-v. (No change.)
2. [The following are not examples] Examples of animals not
deemed to be [“]farm animals[” as used in this subchapter] include, but
are not limited to:
i. Farmer’s pet dogs, hunting dogs, and watch dogs;
ii. (No change.)
iii. Animals not raised for sale, which are used on the premises where
they are maintained for purposes other than farm work[,] (for example,
trout in a stream stocked for fishermen, animals in a petting zoo, horses in
a riding academy).
“Farmer” means a person who owns, operates, or manages a farming
enterprise for gain or profit.
“Farming enterprise” means a business or part of a business which,
using land and improvements to the land, is engaged primarily in
producing agricultural or horticultural commodities for sale.
1. [The following are examples] Examples of [“]farming
enterprises[”] include, but are not limited to:
i. A fruit orchard that raises apples, pears, and cherries for sale to the
public;
ii. (No change.)
iii. A game farm that raises pheasants and other game animals for sale
to butchers, supermarkets, and sporting clubs;
iv. A fish hatchery that raises fish for sale to restaurants, food stores,
and fish processors;
v.-xii. (No change.)
(CITE 47 N.J.R. 2946)
2. [The following are] Examples of businesses not deemed to be
[“]farming enterprises[”] include, but are not limited to:
i. A horse boarding [enterprise] business;
ii. A horse training [enterprise] business;
iii.-iv. (No change.)
v. A lake that is stocked with trout[,] for sporting and recreational use;
vi. Farmers’ markets, produce stores, dairy product stores, and florist
shops;
vii. (No change.)
viii. Rural property on which the owner may grow or raise horses,
barnyard animals, flowers, vegetables, and fruits primarily for [his] the
owner’s own use, rather than for sale.
“Handling and preservation” means the care and maintenance of farm
animals and of agricultural [and] or horticultural commodities for sale
during production [for sale] and up to the point when the commodity
reaches a marketable state, and the prevention of spoilage or deterioration
of agricultural [and] or horticultural commodities for sale during and
after production until they reach a marketable state.
“Production services” means services purchased by a farmer that are
part of the process of planting, breeding, propagating, feeding, fertilizing,
raising, or harvesting agricultural or horticultural commodities on that
farmer’s farming enterprise for the purpose of selling those commodities.
1. [The following are examples] Examples of [“]production
services[”] include, but are not limited to:
i.-v. (No change.)
2. [The following are not examples] Examples of services not
deemed to be [“]production services[”] include, but are not limited to:
i. Cleaning a retail store facility operated by [the] a farmer;
ii. [Services of repairing] Repairing farm production equipment;
iii.-iv. (No change.)
v. [Renting a storage space for] Storing farm equipment.
18:24-19.3 Scope of exemption
(a) (No change.)
(b) The exemption applies only when the property or service is
purchased for use or consumption directly and primarily at a farming
enterprise in the production [for sale,] and handling [for sale or] and
preservation [for sale] of agricultural or horticultural commodities for
sale.
(c)-(d) (No change.)
18:24-19.4 Direct use
(a) In order to be exempt under N.J.S.A. 54:32B-8.16[,] a farmer’s
purchase of qualified tangible personal property or services must be used
directly at the purchaser’s farming enterprise in the production[,] and
handling [or] and preservation [for sale] of agricultural or horticultural
commodities [on the purchaser’s farming enterprise] for sale.
(b) In determining whether a service or an item of tangible personal
property is used directly for an exempt purpose, the following factors are
to be considered:
1. The physical proximity of the item in question to the production[,]
and handling [or] and preservation [for sale] process in which it is used;
2. The proximity of the time of use of the property or service to the
time of use of other property or services employed before or after it in the
production[,] and handling [or] and preservation of agricultural or
horticultural commodities for sale; and
3. The active causal relationship between the use of the property or
service in question and the production[,] and handling [or] and
preservation of an agricultural or horticultural commodity for sale.
(c) Tangible personal property and services qualify for the farm use
exemption when used primarily in growing agricultural or horticultural
commodities for sale, or in preserving agricultural commodities for sale
from the time of harvest until they are in a marketable state, or in
maintaining farm animals or handling agricultural [and] or horticultural
commodities for sale until they reach a marketable state.
1. Tangible personal property used in planting, propagating, growing,
feeding, stimulating growth, or raising plant and animal agricultural or
horticultural commodities for sale is used directly in production [for
sale], for example, tilling equipment used in a vegetable farm, seeds used
in a forage crop farm, fertilizer used in a sod farm, feed scoops used in a
poultry farm, bull semen used in a cattle ranch, and an incubator used by
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
a poultry farm. Repair and replacement parts for exempt farm equipment
are also exempt from tax, but repair services are taxable.
2. (No change.)
3. Property used to extract or separate an agricultural or horticultural
commodity from farm animals, the soil, water, or plants is used directly
in production[,] (for example, milking equipment, egg collecting
equipment, cherry picking devices, combines, sheep shearing tools, and
ropes used by a tuna aquaculture enterprise).
4. Services of an outside service contractor of extracting agricultural or
horticultural commodities from farm animals, soil, water, or plants for the
farmer are used directly in production[,] (for example, picking fruit for an
orchard, shearing sheep for a sheep farm, aerial spraying of pesticide on
an orchard).
5. Tangible personal property or services are used directly in
[“]handling and preservation[”] of agricultural or horticultural
commodities for sale when used for the following purposes:
i. Maintaining the health of farm animals, handling and maintaining
agricultural or horticultural commodities for sale during production, and
preparing them until they reach a marketable state[,] (for example,
equipment used to wash and pack fruit at a fruit orchard, ropes and
harnesses used in moving livestock on a ranch, medicines for a sheep
farmer’s herding dog, debeakers used on a poultry farm, service of
washing eggs on a poultry farm, and grooming and shoeing service
provided for a horse breeding farm); or
ii. Preventing the spoilage or deterioration of agricultural or
horticultural commodities for sale until they reach a marketable state[,]
(for example, refrigerators to cool and preserve raw milk on a dairy farm,
disinfectants to sterilize milking equipment and cans on a dairy farm,
cooling equipment to preserve harvested perishable fruits on an orchard,
watering equipment to maintain the freshness of balled and burlapped
trees on a tree farm until shipment to market, pesticide application service
to preserve horticultural products being prepared for sale by a farm).
(d) A farmer’s purchase of building materials used to construct a silo,
greenhouse, grain bin, or manure handling facility is exempt from sales
tax if the silo, greenhouse, grain bin, or manure handling facility will be
used directly and primarily in producing, handling, or maintaining the
specific varieties of agricultural or horticultural commodities raised in
that farmer’s farming enterprise:
1.-2. (No change.)
(e) Property or services used in producing secondary products, made
from agricultural or horticultural commodities, are not deemed to be used
[“]directly[”] in the production of an agricultural or horticultural
commodity and [therefore] are not eligible for the farm use exemption.
([However, the] The manufacturing [equipment] exemption may apply in
[some] certain circumstances. See N.J.S.A. 54:32B-[8.13a]8.13.a and
N.J.A.C. 18:24-4.)
1. [For example, property] Property or services used in making butter,
sausage, jellies, flour, cider, cheese, ice cream, woolen fabric, floral
wreaths, herbal sachets, bees wax candles, finished lumber, furniture, and
other items which are made from farm products, but which are not in
themselves agricultural or horticultural commodities, are not eligible for
exemption under the farm use exemption [provision, N.J.S.A. 54:32B8.16].
2. Property and services used directly and primarily in producing an
agricultural or horticultural commodity for sale are exempt from tax,
even though the farmer may also operate another enterprise, which is not
a farming enterprise, in which [he] the farmer produces and sells
secondary products made from [his] the farmer’s farm products:
i. [For example, a] Example: A corporation which raises sheep for
their wool, which it then uses to make sweaters and blankets for sale, is
eligible for the farm use exemption on purchases of tangible personal
property used in raising the sheep and shearing the wool[;].
ii. Example: A business that raises flowers and herbs in order to
produce wreaths, sachets, teas, and jellies for sale is eligible for the farm
use exemption on seeds, fertilizers, and farming equipment used in
planting, raising, and harvesting the herbs and flowers.
(f) The fact that a particular item of tangible personal property or
service may be essential to the conduct of a farmer’s business because its
use is required by law or practical necessity does not, by itself, mean that
the property or service is used [“]directly[”] in production[,] and
handling [or] and preservation [for sale] of agricultural or horticultural
commodities for sale.
1. Example: A vegetable farmer’s purchase of a smoke alarm to install
in farm workers’ housing is not exempt under N.J.S.A. 54:32B-8.16
because the item is not used [“]directly[”] in production[,] and handling
[or] and preservation of agricultural or horticultural commodities for
sale.
2. Example: A sod farmer’s purchase of books, CD-Roms,
information services, and other employee training materials regarding
the safe use of pesticides, although necessary, is not exempt because it is
not used [“]directly[”] in production.
(g) Property and services used in personal, administrative, clerical,
financial, personnel management, promotional, repair, sales, and other
non-farming activities are not used directly in the production[,] and
handling and preservation of agricultural [and] or horticultural
commodities for sale and[, therefore,] are not eligible for the farm use
exemption.
1. [Following are examples] Examples of taxable tangible personal
property not used [“]directly[”] in production[,] and handling [or] and
preservation of agricultural or horticultural commodities for sale include,
but are not limited to:
i. Office furniture, equipment, and supplies; books and educational
materials; and recordkeeping materials;
ii. [Advertising] Printed advertising materials and promotional
materials;
iii. Equipment and supplies used in transporting products to market or
to customers, or in displaying products for sale, or in operating a store;
iv.-v. (No change.)
vi. Property used for the personal comfort or convenience of the
farmer, [his] farm employees, service personnel, suppliers, or
customers[,] (for example, planking for crosswalks, beds and fans for
migrant labor camp[;], and telephones).
2. [Following are examples] Examples of taxable services not used
[“]directly[”] in the production[,] and handling and preservation [for
sale] of agricultural [and] or horticultural commodities for sale include,
but are not limited to:
i.-iii. (No change.)
iv. Grooming dogs, horses, and other animals kept for the farmer’s
personal use or enjoyment;
v. (No change.)
vi. Imprinting the farmer’s stationery with [his] the farmer’s business
logo;
vii. [Direct mail] Mail processing services [of promotional literature]
for printed advertising material sent to potential New Jersey customers;
viii.-xii. (No change.)
18:24-19.5 Primary use
(a) In order to be exempt under N.J.S.A. 54:32B-8.16, a farmer’s
purchase of qualified tangible personal property or services must be used
primarily at the purchaser’s farming enterprise in the production[,]
and handling and preservation [for sale] of agricultural or horticultural
commodities [on the purchaser’s farming enterprise] for sale.
(b) When a service or [piece of] tangible personal property is put to
use in more than one way, the [item of] service or property is not exempt
[under this section] unless it is used more than 50 percent of the time
directly in the production[,] and handling and preservation [for sale] of
agricultural or horticultural commodities for sale.
(c) Examples:
1. A farmer is in the business of raising vegetable plants for sale to
garden centers and other retail sellers of plants. [He] The farmer buys
tilling equipment which [he uses] is used to prepare the soil for planting.
The equipment is used directly in the production of the horticultural
commodities [he raises] raised for sale. The farmer also occasionally
uses the tiller to prepare a small decorative flower border at the entrance
of [his] the farm, adjacent to the road. The tiller is used approximately 90
percent of the time in preparing the growing areas for plants raised for
sale, and 10 percent in preparing the decorative border.
The tiller qualifies for exemption because it is used directly in the
production of horticultural commodities for sale more than 50 percent
of the time.
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2947)
TREASURY — TAXATION
PROPOSALS
2. A partnership breeds and raises horses for sale. It also uses a portion
of its property as a boarding and training facility for customers’ horses. It
makes the following purchases: food additives, horse shoeing tools, and
grooming equipment. The food additives are used approximately 60
percent of the time in feeding the horses used for breeding for sale and 40
percent in feeding the horses being boarded; the horse shoeing tools are
used approximately 75 percent of the time on the horses being breed for
sale and 25 percent on the horses boarded for customers; the grooming
equipment is used approximately 20 percent on the horses bred for sale[,]
and 80 percent on the horses boarded or trained for customers.
