Pursuant to N.J.S.A. 54:4-11.1, a 6% Outdoor Advertising Fee is imposed on the gross amounts collected by a retail seller for advertising space on an outdoor advertising sign (billboard). Recently enacted legislation amends certain sections of the law which will affect payment of the Fee on amounts collected on and after July 1, 2004. In addition, the Fee is reduced from 6% to 4% for the period July 1, 2006 through June 30, 2007. The Fee will continue to be reported and remitted on a quarterly basis on Form OA-100
, which may be amended to include the new exemptions from the Fee.
The Outdoor Advertising Fee is due from the retail seller and is based upon the amount that the seller receives from an end user, whether payment is received in money or otherwise, for the sale of space on an outdoor advertising sign. The retail seller is the licensee or permit holder authorized by the New Jersey Department of Transportation to engage in the business of outdoor advertising and selling the space to the end user. The end user is the person purchasing the space in order to place their advertisement on the sign.
The Outdoor Advertising Fee is not imposed on amounts collected for the creation or design of the ad, installation of the ad, or the rental or lease of the outdoor advertising structure. It is only imposed on amounts collected for the placement of advertising on the sign.
Exemptions from the Fee:
Exempt Organizations/Governmental entities
Although the Fee is imposed on the retail seller, the law provides that the seller is not subject to the Fee on amounts collected from a purchaser/end user that is exempt from the New Jersey Sales and Use Tax pursuant to N.J.S.A. 54:32B-9(a) or (b). This includes the following end users, when they are the purchaser or consumer of the advertising space:
- agencies, instrumentalities, public corporations or political subdivisions of the State of New Jersey;
- agencies and instrumentalities of the United States;
- the United Nations or any international organization of which the U.S. is a member.
- I.R.C.Section 501( c )(3) organizations, or parent-teacher, fire, rescue or emergency company, or veteran's organizations which have been granted exempt status by the New Jersey Division of Taxation.
- Qualified diplomatic and consular personnel.
In order to support the exemption from paying the Outdoor Advertising Fee, the retail seller must obtain the appropriate sales tax exemption documentation from the end user. A contract or purchase order on government letterhead is sufficient for governmental end users, but an exempt organization listed in #4 above must provide a copy of their New Jersey Exempt Organization Certificate (ST-5).
There is also an exemption for "fees received by an advertising agency that is not a related party of the retail seller and that are not received by the retail seller." Related party is defined in the law as any licensee, permittee, or other party that has authority to sell advertising space on an outdoor advertising sign. Therefore, the retail seller does not owe the Fee on amounts retained as commissions by an unrelated advertising agency.
The law provides that a licensee or permit holder must provide their taxpayer identification number to the Division of Taxation upon request. Any licensee or permit holder that is not already registered as a business with the New Jersey Division of Taxation must complete a Business Registration Application (NJ-REG)
, which is available online or by calling the Customer Service Center at 609-292-6400 and requesting that the form be mailed.
By July 30, 2004, all licensees and permit holders must provide the following information in writing to the New Jersey Division of Taxation, Regulatory Services Branch, Attn: Outdoor Advertising, P.O. Box 269, Trenton, New Jersey 08695-0269:
Business name, address, telephone number, contact name, and social security number or Federal Identification number of the licensee or permit holder.