The food additives and horse shoeing tools qualify for exemption
because they are used more than 50 percent of the time directly in the
production[,] and handling and preservation of an agricultural product
for sale, that is, horses[, for sale]. The grooming equipment does not
qualify because it is used directly for exempt purposes only 20 percent of
the time; its use in the boarding and training of customers’ horses is not a
use in the production[,] and handling and preservation of horses for sale.
3. A corporation is in the business of operating a botanical garden. It
charges the public a fee for admission to its greenhouses to view the plant
collections and displays. Part of each greenhouse is used for propagating
and growing plants. Most of the plants are grown for display in the
portions of the greenhouses open to the public. Approximately 15 percent
of the plants are grown for sale in the botanical garden’s gift shop or for
sale to plant stores. The corporation is purchasing materials to construct
an additional greenhouse in the complex, which will be used in the same
way as the existing greenhouses.
The materials purchased to construct a greenhouse will not qualify for
exemption because they will not be used more than 50 percent of the time
in the production[, preservation or] and handling and preservation of
horticultural products for sale.
4. (No change.)
5. A tree nursery and landscaping business grows shade trees which it
installs for its customers as part of its landscaping operation. It purchases
tree seedlings, watering equipment, and digging equipment. The watering
equipment is used during the growing process, and the digging equipment
is used approximately 70 percent in the growing operations and 30
percent in the landscaping operations.
The purchase of the watering equipment is eligible for the [farming]
farm use exemption because it is used directly in production in the
nursery’s farming operations. The digging equipment also qualifies for
exemption because, although it is used part of the time in the landscaping
operations, it is used more than 50 percent of the time, that is, primarily,
in production of an agricultural commodity for sale (trees). The seedlings
are not eligible for exemption because they become the property which
the business installs in its landscaping operation. When this business
installs trees or performs other landscaping jobs on its customers’ real
property, it is acting as a contractor, rather than as a farmer. Contractors
are liable for sales or use tax on the materials they install on their
customers’ real property.
(d) The eligibility of a particular purchase for exemption under the
farm use exemption [provision] (N.J.S.A. 54:32B-8.16) depends upon the
nature and extent of its use in the farming enterprise.
1. (No change.)
2. Examples:
i. A vegetable farmer raises vegetables for sale. [He] The farmer also
raises a goat, a sheep, and several ducks for the enjoyment of [his] the
farmer’s family and guests, but does not sell the animals or their
products. [His] The farmer’s purchases of feed for the animals are not
exempt.
ii. A neighboring farmer raises goats, sheep, and ducks for their meat,
milk, wool, and eggs for sale. [He] The farmer also grows vegetables
solely for his family’s consumption. [His] The farmer’s purchases of
fertilizer and a hoe for [his] the vegetable garden are not eligible for
exemption.
iii. Three farms maintain horses on their premises. Farm No. 1 breeds
and raises horses for sale. Farm No. 2 raises corn and beans for sale, and
also boards a few horses for customers. Farm No. 3 raises horticultural
products for sale in a greenhouse and also has a few horses which it
[raised] raises for the use and enjoyment of the farmer’s family. The
purchases of feed, equine medicine, and horse grooming supplies by
(CITE 47 N.J.R. 2948)
Farm No. 1 qualify for the farm use exemption. Purchases of the same
items by Farm No. 2 and Farm No. 3 are taxable, because the items are
not used directly and primarily in the production[,] and handling and
preservation of horses ([“]agricultural product[”]) for sale by that farm.
iv. [A sod farmer] Farmer Bob grows most of his sod for sale to
landscaping contractors. However, [he] Farmer Bob sometimes acts as a
[“]contractor[”] by supplying fully installed sod to his customers. [The
farmer] Farmer Bob purchased [two pieces of equipment:] a cutting
implement used to cut and harvest mature sod for sale[,] and a roller used
in planting and installing sod on customers’ property. The cutter is
eligible for the farm use exemption. The roller is not eligible for the
farm use exemption[,] because it is used in contracting work, not in the
farming operation.
18:24-19.6 Exclusions; exceptions to exclusions
(a) The exemption provided by N.J.S.A. 54:32B-8.16 does not apply to
purchases of the following categories of tangible personal property, even
if they are used directly and primarily in the production of agricultural
[and] or horticultural commodities for sale:
1.-2. (No change.)
3. Materials used to construct a building or structure, with the
exception of the following single-use agricultural facilities: silos,
greenhouses, grain bins, and manure handling facilities.
(b) The exclusion from exemption for materials used to construct a
building or structure does not apply to farming equipment used directly
and primarily in the production[,] and handling and preservation of
agricultural or horticultural commodities for sale, even if the equipment
must be permanently affixed to an existing building or structure.
Purchases of such equipment are deemed to be exempt purchases of
farming equipment; they are not deemed to be purchases of materials
used to construct a building or structure.
(c) Examples:
1. A vegetable farmer makes the following [three] purchases: a farm
tractor used in preparing fields for planting, a commercial truck with
manufacturer’s gross vehicle weight rating over 18,000 pounds which
[he] the farmer registers with the Motor Vehicle [Services] Commission
as a farm vehicle, and an all-terrain vehicle which [he] is used to
transport workers and farming implements to the work site.
The all-terrain vehicle does not qualify for exemption; as an
[“]automobile[”] it is excluded from the scope of the exemption. The
commercial farm truck is not an [“]automobile.[”] The commercial truck
qualifies for exemption under the commercial truck exemption
[provision,] N.J.S.A. 54:32B-8.43, regardless of whether it is used
[“]directly and primarily[”] in production. The farm tractor, which is not
required to be registered as a motor vehicle, is not an [“]automobile.[”] It
is farm equipment, which is exempt when used directly and primarily in
production.
2. A poultry farmer purchases animal feeders which must be
permanently installed onto an existing farm building.
The purchase qualifies for exemption as tangible personal property
used directly and primarily in production of agricultural products for
sale.
3. A farmer, who grows horticultural products for sale, in greenhouses
purchases building materials which [he] the farmer intends to use to
construct a permanent addition to [his] the greenhouse.
The farmer’s purchase qualifies for exemption as tangible personal
property used directly and primarily in production. Because the materials
will be used to construct a greenhouse, they are not the kind of building
materials that are excluded from the scope of the exemption.
4. The same farmer hires a contractor to build a new greenhouse [for
him]. The contractor purchases materials to construct the greenhouse for
the farmer.
The contractor must pay tax on [his] the purchase of materials. The
farm use exemption is available only to the farmer and does not pass
through to the contractor.
5. A farmer purchases lumber and other materials to build a barn.
The farmer must pay tax on [his] the purchase of these materials. The
exemption does not apply to materials used to construct a building, with
certain exceptions; barns are not among the four exceptions enumerated
in the statute.
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
6. A farmer uses electric and gas utility services directly and primarily
in some [of his] production activities.
The electric and gas utility services are subject to sales tax. The
exemption does not apply to purchases of energy even when used directly
and primarily in production.
7. A farmer purchases fuel oil and water utility services for [use in his]
business use and [his] home use.
Oil, water, and other fuels and utilities, except natural gas and
electricity, are exempt from sales tax under N.J.S.A. 54:32B-8.7. They
need not be used in farming in order to qualify for exemption, and they
do not fall within the definition of [“]energy[”] in N.J.S.A. 54:32B-8.16.
18:24-19.7 Farmer’s Exemption Certificate: Form ST-7
(a) A farmer claiming exemption from sales tax pursuant to N.J.S.A.
54:32B-8.16 on a purchase of qualified tangible personal property or
service[s] must present the seller with a [signed,] fully completed
Farmer’s Exemption Certificate (Form ST-7) or other approved form
disclosing a proper basis for exemption.
(b) The Division shall relieve a seller of the tax otherwise applicable,
if it obtains a blanket exemption certificate for a purchaser with which the
seller has a recurring business relationship. The Division may not request
from the seller renewal of blanket certificates or updates of exemption
certificate information or data elements when there is a recurring business
relationship between the buyer and seller. For purposes of this subsection,
a [“]recurring business relationship[”] exists when a period of no more
than 12 months elapses between sales transactions. [See] (see N.J.A.C.
18:24-10.4(g)[.])
(c)-(d) (No change.)
18:24-19.8 Other exemptions specifically for farmers
(a) Containers, wrapping supplies, and packing supplies are exempt
from sales and use tax when purchased by a farmer for any use in that
farmer’s farming enterprise. N.J.S.A. 54:32B-8.15.
1. The use of the containers in the farming enterprise need not be
[“]direct[”] or [“]primary[”] in order for the purchase to qualify for
exemption.
2. Examples that qualify for exemption include, but are not limited
to:
i. Crates used to store farming implements on the farm [qualify for the
container exemption];
ii. Returnable and nonreturnable pallets used by a sod farmer to ship
sod to market [qualify for the container exemption]; and
iii. Burlap used to wrap the root balls of trees [dug] for sale on a tree
farm [qualify for the container exemption].
(b) The sale, rental, or lease of a commercial truck, having a
manufacturer’s gross vehicle weight rating in excess of 18,000 pounds,
and registered as a farm vehicle pursuant to N.J.S.A. 39:3-24 or N.J.S.A.
39:3-25 is exempt from sales or use tax pursuant to N.J.S.A. 54:32B8.43(a)(3). [See] (see N.J.A.C. 18:24-7.18[.])
(c) A [properly executed] fully completed Exempt Use Certificate
(Form ST-4) or other approved form shall be used to support a claim
for exemption based on (a) or (b) [of this subsection] above.
18:24-19.9 Other exemptions not specifically for farming enterprises
(a) (No change.)
(b) [Following are examples] Examples of items that [will be] are
exempt from sales tax even though not used directly and primarily in the
production[,] and handling [or] and preservation [for sale] of agricultural
commodities for sale include, but are not limited to:
1. Protective equipment, [such as] for example, protective masks;
2. Clothing, including work clothing, [such as] for example, gloves
and boots; and
3. Electronically transmitted software that is used directly and
exclusively in the conduct of the farmer’s business, even though not used
directly and primarily in the production[,] and handling[, or] and
preservation [for sale] of agricultural commodities for sale.
SUBCHAPTER 20.
COMMERCIAL ADVERTISING FILM
NEGATIVES, ORIGINAL PRODUCTION
VIDEO TAPE, AND SIMILAR MATERIALS
18:24-20.2 Taxability
[(a) Where, after the original commercial advertising motion picture
negative is finally edited and completed outside of the State of New
Jersey, and after one or more duplicate negatives and/or one or more fine
grain master positives are made outside the State, the original negative,
with or without said dupes or fine grain masters, is or may be brought
into New Jersey for various purposes, including the storage thereof, the
person bringing the same into the State is subject to the New Jersey
compensating use tax on the use of each of such original negatives,
duplicate negatives, or fine grain master positives at the time each of
them is brought into the State, regardless of the nature or extent of the
subsequent use of each of said original negatives, dupe negatives, or fine
grain master positives.]
(a) If after the original commercial advertising motion picture
negative is finally edited and completed outside of New Jersey, and
after one or more duplicate negatives and/or one or more fine grain
master positives are made outside this State, and the original
negative, with or without duplicates or fine grain masters is brought
into New Jersey, the State compensating use tax is due. Use tax is
imposed regardless of the nature or extent of the subsequent use,
including storage, of the original negatives, duplicate negatives, or
fine grain master positives.
(b) (No change.)
(c) Where, after the commercial original production video tape is
finally edited and completed outside of the State of New Jersey, and after
one or more original [protection] production duplicates and/or one or
more air master tapes applicable to both high band and low band video
tape recording, are made outside the State, the original production video
tape with or without said original [protection] production duplicates or
air master tapes is or may be brought into New Jersey for various
purposes including the storage thereof, the person bringing the same into
the State is subject to [the New Jersey compensating] use tax on the use
of such original production video tapes, original production duplicates, or
air master tapes at the time each of them is brought into the State
regardless of the nature or extent of the subsequent use of each of said
original production tapes, original [protection] production duplicates, or
air master tapes.
(d) Under the circumstances described in [subsection] (c) [of this
Section] above, whether original production video tape, original
[protection] production duplicate, or air master tape, [the State
compensating] use tax shall be computed upon the raw stock cost of the
tape plus the cost of machine time (processing of video tape) of each
original production video tape, original [protection] production
duplicate, or air master tape brought into the State. The raw stock cost of
the tape is the price paid for the quantity of tape brought into the State
without the cost of machine time. The cost of machine time is that paid to
an outside laboratory. If the machine time is in and by the user’s own
laboratory and/or affiliated laboratory, the cost of the machine time may
be determined from its own records or, in lieu thereof, the cost shall be
the compensation for similar cost of machine time by another outside
laboratory in the same area at the time rendered. Where the original
[protection] production duplicate or air master tape is made by an
outside laboratory which also furnishes the raw stock tape, the cost with
respect to such original [protection] production duplicate or air master
tape shall be the laboratory’s total charge therefor.
SUBCHAPTER 22.
SALES MADE BY FLOOR COVERING
DEALERS
18:24-22.1 Scope of subchapter
This subchapter is designed to clarify the tax obligations of persons
who sell and/or install floor coverings including, but not limited to,
carpeting, linoleum, tile, hardwood, marble, epoxy, laminate, and
padding.
18:24-22.2 Floor covering dealer transactions
(a) (No change.)
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2949)
TREASURY — TAXATION
PROPOSALS
(b) When an installation service is rendered in conjunction with the
sale of floor coverings by a floor covering dealer, the agreement for such
service is treated as a transaction separate and distinct from the sale of the
floor covering. Sales of floor coverings are, therefore, subject to [the]
New Jersey sales and use tax regardless of whether the floor covering
dealer also agrees to install the floor covering. The floor covering dealer
must collect the sales tax from his or her customer on the sales price of
the floor covering.
(c) The sales tax collection obligations of a floor covering
dealer/installer, who [as] is both a seller of tangible personal property and
a contractor are as follows:
1.-2. (No change.)
18:24-22.3 Installation services
(a) Every person who installs floor covering is a contractor.
1. When a floor covering dealer performs an installation service, he or
she is required either to pay sales tax at the time supplies for use in the
installation service are purchased or to remit use tax upon the cost of
supplies withdrawn from his or her sales inventory for use in the
installation service. Supplies include, but are not limited to[,
underlayment, nails, staples, plywood strips, adhesive tape and cement.]:
i. Underlayment;
ii. Nails;
iii. Staples;
iv. Plywood strips;
v. Adhesive tape; and
vi. Cement.
2. A contractor who is not also a floor covering dealer is required to
pay sales or use tax on the floor coverings he or she purchases for
installation, as well as on supplies. [See] (see N.J.A.C. 18:24-5.3[.])
(b) (No change.)
SUBCHAPTER 23.
BAD DEBTS
18:24-23.4 Procedure for claiming credit for bad debts
(a) [As] A seller may deduct a bad debt on the sales and use tax return
for the period during which the bad debt is written off as uncollectable in
the claimant’s books and records and is eligible to be deducted for
Federal income tax purposes. A claimant who is not required to file
Federal income tax returns may deduct a bad debt on the sales and use tax
return filed for the period in which the bad debt is written off as
uncollectable in the claimant’s books and records and would have been
eligible for a bad debt deduction for Federal income tax purposes if the
claimant had been required to file a Federal income tax return.
(b) (No change.)
(c) When the amount of bad debt exceeds the amount of taxable sales
for the period during which the bad debt is written off, a refund claim
may be filed within [four-years] four years from the due date of the
return on which the bad debt could first be claimed.
(d) (No change.)
(e) For the purposes of reporting a payment received on a previously
claimed bad debt, any payments made on a debt or account are first
applied [first] proportionally to the taxable price of the property or
service and the sales tax thereon, and [secondly] then to interest, service
charges, and any other charges.
SUBCHAPTER 25.
SALES OF COMPUTER SOFTWARE AND
RELATED SERVICES
18:24-25.1 Scope
This subchapter is intended to clarify the application of the Sales and
Use Tax Act, [(]N.J.S.A. 54:32B-1 et seq.[)], to sales of computer
software and computer software related-services. This subchapter does
not address the sale of clerical, data entry, or accounting services, etc.,
which may be performed with the use of computer software.
18:24-25.1A Definitions
The following words and terms, as used in this subchapter, shall have
the following meanings, unless the context clearly indicates otherwise:
...
“Custom software” means computer software created, written, and
designed for the exclusive use of a specific purchaser and sold to the
(CITE 47 N.J.R. 2950)
purchaser for whom it was designed. The use of development languages
or prewritten functions or routines does not necessarily cause computer
software, designed for a specific purchaser, to become taxable prewritten
computer software.
...
“First available for transmission” means the location from which
the computer software originated.
“Installing” computer software means the act of loading an executable
file, whether tangible or electronic, containing a prewritten computer
software application or program onto a device or equipment. The mere
act of electronic delivery does not constitute installation.
“Load-and-leave” is a method of computer software delivery whereby
a seller or its representative installs computer software on a purchaser’s
computer by using a tangible storage medium, which is then removed and
not left in the purchaser’s possession.
“Modifying” computer software means any action, other than
installing or servicing computer software, performed to enhance,
improve, or customize computer software, regardless of whether the
computer code is changed.
“Prewritten computer software” means any computer software,
including prewritten upgrades and updates and combinations of two or
more prewritten computer software programs, or prewritten portions
thereof, that is not designed and developed to meet the unique
requirements of a specific purchaser, and sold to that specific purchaser
for the purchaser’s exclusive use.
“Servicing” computer software means any action to maintain the
compatibility of computer software with other computer hardware and
computer software products and performing other corrective services
that do not involve changing computer code.
...
“Software term license” means a transaction in which the purchaser’s
right to continue to use prewritten computer software is dependent on
periodic payments.
...
18:24-25.2
Prewritten computer software taxed as tangible personal
property
(a) The retail sale of prewritten computer software, including
prewritten computer software transmitted electronically, is subject to
sales or use tax unless a specific statutory exemption applies under the
circumstances of the transaction.
(b) (No change.)
18:24-25.3
Development of custom computer software treated as
nontaxable service transaction
(a) [Software] Computer software created, written, and designed for
the exclusive use of a specific purchaser and sold to the purchaser for
whom it was created is not prewritten computer software.
(b) The purchase of entirely custom-made computer software, by the
purchaser for whom it was created, is treated as the purchase of a
nontaxable computer software design service.
18:24-25.4 Treatment of modified computer software
(a) The sale of prewritten computer software that has been modified
to meet the purchaser’s special need or combined with other prewritten
computer software is treated as the sale of prewritten computer
software.
(b) Separately stated, commercially reasonable fees for the service of
modifying prewritten computer software for a purchaser are not taxable.
18:24-25.5
Retail sales of electronically delivered prewritten computer
software; business-use exemption
(a) [Effective October 1, 2006, retail] Retail sales of electronically
delivered prewritten computer software are treated as retail sales of
tangible personal property.
(b) Retail sales of electronically delivered prewritten computer
software are taxable, except as provided in this subsection.
1. Sales of electronically delivered prewritten computer software are
exempt from sales and use tax if the computer software is to be used
directly and exclusively in the conduct of the purchaser’s business, trade,
or occupation.
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
2. In the following situations, computer software is not deemed to be
delivered electronically, and [therefore] the business-use exemption does
not apply:
i. [Software] Computer software delivered by [“]load-and-leave[”]
method; or
ii. Purchaser receives the computer software in some tangible storage
medium in addition to receiving it by electronic delivery.
(c) The sale of music, ringtones, movies, books, and audio and video
works delivered through electronic means is not deemed to be the sale of
electronically delivered computer software.
18:24-25.6 Treatment of computer software-related services
(a) Since prewritten computer software is defined as tangible personal
property under the Sales and Use Tax Act, servicing, installing, or
maintaining computer software is subject to tax pursuant to N.J.S.A.
54:32B-3(b)(2), whether the computer software is serviced, installed, or
maintained at the purchaser’s location or from or at a seller or service
provider’s remote location.
Example: Upon purchase of prewritten computer software, and for a
separate additional cost, a technician goes to a customer’s business
location to download (install) computer software to the business’s
server. The charge for this installation service is subject to sales tax.
(b) Modifying prewritten computer software for a purchaser is treated
as a sale of non-enumerated services and is not subject to sales tax.
Example: A computer technician creates a string of code to “bridge”
two computer software platforms already in place at the location of the
business customer. This requires the entry of computer code
programming. The charge for modifying the existing computer software
is not subject to sales tax.
(c) Customer support services are treated as a sale of a nonenumerated service and are not subject to sales tax.
Example: A computer software developer provides customers the
opportunity to call a manned hot-line whereby customers who are
experiencing issues/problems may receive verbal advice or advice by
email about how to resolve their issues/problems. The charge for this
service is not subject to sales tax.
(d) Clerical, data entry, or accounting services, etc., which may be
performed with the use of computer software are not considered to be
servicing computer software. The charge for these services is not subject
to sales tax.
Example: An accountant assists one of his business customers by
creating an Excel template spreadsheet that may be used as a basis for
day-to-day inventory tracking. The charge for this service is clerical or
professional in nature. It is not considered the servicing of computer
software and is not subject to sales tax.
18:24-25.7 [Software] Computer software maintenance contracts
(a) [Software] Computer software maintenance contracts are taxed as
follows:
1. A computer software maintenance contract that only provides
upgrades and updates is treated as a sale of prewritten computer software
and is subject to tax regardless of whether the computer software is
delivered on tangible storage media (for example, disk, CD-ROM) or
electronically; however, if the upgrades and updates are delivered only
electronically and for use directly and exclusively in the conduct of the
purchaser’s business, trade, or occupation, the computer software
maintenance contract is not taxable.
2. A computer software maintenance contract that only provides
customer support services is treated as a sale of non-enumerated services
and is not subject to sales tax.
3. A computer software maintenance contract that includes both
taxable and nontaxable or exempt products that are not separately
itemized on the invoice or similar billing document is a bundled
transaction and shall be treated as taxable unless the seller can
demonstrate, using a reasonable and verifiable method based on its books
and records as of the time of sale, the portion of the contract that is for
nontaxable or exempt products. The method selected by the seller shall be
binding on the purchaser.
18:24-25.8 Sourcing
(a) Sourcing of receipts from sales of prewritten computer software is
governed by the following [principles.]:
1. (No change.)
2. If prewritten computer software is not received by the purchaser at a
business location of the seller, the retail sale is sourced to the location(s)
where receipt by the purchaser occurs. Receipt may occur at multiple
locations if the seller delivers the computer software to multiple
locations. The transaction is sourced to those locations if the seller
receives delivery information from the purchaser by the time of the
invoice.
3.-4. (No change.)
5. If (a)1, 2, 3, or 4 above [of this rule] do not apply, including
circumstances in which the seller is without sufficient information to
apply those paragraphs, then the retail sale is sourced to the jurisdiction
for the address of the location from which the prewritten computer
software was shipped, or, if delivered electronically, was first available
for transmission by the seller.
[i. “First available for transmission” means the location from which
the software originated.]
(b) Sourcing of receipts from sales of services to prewritten computer
software is governed by the following [principles]:
1. A retail sale of a computer-related service is sourced where the
purchaser makes first use of the service. The purchaser may make first
use of a service in more than one location[; and].
2. A retail sale of a post-sale support agreement, sold by the seller of
computer software at the same time as the sale of the computer software
itself, is sourced to the same address(es) as the retail sale of the
underlying computer software.
(c) Sourcing of payments made in connection with a software term
license or subscription is governed by the following [principals]:
1. Initial payments are sourced in the same manner as the sale of the
computer software. (See (a) above[.])
2. If the initial payment is sourced based on the location where receipt
by the purchaser (or the purchaser’s donee, designated as such by the
purchaser) occurs, including the location indicated by instructions for
delivery known to the seller, then [one of] the following [apply] applies:
i. If the seller receives information from the purchaser indicating that
the location of the underlying computer software has changed, a
subsequent payment made in connection with a software term license or
renewal of a software subscription is sourced to such new location[; or].
ii. If the seller has not received information from the purchaser
indicating a change in the location of the underlying computer software,
sourcing a subsequent license payment made in connection with a
software term license or the renewal of a software subscription to the
same location where the initial payment was sourced will not constitute
bad faith.
SUBCHAPTER 26.
SOLAR ENERGY DEVICES OR SYSTEMS;
EXEMPTION FROM SALES AND USE
TAXATION
18:24-26.1 Scope of subchapter
This subchapter is intended to clarify the application of the Sales and
Use Tax Act, [(]N.J.S.A. 54:32B-1[,] et seq.[)], to the purchase, rental,
lease, or use of solar energy devices or systems designed to provide
heating or cooling, or electrical or mechanical power by collecting and
transferring solar-generated energy and including mechanical or chemical
devices for storage of solar-generated energy.
18:24-26.2
Technical sufficiency standards of solar energy systems;
devices for storing solar-generated energy
The technical sufficiency standards of solar energy systems, devices
for storing solar-generated energy as established and promulgated [under
N.J.A.C. 14:251] by the [Department of Environmental Protection and
Energy] Board of Public Utilities shall be used to determine eligibility
for exemption from sales and use tax of such solar energy systems. In the
absence of such standards, the Division will make determinations on
a case-by-case basis.
[1 See N.J.A.C. 14:25-1.1 et seq.]
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2951)
TREASURY — TAXATION
PROPOSALS
18:24-26.4 Procedure for exemption
For purposes of exemption from tax, the purchaser of a solar energy
device or system shall issue to the seller an Exempt Use Certificate (Form
ST-4) or other approved form. The certificate should indicate on its
face that the purchase qualifies for exemption [under the technical
sufficiency standards of] as a solar energy system. [(See N.J.A.C. 18:2426.2.)] The purchaser must insert the address of the property upon which
the solar energy device or system will be installed. In those cases where
the purchaser is not registered with the Division of Taxation, a New
Jersey tax identification number is not required. However, for purposes of
verification, either a Federal employer identification number, out-of-State
tax identification number for businesses, or a driver’s license number for
individuals purchasing for personal use is to be furnished and written
clearly on the certificate.
SUBCHAPTER 27.
TRANSPORTATION OF PERSONS AND OF
TANGIBLE PERSONAL PROPERTY
18:24-27.1 Nontaxability of transportation services; exceptions
(a)-(b) (No change.)
(c) Examples of nontaxable transportation services include, but are not
limited to: [transporting household belongings to a new home, bus rides,
services provided to retailers to transport their merchandise to customers,
free-floating balloon rides, document delivery services, taxi rides,
transportation of mourners and of the deceased in connection with funeral
services, train rides and ferry service.]
1. Transporting household belongings to a new home;
2. Bus rides;
3. Services provided to retailers to transport their merchandise to
customers;
4. Free-floating balloon rides;
5. Document delivery services;
6. Taxi rides;
7. Transportation of mourners and of the deceased in connection
with funeral services;
8. Train rides; and
9. Ferry service.
18:24-27.2 Delivery charges
(a) “Delivery charges” means charges by the seller of tangible
personal property or services for the preparation and delivery to a
location designated by the purchaser of tangible personal property or [the
purchaser of] services performed upon tangible personal property.
[Delivery] Examples of delivery charges include, but are not limited
to[,transportation, shipping, postage, handling, crating, and packing.]:
1. Transportation;
2. Shipping;
3. Postage;
4. Handling;
5. Crating; and
6. Packing.
(b) Delivery charges are part of [a “]the receipt[”] or [“]sales price[”]
for the retail sale of tangible personal property delivered to a New Jersey
location or for the retail sale of services performed on tangible personal
property delivered to New Jersey.
1.-2. (No change.)
(c) If a shipment includes both exempt and taxable property, the seller
should charge the sales tax proportionately according to either the
percentage of:
1.-2. (No change.)
Example 1: Customer makes a retail purchase of clothing from a mail
order seller and has the items shipped to his home in New Jersey. Invoice
is as follows:
Sweater ..........................................$30.00
Gloves ...........................................$10.00
Hat .................................................$15.00
Merchandise Total .........................$55.00
Shipping ......................................... $4.00
No sales tax will be imposed on this purchase. The purchase of
clothing [items] is exempt from tax. Therefore, the shipping charge will
be exempt as well.
(CITE 47 N.J.R. 2952)
Example 2: (No change.)
Example 3: Parents make a retail purchase from an online seller and
ask to have the merchandise shipped to their son’s college dormitory
[address] in New Jersey. Invoice is as follows:
Boots .............................................$50.00
Backpack .......................................$35.00
Clock .............................................$15.00
Merchandise Total .......................$100.00
Shipping and handling .................... $6.00
[N.J.] NJ sales tax .......................... $3.71
In this example, the tax on the shipping charge was allocated
according to the proportion of the total sale that was taxable. Half of the
$100.00 sale was for taxable items (backpack and clock). Therefore, sales
tax was collected on the taxable merchandise and on half of the $6.00
shipping and handling charge[.] (7% tax on $50.00 merchandise is
$3.50[,] and 7% tax on $3.00 shipping and handling charge is $.21, for a
total of $3.71 sales tax[.]).
18:24-27.3 Transportation services provided by limousine operators
(a) [The retail sale of] Charges for transportation services provided by
a limousine operator and both originating and ending within New Jersey
[is] are subject to sales tax.
(b)-(c) (No change.)
(d) Receipts for [“]transportation services[”] include the charge for
physically transporting a passenger or passengers, as well as any charges
that may be itemized for amenities, individualized services, and
components of the limousine operator’s overhead, which are billed to the
purchaser of the transportation service.
1. Additional amounts charged, beyond the base rate, for services,
amenities, and expenses, such as the following, are treated as part of the
receipt for the transportation service and, therefore, subject to sales tax
payable by the purchaser of the transportation service:
i.-v. (No change.)
vi. Reimbursement of expenses incurred [incident] incidental to
providing the transportation service, such as tolls and parking charges;
vii. (No change.)
viii. Providing access to in-vehicle television, telephone, [internet]
Internet service, or videos.
2. (No change.)
3. The following are not deemed to be receipts for transportation
services provided by a limousine operator and, therefore, are not subject
to sales tax:
i. Cancellation and [“]no-show[”] charges; and
ii. The transportation of tangible personal property, including
packages, pets, [and] medical supplies, and human organs when [any of
these are] not accompanied by a human passenger.
(e) “Services originating in New Jersey” means services in which the
trip begins with pick-up of the passenger or passengers in New Jersey.
The location from which the limousine is dispatched, the office location
of the limousine operator, and the purchaser’s billing address are all
irrelevant to the determination of where the service originates.
Example 1: The passenger is picked up by a limousine in Hackensack,
New Jersey, and dropped off at the airport in Newark, New Jersey. The
limousine operator itemizes extra charges for luggage and for parkway
tolls.
The charges are taxable because the service begins and ends in New
Jersey. The extra charges for luggage and tolls are treated as part of the
transportation service and therefore are taxed as well.
Example 2: The passenger is picked up by limousine in Red Bank,
New Jersey, and dropped off at J.F. Kennedy Airport in New York.
The charges are not taxable[,] because the service ends outside New
Jersey.
Example 3: (No change.)
Example 4: A passenger contracts with a limousine operator to provide
him with round trip service from his home to a meeting in Pennsylvania
and back. The passenger is picked up in Cherry Hill, New Jersey[,] in the
morning and taken to a location in Philadelphia, Pennsylvania. Then,
several hours later, the passenger is taken back home to Cherry Hill, New
Jersey.
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
The services provided are not taxable. The morning service is not
taxable because it ends outside New Jersey, and the afternoon service is
not taxable because it originates outside New Jersey.
Example 5: Three tourists staying in Morristown, New Jersey, plan a
group trip to visit Ellis Island and the Statute of Liberty in New York
City. They arrange for a limousine operator to take them from
Morristown to the Jersey City, New Jersey ferry terminal in the morning
and then to pick them up in New York City in the evening and take them
back to Morristown. They are charged extra for 20 minutes of waiting
time in the morning in Morristown[,] and for an hour of waiting time in
New York City.
They are charged for two transportation services provided by a
limousine operator. The service from Morristown to Jersey City,
including the charge for 20 minutes of waiting time in Morristown, is
taxable, because the service both originates and ends in New Jersey. The
service from New York City back to Morristown, including the waiting
time in New York City, is not taxable, because that service originates
outside New Jersey.
Example 6: Pursuant to a reservation made in advance, a passenger is
taken by limousine from Matawan, New Jersey to J.F. Kennedy Airport,
New York and is then picked up at the same airport and returned to
Matawan a week later.
The charges are not taxable because the first service ends outside New
Jersey and the second service originates outside New Jersey.
Example 7: A family of five arranges for limousine transportation
from their home in Stockton, New Jersey. On the way they arrange to
stop briefly to get a package awaiting pick-up in New Hope,
Pennsylvania[,] and then they proceed to their destination in Cape May,
New Jersey.
The charges are not taxable, because the trip does not take place
entirely in New Jersey, since it includes a requested stop in Pennsylvania.
Example 8: A purchaser decides to hire a limousine to take her from
her home in Cherry Hill, New Jersey[,] to a hospital in Camden, New
Jersey[,] where she will be having surgery.
The charges are taxable because the trip begins and ends in New
Jersey.
Example 9: A family in Belle Mead, New Jersey[,] arranges for a
limousine service to drive their son to and from his private school in
Lawrenceville, New Jersey.
The charges are taxable because the rides begin and end in New
Jersey.
SUBCHAPTER 28.
RACE HORSES
18:24-28.1 Scope of subchapter
This subchapter is intended to clarify the application of the New Jersey
Sales and Use Tax Act, [(]N.J.S.A. 54:32B-1[,] et seq.[)], to the
imposition of sales and compensating use tax on race horses purchased or
used within New Jersey.
18:24-28.2 Purchase of race horses
(a)-(b) (No change.)
(c) The residency of the purchaser is not considered for purposes of
imposing the tax where delivery is made to the purchaser in this State.
Example 1: (No change.)
Example 2: The facts are the same as in Example 1, except the horse is
shipped by the auctioneer [on] by a common carrier to the purchaser’s
farm in Kentucky. There is no New Jersey sales or use tax due on the
transaction. However, [should] if the horse [be] is returned to New
Jersey, it may be subject to a compensating use tax.
18:24-28.3 Claiming races
(a) (No change.)
(b) A [“]claim[”] or purchase of a horse is made when a person
acquires a horse as a result of a successful bid placed prior to a claiming
race. Title is passed once the race begins.
(c) For purposes of computing the sales tax due, if no previous
purchases have been made within the calendar year, the full purchase
price is subject to sales tax. If previous purchases have been made in the
calendar year, the sales tax is imposed only on the portion of the total
purchase price that exceeds the highest of any prior purchase prices paid
for the same horse within the State in the same calendar year. The sales
tax is collected at the track at the time the claim is paid.
Example 1: Horse X is entered in a $10,000 claiming race at
Monmouth Park. ABC Farms claims the horse. Horse X has not been
previously claimed in the same calendar year. A taxable transaction has
taken place and the tax due is $700.00.
Example 2: Same facts as Example 1, but Horse X had previously
been claimed twice in the same calendar year for $3,000 and $5,000. A
taxable transaction has taken place and the tax due is $350.00 ($10,000 $5,000 = $5,000; [7% of] $5,000 x .07 = $350.00).
18:24-28.4 Compensating use tax
(a) [The] A race horse purchased outside of New Jersey is subject
to the compensating use tax [is imposed] on the use of a race horse
within this State if the race horse would have been subject to the sales tax
[when] if purchased in this State. The compensating use tax will not be
imposed on the use of a race horse within this State if the horse was
purchased by the user while a nonresident of this State. (See N.J.A.C.
18:24-28.5 regarding the term [“]resident[.”])
(b) (No change.)
18:24-28.5 Resident
(a) For the purpose of this subchapter, the following will apply for
determining who is a resident.
1. Any individual who maintains a permanent place of abode in this
State is a resident. A permanent place of abode is a dwelling place
maintained by a person, or by another for him or her, whether or not
owned by such person, on other than a temporary or transient basis. The
dwelling may be a house, apartment, or flat; a room, including a room at
a hotel, motel, boarding house, or club; or a residence hall operated by an
educational or charitable institution, or a trailer, mobile home, house
boat, or any other premises.
2. Any corporation incorporated under the laws of New Jersey and any
corporation, association, partnership, or other entity doing business in the
State or maintaining a place of business in the State, or operating a hotel,
place of amusement, or social or athletic club in this State is a resident.
3. Any person while engaged in any manner in carrying on in this
State any employment, trade, business, or profession shall be deemed a
resident with respect to the use in this State of tangible personal property
or services in such employment, trade, business, or profession.
4. A person is considered to be engaged in carrying on business within
New Jersey if he or she carries on activity preparatory to racing,
maintains a stable, or races horses on tracks within New Jersey.
5. Activities preparatory to racing are those acts of a person which
enable him or her to pursue a racing operation, such as the possession of
a license to race in New Jersey and, in conjunction therewith, the entry of
horses in racing; the hiring of grooms, trainers, jockeys, or drivers[,]; and
registration with a jockey club at various tracks. The possession of a
license by a nonresident, which is not accompanied simultaneously by
one or more of the other activities described above will not result in a
resident status until one or more of the additional [acts] activities occur.
18:24-28.7 Trades
(a) (No change.)
(b) Trading of horses outside of New Jersey will cause the parties to
the trade to be liable for a compensating use tax if they meet the resident
requirements set forth in N.J.A.C. 18:24-28.5 at the time of the trade and
subsequently race the horse in New Jersey. Compensating use tax is to be
computed on the market value, as provided in N.J.A.C. 18:24-28.4, of the
horse accepted in trade.
18:24-28.8 Homebreds
(a) (No change.)
(b) [Upon] Sales tax is due upon reacquisition of the horse in New
Jersey for racing purposes[, a sales tax is due]. If the horse is reacquired
outside of New Jersey and is subsequently raced in New Jersey, the user
will be subject to a compensating use tax if [he] the purchaser met the
resident requirements set forth in N.J.A.C. 18:24-28.5 at the time of
reacquisition.
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2953)
TREASURY — TAXATION
PROPOSALS
18:24-28.9 Syndication
(a) The syndication of a horse within New Jersey, with the exception
of [one] a horse used exclusively for breeding purposes, is considered a
sale of [the] a horse and is subject to the sales tax.
(b) (No change.)
(c) No business can obtain tax benefits [under] described in this
subchapter unless the [Urban Enterprise Zone] Authority has [determined
that] certified the business [meets the definition of] as a qualified
business [under N.J.S.A. 52:27H-62c paraphrased below in N.J.A.C.
18:24-31.2].
SUBCHAPTER 29. DISPOSABLE HOUSEHOLD PAPER
PRODUCTS: EXEMPTION FROM SALES AND
USE TAX
18:24-31.2 Definitions
The following words and terms, when used in this subchapter, shall
have the following meanings, unless the context clearly indicates
otherwise:
“Enterprise zone,” “zone,” or “UEZ” means an urban enterprise
zone designated by the Urban Enterprise Zone Authority under the
UEZ Act, N.J.S.A. 52:27H-60 et seq.
“Qualified business” means:
1. (No change.)
2. An entity which[, after that designation but during the designation
period,] becomes newly engaged in the active conduct of a trade or
business in that zone or district, and has at least 25 percent of its full-time
employees employed at [a] its business location in the zone or district,
who [meet at least one of the following criteria]:
i. [Residents] Reside within the zone or district, within another zone,
or within the municipality within which the zone or any other zone or
district is located; [or]
ii. [Either] Were either unemployed for at least six months prior to
being hired and residing in New Jersey, or recipients of New Jersey
public assistance programs, for at least six months prior to being hired;
or
iii. [Found] Were determined to be low income individuals, pursuant
to the Workforce Investment Act of 1998, [P.L. 105-220] (29 U.S.C. [§
2811] §§ 2801 et seq.).
[“Enterprise zone” or “zone” means an urban enterprise zone
designated by the Urban Enterprise Zone Authority under N.J.S.A.
52:27H-60 et seq.]
“Urban enterprise zone-impacted business district,” “UEZimpacted [business] district,” or “district” means an economicallydistressed business district classified by the Urban Enterprise Zone
Authority as having been negatively impacted by two or more adjacent
[urban enterprise zones] UEZs in which 50 percent less sales tax is
collected pursuant to [section 21 of P.L. 1983, c.303] [(]N.J.S.A. 52:27H80[)].
18:24-29.1 Scope of subchapter
This subchapter is intended to clarify the application of the Sales and
Use Tax Act, [(]N.J.S.A. 54:32B-1[,] et seq.[)], to the purchase and use of
disposable household paper products.
18:24-29.4 Household paper products
(a) [The] Receipts from the sale of disposable paper products[, such
as paper towels, paper napkins, toilet tissue, facial tissue, diapers, paper
plates and cups, purchased for household use is] are exempt from sales
and use tax.
[Example: The sale of paper place mats, paper bags, wax paper, paper
freezer wrap, paper tablecloths and paper straws is exempt from sales and
use tax.]
(b) Examples of household paper products include, but are not
limited to:
1. Baby wipes and personal care wipes;
2. Diapers;
3. Facial tissue;
4. Paper bags;
5. Paper freezer wrap;
6. Paper place mats;
7. Paper plates and cups;
8. Paper napkins;
9. Paper straws;
10. Paper tablecloths;
11. Paper towels; and
12. Toilet tissue.
18:24-29.5 Business use
The exemption[s] from sales and use tax provided by this subchapter
does not apply to the sale or any use of disposable paper products for
industrial, commercial, or other business purposes, or for the use of any
person consuming them in a capacity related to such purposes.
SUBCHAPTER 31.
URBAN ENTERPRISE ZONES ACT
18:24-31.1 General provisions
(a) [The] This subchapter explains certain sales and use tax
benefits provided pursuant to the New Jersey Urban Enterprise Zones
Act (the UEZ Act), [Chapter 303, Laws of 1983,] N.J.S.A. 52:27H-60 et
seq., [approved August 15, 1983,] which provides for the establishment
of urban enterprise zones ([also known as] enterprise zones, zones, or
UEZs) in urban areas suffering from high unemployment and economic
distress, and [UEZ-impacted] urban enterprise zone-impacted business
districts (UEZ-impacted districts or districts). [Each designation shall
be for 20 years, except as otherwise designated or extended by the
Authority.] Zones and districts are designated by [an] the Urban
Enterprise Zone Authority (the Authority) in the Department of
Community Affairs, which is responsible for administering the UEZ
Act. The Authority [may grant] determines the benefits, such as certain
sales tax and other tax benefits, that are available to businesses existing
in or formed in designated enterprise zones or UEZ-impacted districts,
which have met the definition of a qualified business. [This subchapter of
the sales tax rules sets forth the possible benefits, the necessary
definitions, and the procedures for qualifying for any of these sales tax
benefits.]
(b) The possible sales tax benefits include an exemption for retail sales
to a qualified business, a partial exemption for retail sales by a qualified
business, and an exemption for sales of building materials and services
used in constructing or maintaining buildings or [realty] real property of
a qualified business.
(CITE 47 N.J.R. 2954)
18:24-31.3 Exemption for retail sales to a qualified business
(a) Retail sales, rentals, and leases of tangible personal property
(except motor vehicles and energy) to a qualified business and sales of
services (except telecommunications and utility services) to a qualified
business, for the exclusive use or consumption of such business within an
enterprise zone are exempt from the sales and use taxes imposed by
N.J.S.A. 54:32B-1 et seq.[, provided that the designation of the enterprise
zone by the Urban Enterprise Zone Authority specifically makes this
exemption available to the qualified business.] Sales of specified digital
products, as defined by N.J.S.A. 54:32B-2(zz) are not eligible for
exemption.
[(b)] 1. [Tangible] Examples of tangible personal property that
qualify for exemption when used or consumed exclusively within the
enterprise zone include[s, for example, items such as office], but are
not limited to:
i. Office supplies and stationery[, office];
ii. Office or business equipment[, office];
iii. Office and store furnishings[, trade];
iv. Trade fixtures[,]; and [cash]
v. Cash registers. [Services include installing, maintaining or repairing
tangible personal property used in business (other than a motor vehicle);
maintaining, servicing or repairing real property used in business,
including janitorial and landscaping services; and information services
used or consumed exclusively within the enterprise zone.]
2. Examples of services that qualify for exemption when used or
consumed exclusively within the enterprise zone include, but are not
limited to:
i. Installing, maintaining, or repairing tangible personal property
used in business (other than a motor vehicle);
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
ii. Maintaining, servicing, or repairing real property used in
business, including janitorial, landscaping, and security guard
services; and
iii. Information services.
[(c)] 3. [Qualified] A qualified business[es] purchasing, renting, or
leasing tangible personal property (except motor vehicles and energy) or
services (except telecommunications and utility services) to be used or
consumed exclusively within the enterprise zone shall [furnish to their
sellers, suppliers or lessors] issue a [properly] fully completed Urban
Enterprise Exempt Purchase Certificate, [subject to the provisions of P.L.
2006, c. 34, and P.L. 2007, c. 328] (Form UZ-5), to the seller, lessor, or
supplier.
[(d)] (b) The benefits set forth in this section are [unavailable] not
available for qualified businesses within a UEZ-impacted business
district.
[(e)] (c) Notwithstanding [the provisions in] (a)[-(c)] above, and in
accordance with the provisions in N.J.S.A. 52:27H-87.1, a qualified
business may [be exempt] receive exemption from sales and use tax on
charges for energy and utility service [in accordance with the provisions
in N.J.S.A. 52:27H-87.1] purchases. A qualified business [may be
eligible to use an Urban Enterprise Zone - Energy Exemption Certificate
(Form UZ-6), in accordance with those provisions and the instructions
provided on the certificate.] meeting certain eligibility requirements
must apply for the exemption by submitting an application to the
New Jersey Economic Development Authority (EDA) as set forth in
N.J.A.C. 19:31-13.
18:24-31.4
Partial sales tax exemption for retail sales of tangible
personal property by a certified seller
(a) [Sales] A certified seller may impose sales tax [is imposed] at 50
percent of the statutory rate[,] on receipts from retail sales, [with] subject
to the exceptions stated in (b) [or] and (c) below[, made by a certified
vendor which is a qualified business from a place of business owned or
leased, and regularly operated by the seller for the purpose of making
retail sales, and located in a designated enterprise zone or UEZ-impacted
district].
(b) This partial sales tax exemption does not [extend] apply to retail
sales of motor vehicles, cigarettes, alcoholic beverages, or energy.
(c) The [provisions of this] partial sales tax exemption [do] does not
apply to retail sales, rentals, or leases of manufacturing machinery,
[equipment or] apparatus, or equipment. Such sales may[, however,] be
exempt from sales tax under the provisions of N.J.S.A. 54:32B-8.13[, as
further defined in]. (see N.J.A.C. 18:24-4.1 through 4.8[.])
(d) In addition to being a qualified business, a certified seller must
regularly operate a place of business for the purpose of making retail
sales. Items of tangible personal property must be regularly exhibited and
offered for retail sale at this location, and the place of business may not
be utilized primarily for the purpose of online, catalog, or mail order
sales.
(e) [All] Only sales [made by] transactions that originate or are
completed by the purchaser, in person at a [qualified and] certified
seller’s [must be made from his or her] place of business within an
enterprise zone or district[, that is, either] qualify for the partial sales
tax exemption. Either the purchaser must accept delivery at the seller’s
place of business within an enterprise zone or district, or the seller must
deliver the tangible personal property directly from [his or her] the
seller’s place of business within an enterprise zone or district. [Only
receipts from sales, which originate and are completed by the purchaser
in person at the seller’s place of business within an enterprise zone or
district qualify for the reduced rate of sales tax; provided, however, that
after] After a sale has been completed within an enterprise zone or
district, the seller may deliver the tangible personal property to the
purchaser at a location outside an enterprise zone or district.
1. Receipts from mail order, telephone, [telex] online, fax, and similar
sales transactions are subject to sales tax at the regular rate [where
delivery is made] when a certified seller delivers the order directly
from the seller’s place of business in the zone or district, to a location
within this State.
18:24-31.5
No partial sales tax exemption for retail sales of taxable
services by a qualifying business
The partial sales tax exemption does not apply to the sale of
taxable services.
18:24-31.6
Exemption for retail sales of building materials to or for a
qualified business
(a) [Section 31 of the Act] N.J.S.A. 54:32B-8.22 provides an
exemption from sales and use tax on sales of materials, supplies, or
services to contractors or repairmen for exclusive use in erecting
structures, or building on, or otherwise improving, altering, or repairing
real property of a qualified business within an enterprise zone. (see
N.J.A.C. 18:24-5.3)
(b) Purchasers of materials, supplies, or services to be used for
construction, alteration, and repair of structures and [realty] real
property of a qualified business[es] within an enterprise zone shall
[furnish to their sellers or suppliers] issue a [properly] fully completed
[UZ-4] Contractor’s Exempt Purchase Certificate, Urban Enterprise
Zone, (Form UZ-4) to the seller or supplier.
(c) The benefits set forth in this section are [unavailable for] not
available to qualified businesses within a UEZ-impacted [business]
district.
SUBCHAPTER 32.
LEASES AND RENTALS OF TANGIBLE
PERSONAL PROPERTY
18:24-32.1 Scope of subchapter
[Except where otherwise explicitly provided, the] The provisions of
this subchapter apply to the sales and use tax treatment of leases
[beginning on or after October 1, 2005, the effective date of P.L. 2005, c.
126].
18:24-32.2 Definitions [of “lease or rental”]
The following words and terms, as used in this subchapter, shall
have the following meanings, unless the context clearly indicates
otherwise:
[(a) A lease] “Lease” or “rental” [is] means a transfer of possession or
control of tangible personal property, for either a fixed or an
indeterminate term and for consideration. [(b) A lease] Lease or rental
does not include any of the following types of transactions:
1.-3. (No change.)
“Long-term lease or rental” means those agreements for a term of
more than six months.
[(c) As used in this subchapter, “short-term] “Short-term lease or
rental” [agreements] means those agreements for a term of six months or
less[, and “long-term lease or rental” agreements means those for a term
of more than six months].
“Transportation equipment” means railroad cars, trucks, with a
gross vehicle weight rating of 10,001 pounds or more, certain
passenger buses, air carriers, and containers for all of these. It does
not include passenger cars and most motor vehicles or boats.
18:24-32.3 Tax base and calculation of tax
(a) The tax base and method of calculating the tax, which depend upon
whether the lease or rental agreement is short-term or long-term is as
follows:
1. Agreements for a term of six months or less. The tax base for these
short-term rentals and leases is either the total [amount] of the periodic
payments due under the agreement, that is, the amount of rent due, or the
lessor’s original purchase price of the property; and
2. (No change.)
(b) (No change.)
(c) The treatment of trade-ins is as follows:
1. (No change.)
2. Reduction of the tax base through trade-in credit is available only
when the lessee trades in property that is owned and not merely leased.
i. (No change.)
ii. Reduction of the tax base through trade-in is not allowed if the
property [traded in] traded-in will not be held for sale (including lease or
rental) by the lessor.
(d)-(e) (No change.)
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2955)
TREASURY — TAXATION
PROPOSALS
(f) The treatment of special charges in motor vehicle leases for terms
of more than six months is as follows:
1.-5. (No change.)
6. Fees commonly known as [“]motor vehicle fees,[”] which are
imposed by the State, including title and registration fees, are not
included in the tax base;
7. (No change.)
8. The allowed value of a trade-in vehicle, which was owned by the
customer and is taken by the dealer for resale is [credited against] not
included in the tax base for purposes of computing the sales tax;
9. [“]Gap coverage[”] sold by and the premium collected by the
leasing company is included in the tax base;
10. [“]Gap coverage[”] sold to the buyer directly by a third-party
insurer is not included in the tax base; and
11. (No change.)
18:24-32.4 Payments, collection, and remittance of tax
(a) (No change.)
(b) [Lessor’s] The lessor’s collection and remittance obligations are as
follows:
1. (No change.)
2. The lessor must separately state the sales tax on invoices, billing
slips, and similar documents given to the [customer] lessee;
3. When the lease agreement is for a term of more than six months, the
lessor must remit the full amount of tax due on the lease at the time of
filing the monthly or quarterly sales and use tax return for the period
when the leased property was delivered to the lessee in New Jersey,
regardless of whether the tax is calculated on the lessor’s original
purchase price of the property or on the total of the periodic payments
required under the lease agreement;
4. When the lease is for a term of six months or less, the lessor must
charge the [customer] lessee sales tax at the time of each periodic
payment and must remit the tax at the time of filing the monthly or
quarterly sales and use tax returns for the periods when the periodic
payments are charged to the [customer] lessee; and
[5. Since the lessor collects sales tax from the lessee on both shortterm and long-term lease and rental agreements beginning on or after
October 1, 2005, the Lessor Certification, Form ST-40, should no longer
be used; and]
[6.] 5. (No change in text.)
18:24-32.5
Treatment of leases when property is relocated to or from
New Jersey before expiration of the lease
(a) If property purchased outside of New Jersey for a lease or rental
that originated outside this State is subsequently brought into New Jersey
for use in this State, tax is due on each of the subsequent lease payments
attributable to the period of the agreement remaining after the first use in
this State. Lessee’s tax liability is reduced by credit for sales tax paid to
the state where the lease began, if the tax on the full lease was due and
paid to that state at the inception of the lease, with no right [of] to a
refund of that state’s sales tax under that state’s law.
(b) (No change.)
18:24-32.6 Sourcing
(a) The general rule, for leases or rentals of tangible personal property
other than motor vehicles, trailers, or aircraft, or [“]transportation
equipment[”] is as follows:
1.-2. (No change.)
(b) Sourcing for leases and rentals of motor vehicles, trailers, semitrailers, or aircraft that do not qualify as [“]transportation equipment[”] is
treated as follows[.]:
1.-3. (No change.)
(c) Sourcing for leases and rentals of [“]transportation equipment[”] is
treated as follows[.]:
[1. “Transportation equipment” includes railroad cars, trucks, with a
gross vehicle weight rating of 10,001 pounds or more, certain passenger
buses, air carriers, and containers for all of these. It does not include
passenger cars and most motor vehicles or boats.]
[2.] 1. (No change in text.)
(CITE 47 N.J.R. 2956)
18:24-32.7
(Reserved)
SUBCHAPTER 33.
MASSAGE, BODYWORK, AND SOMATIC
SERVICES
18:24-33.1 Scope of the subchapter
This subchapter is intended to clarify the application of the Sales
and Use Tax Act, N.J.S.A. 54:32B-1 et seq., to receipts from sales of
massage, bodywork, and somatic services.
18:24-33.3 Definitions [of “massage, bodywork, and somatic services”]
[(a)] “Massage, bodywork, and somatic services” means systems of
activity of structured touch, which include holding, applying pressure,
positioning and mobilizing soft tissue of the body by manual technique,
and use of visual, kinesthetic, auditory, and palpitating skills to assess the
body for purposes of applying massage, bodywork, or somatic principles.
Such application may, for example, include the use of therapies, such as
heliotherapy or hydrotherapy, the use of moist hot and cold external
applications, and external application of herbal or topical preparations.
[(b)] For purposes of the Sales and Use Tax Act, [“]massage,
bodywork, and somatic services[”] do not include:
1. Services rendered by persons in the following medical and medicalrelated fields, when they are performing services they are authorized to
perform within the scope of their specific professional licenses: medical
doctors (M.D.), doctors of osteopathy [(O.D.)] (D.O.), dentists,
chiropractors, physical therapists, registered nurses (R.N.), podiatrists
(D.P.M.), or certified midwives;
2. (No change.)
3. Cosmetic and beauty services, such as manicures, [and] pedicures,
cosmetic facials, [and] cosmetic wraps, depilatory services, hair styling,
sauna baths, and other services that are designed primarily to enhance
appearance or cleanliness.
18:24-33.4 Doctor’s prescription
(a) (No change.)
(b) To qualify for the prescription [exemption] exclusion from the
imposition of sales tax on massage, bodywork, or somatic services, a
doctor’s prescription must satisfy the following requirements:
1.-2. (No change.)
3. It must contain the name of the patient and the name and signature
of the referring doctor;
4. The referring doctor must be [one of the following] a licensed
professional. Examples of licensed professionals include, but are not
limited to: [medical doctor (M.D.), osteopath (O.D.), chiropractor,
podiatrist (D.P.M.), psychologist with a doctorate in psychology, or
dentist; and]
i. Medical doctor (M.D.);
ii. Doctor of osteopathy (D.O.);
iii. Chiropractor;
iv. Podiatrist (D.P.M.);
v. Psychologist with a doctorate in psychology; or
vi. Dentist; and
5. (No change.)
18:24-33.5 Type of facility does not affect taxability
The taxability of the services does not depend upon the type of facility
where the services are performed. Massage, bodywork, and somatic
services are taxable regardless of whether they are performed in a
massage-only facility, a clinic, a spa, an athletic facility, or other location
in New Jersey, unless they are performed pursuant to a doctor’s
prescription.
18:24-33.6 Contracted services and employee services
(a) Massage, bodywork, and somatic therapists, masseurs, and other
service providers who are employed to perform these services do not
collect sales tax from their employers on their wages or salaries.
(b) (No change.)
(c) A business, such as a medical office, spa, health club, massage
facility, or clinic that offers massage, bodywork, or somatic services
provided by its employees or contract workers, and that bills clients for
such services provided, is the [“]seller[”] of the services and must collect
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
and remit the sales tax on the receipts for taxable massage, bodywork,
and somatic services.
SUBCHAPTER 34.
INVESTIGATION AND SECURITY SERVICES
18:24-34.1 Scope of the subchapter
The provisions of this subchapter implement N.J.S.A. 54:32B-3(b)(11)
[of the Sales and Use Tax Act,] and clarify the scope of the imposition of
sales tax on investigation and security services, as authorized by N.J.S.A.
54:32B-24.
18:24-34.3 Investigation and detective services
(a)-(b) (No change.)
(c) Examples of services taxed as investigation and detective services
include, but are not limited to:
1.-3. (No change.)
4. Online or [“real-life”] in-person research services to track down
unclaimed assets; and
5. Online or [“real-life”] in-person research services to track down
birth parents, kidnap victims, debtors, lost pets, missing persons, or
others.
(d) The following are not deemed to be investigative or detective
services and are not taxable:
1.-3. (No change.)
4. Insurance claim adjustment services, for example, evaluation of
liability or damages, settlement negotiations, trial preparation, or
settlement of claim.
(e) The amount of the receipt subject to sales tax includes the fee
charged for the investigation and security service, as well as any expenses
and overhead costs incurred by the seller, which are passed on to the
purchaser of the service, regardless of whether they are separately
itemized. For examples, charges for transportation, employees, telephone,
[and] Internet, and other expenses incurred by the seller and billed to the
purchaser of the service are subject to tax as part of the receipt for the
taxable investigation and security service.
(f) Investigation and detective services are sourced for sales tax
purposes to the jurisdiction where the purchaser of the service makes first
use of the service. “First use” is deemed to be the location where the
investigative report is delivered, or, if the report is delivered
electronically, to the purchaser’s billing address.
(g) The service provider may claim a resale exemption from sales tax
when purchasing property and services that are actually transferred to the
purchaser of the services, such as photographs, [video cassettes] DVDs
for surveillance records, printing and copy charges related to the
investigative report, and when purchasing investigative and detective
services subcontracted to another service provider.
18:24-34.4 Security guard and patrol services
(a) Security guard and patrol services include, [for example,
bodyguard, personal protection, guard dog, guard, patrol, and security
services.] but are not limited to:
1. Bodyguard;
2. Personal protection;
3. Guard dog;
4. Guard;
5. Patrol; and
6. Security services.
(b) Security guard and patrol services are sourced to the jurisdiction
where the purchaser of the service makes first use of the service. Security
guard and patrol services provided for a specific location[,] are sourced
based on the location of the property being guarded. Thus, security guard
and patrol services performed at a location in New Jersey are subject to
tax.
18:24-34.5 Armored car services
(a)-(b) (No change.)
(c) Separately stated, commercially reasonable charges for cash
management services are not taxable.
1. Examples of cash management services include:
i.-iii. (No change.)
iv. Deposit processing. Counting, verifying, and consolidating
(wrapping, banding, and rolling) customer deposits; and
v. Envelope processing. Verifying commercial drop envelope deposits,
counting currency, coin, and checks, and consolidating (wrapping,
banding, and rolling currency and coin) for deposit.
(d) Charges for armored car services are sourced as follows[.]: If the
armored car service is performed entirely within New Jersey, it is subject
to sales tax. If the service is not performed entirely within this State, then
the service is sourced to the jurisdiction in which the purchaser of the
service is located. Thus, if the location of the purchaser of the service is
in New Jersey, regardless of whether goods are picked up or delivered to
that location, the service is subject to sales tax.
18:24-34.6 Security systems services
(a)-(b) (No change.)
(c) Alarm monitoring services [have been] are taxable pursuant to
N.J.S.A. 54:32B-[(b)(11) and (3)(f)]3(b)(11) and (f).
SUBCHAPTER 35.
INFORMATION SERVICES
18:24-35.1 Scope of the subchapter
This subchapter is intended to clarify the scope of N.J.S.A. 54:32B3(b)(12) [of the Sales and Use Tax Act], which imposes tax on
[“]information services.[”]
18:24-35.2 Taxability of information services
(a) (No change.)
(b) “Information services” means [as defined in N.J.S.A. 54:32B2(yy)] the furnishing of information of any kind, which has been
collected, compiled, or analyzed by the seller, and provided through
any means or method, other than personal or individual information
which is not incorporated into reports furnished to other people.
18:24-35.3
Information services distinguished from information-related
services
(a) Information services do not include professional and personal
services, such as the services of lawyers, physicians, accountants,
engineers, or architects, in which the service provider may collect and
review information in preparation for doing the work that is the true
object of the service, such as the preparation of legal briefs, medical
treatment plans, tax returns, blueprints, and architectural designs. These
services continue to be nontaxable[,] because they are not deemed to fall
within any of the categories of services enumerated as taxable in N.J.S.A.
54:32B-3.
(b) A business, which sells access to any type of information, other
than personal or individual information, through any means (for example,
an electronic database or subscription to a hard copy report) is selling an
information service, because what the customer seeks in that transaction
is the information itself. For example, sales of access to stock quotes,
legal research resources, local property tax values, and marketing trends,
through electronic databases or through subscriptions to hard copy
reports, are sales of information services.
18:24-35.4 Examples of taxable information services
(a) The following are examples of information services subject to tax
under N.J.S.A. 54:32B-3(b)(12):
Example 1: (No change.)
Example 2: A business sells credit reports both to individuals seeking
their own report[,] and to businesses that will use the information for
reviewing credit history.
This service is an information service and is subject to tax. The
information is furnished in reports sold to persons other than the
individual whose personal information is contained in the report.
Example 3: A business collects and compiles information from
different sources regarding new construction projects. It provides the
information to purchasers of its services in abstracts or reports. The
abstracted information may be accessed from the business’s website[,] or
the purchaser can obtain the information via email or by facsimile.
This service is an information service and is subject to tax. The
information is not personal or individual.
Example 4: A business maintains a computer database of statistical
information, which is sold to purchasers. A purchaser pays a fee for a
period of time during which the purchaser can access the information
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2957)
TREASURY — TAXATION
PROPOSALS
online[,] with the option either to view it or to download and/or print it.
No disk or other information is sent to the customer.
This service is an information service and is subject to tax. The
information is not personal or individual.
Examples 5- 6 (No change.)
Example 7: A web-based business gathers statistics concerning the
characteristics and activities of [internet] Internet users and publishes
these statistics on its website. This information is available to anyone
subscribing to the service.
This service is an information service and is subject to tax. The
information is not personal or individual.
Example 8 (No change.)
18:24-35.5
Examples of services that are not treated as information
services
(a) The following are examples of services that are not treated as
[“]information services[”] under N.J.S.A. 54:32B-3(b)[(2)](12) [of the
Sales and Use Tax Act] because they consist of furnishing “personal” or
“individual” information specific to the particular purchaser and not
furnished to others:
Example 1: A service provider assembles data provided by both its
purchaser and its purchaser’s suppliers. The data pertains to the
purchaser’s transactions buying and selling telecommunication services.
The data is then put into a common format and entered into a database
managed by the service provider. The data used to provide the service is
not made available to any other potential purchaser. The database and
certain software is accessible online[,] only to the specific purchaser. The
service provider’s software allows the purchaser to view the data and
manipulate and analyze the data in many different ways to help them
reduce costs and maximize revenue.
The information in the database is personal or individual to the
purchaser[,] and not furnished to others by the service provider, and
[therefore] is not an information service[, as defined in the Act].
Example 2: A business is involved in producing custom market
research reports to assist its purchasers in making marketing decisions.
The business develops a questionnaire specific to the needs of each
individual purchaser, interviews random respondents, tabulates and
analyzes the data, and communicates the findings to the purchaser in a
report. The business is prohibited from disclosing any part of the project
to anyone else.
The information is personal or individual to each customer, it is not
provided to others, and thus the service is not an information service.
Example 3: A web-based business allows purchasers to obtain up-todate information about their own websites, such as viewers’ online
behavior. The information is collected by the business by embedding
code into the purchaser’s website design, which causes the information to
be sent to the business’s server. Purchasers can request reports based on
their needs, such as the amount of time their customers spend viewing,
length of time on the website, etc.
The information is personal or individual in nature, and thus, the
service is not an information service.
Example 4 (No change.)
(b) The following are examples of services that are based on
information, but are not taxed as information services under N.J.S.A.
54:32B-3(b)[(2)](12):
Examples 1-3 (No change.)
Example 4: A business sells [“]contract programming[“] services,
which consist of the design, development, and implementation of
computer programs based on the purchaser’s particular computer system.
The consulting service is not an information service and is not subject
to tax.
Example 5: An attorney consults with a purchaser of his professional
services, gathers information, and draws up a legal document, such as a
will, a contract, a power of attorney, etc.
The service is not an information service and is not subject to tax.
Example 6: A business performs environmental testing services and
issues a report on factors, such as the condition of the property, levels of
a particular substance, or habitability.
The testing service is not an information service and is not subject to
tax.
(CITE 47 N.J.R. 2958)
Examples 7-9 (No change.)
Example 10: A title insurance company performs a title search on real
property, examines the information, and determines whether to issue a
title insurance policy to the purchaser.
The issuance of a title policy, which includes the pass-through of costs
associated with obtaining and examining the information[,] is not an
information service and is not subject to tax.
Example 11 (No change.)
Example 12: A company, professional organization, or trade school
offers educational seminars, classes, or courses attended by individuals
seeking continuing education credits, required pre-licensing education, or
to advance their expertise in a particular profession. Written and
published educational material may or may not be distributed to
participants attending these educational programs.
The educational seminar, class, or course is not an information service
and is not subject to tax.
(c) Fees paid to New Jersey or Federal governmental agencies to
obtain documents, records, or other information, which the agency is
required to maintain as part of its regulatory or administrative function
are not subject to tax. Examples include, but are not limited to:
1.-2. (No change.)
3. Fees paid to the [State] New Jersey Division of Taxation to obtain a
copy of a tax return previously filed.
SUBCHAPTER 36.
SALES PRICE
18:24-36.1 Scope of the subchapter
This subchapter clarifies the application of the [“]sales price[”]
definition in N.J.S.A. 54:32B-2(oo) and [at] N.J.A.C. 18:24-1.2.
18:24-36.2 Application of [“]sales price[”]
(a) [The taxable receipt or sales] Sales price includes all taxes imposed
on the seller.
1. Excise taxes, which are imposed on manufacturers, importers,
producers, distributors, or other sellers are included in the [receipt on
which sales or use tax is computed] sales price, even though the excise
tax may be separately stated to the purchaser. [Thus] For example, the
Federal manufacturer excise tax[es] imposed on the sale or lease of
certain automobiles (gas guzzlers) are included in the [taxable receipt]
sales price, as are the excise taxes imposed on tires, sporting goods, and
firearms.
2. Excise taxes, which are imposed on the purchaser are excluded from
the [taxable receipt; for] sales price. For example, the Federal retail
excise tax[es] imposed on heavy trucks and trailers sold at retail[, and the
Federal luxury tax on certain retail purchases] are excluded from the
sales price.
(b) Expenses billed to a purchaser but incurred by a seller in making a
sale of taxable [goods] tangible personal property or services,
regardless of whether the expenses are taxable or nontaxable, and
regardless of whether the expenses are separately billed to a purchaser,
are not deductible from the [receipt] sales price on which sales tax is
computed.
Example 1: An equipment repairman charges $20.00 per hour plus
certain expenses [when on] for a service call. The purchaser is billed as
follows:
Repair time-2 hours @ $20.00
$40.00
Travel time
10.00
Parts
20.00
Meals
5.00
Sales price
$75.00
The [receipt] sales price subject to 7 % tax is $75.00.
Example 2: A photographer contracts with a purchaser to sell
photographs at $50.00 each, in addition to the reimbursement of certain
expenses. The purchaser is billed as follows:
Photographs - [(]2[)] @ $50.00 $100.00
Model fees
60.00
Meals
10.00
Travel
25.00
Props (Flowers)
5.00
Sales price
$200.00
The [receipt] sales price subject to 7% tax is $200.00.
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
(c) Term discounts, which are given by a seller for the purpose of
encouraging prompt payment on an account, also known as [“]early
payment discounts,[”] are deductible from [receipts] the sales price.
Example: A seller gives a purchaser a two percent discount for paying
the price of a $100.00 camera within 10 days. If the purchaser pays
within 10 days, the sales tax is to be computed on the taxable [receipt]
sales price of $98.00.
Merchandise price
$100.00
Less 2% early payment discount
2.00
Sales price
$98.00
Sales tax at 7%
6.86
Amount due
$104.86
(d) Discounts that represent a reduction in price, such as a trade
discount, volume discount, or cash and carry discount, are deductible in
computing the taxable [receipt] sales price.
Example 1: A seller gives a purchaser a 30 percent discount for
purchasing 1,000 light bulbs. The discounted price charged is the taxable
[receipt] sales price. The purchaser is billed as follows:
1,000 bulbs @$0.50
$500.00
Less 30% volume discount
150.00
Sales price
350.00
Sales tax at 7%
24.50
Amount due
$374.50
Example 2: A seller gives a purchaser a 10 percent cash and carry
discount. The discounted price [will be] is the [taxable receipt] sales
price. The purchaser is billed as follows:
Merchandise
$50.00
Less 10% [carry] cash and carry discount
5.00
Sales price
45.00
Sales tax at 7%
3.15
Amount due
$48.15
(e) When a seller issues a coupon entitling a purchaser to receive a
discount upon presentation, and the seller receives no reimbursement
from [any person] a manufacturer, distributor, or any other thirdparty, the sales tax is due from the purchaser [only] based on the
discounted price[, which is the actual receipt].
Example 1: A store issues a coupon entitling the holder to purchase a
product for $0.20 less than the regular selling price. The purchaser is
billed as follows:
Regular price
$1.00
[Store] Less store coupon
.20
Sales price
.80
Sales tax at 7%
.06
Amount due
$.86
Example 2: A store issues a coupon entitling the purchaser to receive
two items for the price of one. The purchaser is billed as follows:
Regular price - [for one item] 2 @ $1.00
[$1.00] $2.00
[Store] Less store coupon for free item
1.00
Sales price
1.00
Sales tax at 7%
.07
Amount due
$1.07
(f) When a seller issues a coupon entitling a purchaser to pay a
reduced price on an item purchased, and the seller is reimbursed by a
manufacturer, distributor, or any other third party, the tax is due on the
full price of the item. The [receipt] sales price is composed of the amount
paid plus the amount of the coupon’s stated value.
Example: A store issues a coupon labeled “mfr” entitling the holder to
purchase an item for $1.00 less than the stated purchase price. The seller
[would] bills the purchaser as follows:
Regular price
$10.00
Sales tax at 7%
.70
Sales price
10.70
Manufacturer coupon
1.00
Amount due from purchaser
$9.70
(g) If a manufacturer issues a coupon entitling a purchaser to pay a
reduced price on an item purchased, the tax is due on the full price of the
item. The [receipt] sales price is composed of the amount paid and the
amount of the coupon’s stated value. The coupon value reflects the
payment or reimbursement by another party to the seller.
Example: A manufacturer issues a coupon entitling the purchaser to
purchase an item from a seller for $0.20 less than the purchase price. The
seller bills the purchaser as follows:
Regular price
$1.00
Sales tax at 7%
.07
Sales price
1.07
Less manufacturer coupon
.20
Amount due from purchaser
$.87
(h) When a manufacturer or a seller issues a coupon involving a
reimbursement but does not disclose that fact to the purchaser on the
coupon or in an accompanying advertisement, the seller [will] collects
[from the purchaser] only the tax due on the reduced price from the
purchaser, but [will be] is required to pay the tax applicable to the entire
[receipt] sales price, that is, the amount of the price paid and the
reimbursement received from the manufacturer. The abbreviation “mfr”
appearing on the coupon shall constitute adequate notice that it is
reimbursable by a third party.
(i) Any allowance or credit for property of the same kind accepted in
part payment by a seller on the purchase of tangible personal property
and intended for resale by such seller [shall be] is excluded when
[arriving at] calculating the [receipt] sales price subject to tax. Only the
net sales price of tangible personal property is subject to tax.
Example 1: An automobile dealer allows a purchaser a $2,000 trade-in
for a used automobile, accepted in part payment against the purchase
price of $20,000 for a new automobile. The dealer will hold the used
automobile for resale. The purchaser is billed as follows:
New automobile
$20,000
Trade-in
2,000
Sales price
$18,000
Sales tax at 7%
1,260
Amount due
$19,260
Example 2: A motor vehicle dealer allows a customer $500.00 for a
used boat, accepted in part payment against the purchase price of $20,000
for a new automobile. A boat is not property of the same kind as an
automobile. The customer is billed as follows:
New automobile
$20,000
Sales tax at 7%
1,400
Sales price
21,400
[Trade-in] Less trade-in
500.00
Amount due
$20,900
(j) Any charge made by a seller of tangible personal property subject
to tax for the shipping or delivery of [such] property is included in the
[receipt] sales price subject to tax, unless the property is not taxable or
the sale is entitled to exemption from tax (see N.J.A.C. 18:24-27).
(k) Any charge for credit imposed by a seller and paid by a purchaser
in addition to the purchase price, under a designation, such as interest,
finance, or carrying charge, is not deemed to be part of the sales price of
tangible personal property or charge for services rendered, if the amount
is separately stated on the invoice, bill of sale, or similar document given
to the purchaser. Such charges constitute consideration for the extension
of credit and [shall] are not [be] included in the [receipt] sales price
subject to sales tax.
Example: A seller sells furniture for $1,000 and charges one and a half
percent interest per month on the outstanding balance. [Only t]The
$1,000 selling price is [a receipt] subject to tax.
(l) Charges imposed by a credit card company that are deducted from a
participating seller’s account are charges for financial services rendered [.
Such charges], which have no bearing on the computation of [receipts
subject to] tax.
Example: A seller sells furniture for $1,000. The purchaser uses a bank
credit card. The bank, when remitting to the seller, deducts a five percent
service charge ($50.00). The seller is required to charge and remit tax on
$1,000.
(m) The amount of the sales price of items of property paid in, or
eligible for payment with, food stamps issued in accordance with the
Federal Food Stamp Act of 1977, 7 U.S.C. [§] §§ 2011 et seq., is
excluded from the taxable [receipts] sales price. In the case of food
stamp eligible purchases, otherwise taxable items [will be] are exempt
from sales tax when food stamps are presented in full payment or when
cash is submitted with food stamps used as a partial payment. Food and
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2959)
TREASURY — TAXATION
PROPOSALS
food ingredients exempt from sales tax under N.J.S.A. 54:32B-8.2 remain
exempt whether or not purchased with food stamps.
Example: If a purchaser presents $10.00 in food stamps and $32.00 in
cash as payment for $42.00 worth of food stamp eligible items, the entire
$42.00 is exempt from tax. [Under these facts, the exemption applies]
This is the case even if the [$42.00 worth of food stampable] items
consist[ed] of food stamp eligible, but [sales] taxable, food and food
ingredients, such as candy. The purchase of taxable items, which are not
food [stampable remains] stamp eligible, are subject to sales tax.
(n) A manufacturer’s rebate, whether or not paid directly to the
purchaser, is not deductible from the [receipt on which sales tax is
computed] sales price.
Example: An automobile dealer [agrees to] sells an automobile to a
purchaser for $20,000. As a sales incentive, the manufacturer agrees to
give a rebate of $500.00 to a purchaser who purchases an automobile
during the month of December. The purchaser elects to have the rebate
paid to the dealer. The purchaser is billed as follows:
Sales price
$20,000
Sales tax at 7%
1,400
Amount due
21,400
[Manufacturer’s] Less manufacturer’s rebate [-]500.00
Net cost to purchaser
$20,900
(o) For examples of how delivery charges affect the [taxable receipt]
sales price, see N.J.A.C. 18:24-27.2(d).
SUBCHAPTER 37.
MEDICAL
18:24-37.1 Scope of subchapter
This subchapter [provides guidance as to the scope of N.J.S.A.
54:32B-8.1] clarifies the application of the Sales and Use Tax Act,
N.J.S.A. 54:32B-8.1, [which provides an exemption for] to the sale of
drugs and certain medical equipment for human use.
18:24-37.2 Definitions
The following words and terms, as used in this subchapter, shall have
the following meanings, unless the context clearly indicates otherwise:
...
“Grooming and hygiene product” means a soap or cleaning solution,
shampoo, toothpaste, mouthwash, anti-perspirant, or [sun tan] suntan
lotion or [screen] sunscreen, regardless of whether the item meets the
definition of [“]over-the-counter drug.[“]
“Home use” means that the equipment is sold to an individual for use
where the individual resides. This may include residential facilities, such
as a nursing home, an assisted care center, or a school dormitory.
...
“Over-the-counter-drug” means a drug that contains a label that
identifies the product as a drug, as required by 21 CFR 201.66. The label
must include:
1. A [“]Drug Facts[”] panel; or
2. A statement of the [“]active ingredient[”] or [“]active ingredients[”]
with a list of those ingredients contained in the compound, substance, or
preparation. [“]Over-the-counter drug[”] does not include a grooming and
hygiene product.
...
“Prosthetic device” means a replacement, corrective, or supportive
device, including repair and replacement parts for same, worn on or in the
body in order to:
1.-3. (No change.)
“Transferred to the purchaser” means that the patient must
actually leave the hospital, medical, office, etc. with the property.
18:24-37.3 Drugs and over-the-counter-drugs
(a) Sales of drugs sold pursuant to a doctor’s prescription for human
use and over-the-counter-drugs when sold for human use are exempt
from sales and use tax. In order to determine if an over-the-counter
product is an exempt over-the-counter-drug, the label must be examined
to verify that it includes a [“]Drug Facts[”] panel or a list of [“]active
ingredients.[”]
(b) (No change.)
(c) Examples of drugs and over-the-counter-drugs, [the sales of] which
are exempt from sales and use tax, include, but are not limited to:
(CITE 47 N.J.R. 2960)
1.-7. (No change.)
8. Birth control (pills, patches, IUD, etc.);
9.-16. (No change.)
17. Drug solutions (ad mixture, irrigation, IV, etc.);
18. (No change.)
19. Gases (medical grade nitrous oxide, helium, air, carbon dioxide,
oxygen, etc.);
20.-32. (No change.)
18:24-37.4 Grooming and hygiene products
(a) (No change.)
(b) If the product meets the definition of a [“]drug[”] and is sold
pursuant to a doctor’s prescription, it is exempt from tax [under N.J.S.A.
54:32B-8.1,] as a drug.
(c)-(d) (No change.)
18:24-37.5 Durable medical equipment
(a) Sales of durable medical equipment [for home use] when sold for
human use are exempt from sales and use tax.
(b) Repair and replacement parts for qualifying durable medical
equipment [for home use] are exempt. Disposable or single use items
used in conjunction with qualifying durable medical equipment are not
exempt as repair or replacement parts.
(c) Charges for servicing, repairing, or maintaining [qualified]
qualifying durable medical equipment [for home use] are not subject to
tax. See N.J.S.A. 54:32B-3(b)(2)(ii).
(d) An exemption certificate is not required to purchase qualifying
durable medical equipment [for home use].
(e) Examples of durable medical equipment, which are exempt from
sales and use tax include, but are not limited to:
1. (No change.)
2. Aqua K pumps and therapeutic heating or cooling pads, compresses,
[or] and packs;
3. (No change.)
4. Bed pans, commodes, urinals, and collection bags;
5.-10. (No change.)
11. Enteral – feeding bags, feeding connectors, feeding tubing, and
pumps - not worn on the body;
12.-20. (No change.)
21. Monitors for medical use;
22.-37. (No change.)
(f) [Items] Examples of items commonly used by people without a
medical condition, which are not exempt as durable medical equipment[.
Examples] include, but are not limited to:
1.-11. (No change.)
18:24-37.6 Mobility enhancing equipment
(a) Sales of mobility enhancing equipment when sold by prescription
for human use [and pursuant to a doctor’s prescription] are exempt from
sales and use tax.
(b) Charges for mobility enhancing equipment and labor to modify a
vehicle post-production to make it handicapped accessible are exempt
from tax.
(c) (No change.)
(d) Charges for servicing, repairing, or maintaining [qualified]
qualifying mobility enhancing equipment are not subject to tax. See
N.J.S.A. 54:32B-3(b)(2)(ii).
(e) Examples of mobility enhancing equipment include, but are not
limited to:
1. (No change.)
2. Bath aids (raised toilet seat, tub, [and] shower stool, etc.);
3.-12. (No change.)
13. Trapeze bars[,] and bed pull-up T;
14.-15. (No change.)
16. Wheelchairs (including batteries, cushions, [and] safety belts, etc.);
and
17. (No change.)
(f) (No change.)
18:24-37.7 Prosthetic devices
(a)-(b) (No change.)
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
PROPOSALS
TREASURY — TAXATION
(c) Charges for servicing, repairing, or maintaining [qualified]
qualifying prosthetic devices are not subject to tax. [See] (see N.J.S.A.
54:32B-3(b)(2)(ii)[.])
(d) Examples of prosthetic devises include, but are not limited to:
1.-7. (No change.)
8. Artificial eyes, heart valves, larynx, limbs, and valves;
9.-14. (No change.)
15. Casts, including foam padding inside any part of cast;
16. Catheters (foley, feeding, drainage, ostomy, urinary, dialysis, etc.);
17.-23. (No change.)
24. Drainage drains[,] and shunts;
25. Grafts (vascular, Dacron, etc.);
26.-36. (No change.)
37. Orthopedic shoes, shoe lifts, inserts, arch supports, and heel
protectors;
38. Ostomy products (adhesives, barriers, collection bag and pouches,
drain tube and valve, tubing, and hernia belt);
39.-40. (No change.)
41. Pressure garments (edema gloves, mast pants, and burn garments);
42.-51. (No change.)
52. Traction devices (cervical, pelvic, etc.) – worn on the body;
53.-54. (No change.)
18:24-37.9 Purchases by medical service providers
(a) Supplies are taxable when purchased for use in providing medical
services for compensation and not transferred to the purchaser of the
service. [1. “Transferred to the purchaser” means that the patient must
actually leave the hospital, medical, office, etc. with the property. 2.]
Examples of supplies that are not transferred to the purchaser include,
but are not limited to:
Recodify existing i.-iii. as 1.-3. (No change in text.)
(b) (No change.)
(c) A nursing home, hospital, or other medical service provider may
purchase tangible personal property that will be resold to a patient
without the payment of tax by issuing a fully completed [resale
certificate] Resale Certificate (Form ST-3) or other approved form to
the seller. [The nursing home, hospital, or other medical service provider
will not collect tax from the patient if the tangible personal property is
exempt from tax.]
18:24-37.10
Purchases or reimbursement of property by Medicaid or
Medicare
(a) (No change.)
(b) The purchase of property reimbursed by the Federal government
(for example, Medicaid or Medicare) is not exempt under N.J.S.A.
54:32B-9(a). The property is subject to tax unless the property meets
N.J.S.A. 54:32B-8.1[, as N.J.S.A. 54:32B-9(a) is not applicable].
__________
NEW JERSEY REGISTER, MONDAY, DECEMBER 7, 2015
(CITE 47 N.J.R. 2961)
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