Prior to October 1, 2006, a charge for parking a motor vehicle, where the vehicle was merely held in a convenient place and in a state of readiness for immediate use, was not subject to sales tax.
On and after October 1, 2006, sales tax is imposed on the receipts from parking, storing or garaging a motor vehicle, excluding charges for the following types of parking: residential parking; employee parking, when provided by an employer or at a facility owned or operated by the employer; municipal metered parking; and such receipts subject to tax pursuant to any other law or ordinance. (See N.J.S.A. 54:32B-3(i))
As of July 1, 2007, the law was amended by P.L. 2007, c. 105 to exclude all municipal parking, storing or garaging, not just municipal metered parking. (See N.J.S.A. 54:32B-3(i)).
The sales tax applies to the sale of parking but does not apply to the sale of residential parking. For purposes of the exception for residential parking, the following applies:
“Residential parking” means parking provided to the occupants of a residence who park on the same premises that constitutes their primary residence;
“Same premises” means an area within the residence, an area adjacent to the residence, or any area owned or leased by the landlord, condominium association, or cooperative for the purpose of providing parking for its residents.
“Residence” means a single family home, a duplex, a condominium unit, cooperative unit, a townhouse unit, a school dormitory, an apartment or a mobile home used by a person or persons as a place of primary residence or abode. “Residence” does not include a hotel, motel, a summer camp, a resort lodge or other dwellings of a temporary or transient nature.
Parking privileges provided for in a lease or in a separate writing between landlord and tenant, a condominium association and the owner of the unit, or between a cooperative and one of its members is nontaxable residential parking.
Parking charges paid to a homeowners’ association are not subject to sales tax provided that the parking facility is owned or leased and operated by the association; the association is comprised solely of owners or residents of the residential dwelling units; and the parking charges are paid by the members to the association.
For parking facilities that provide both residential and nonresidential parking, the operator or parking vendor must keep a record of the sale including the name of the resident, the residential address of the resident, and the amount of the sale in order to substantiate that the sale is for residential parking purposes.
Students that live in school provided housing are deemed residents, so parking fees charged by the school are not subject to sales tax.
Parking fees charged by the school to commuter students are subject to sales tax.
Residential Parking Permits
A fee for a residential parking permit that allows a person living within a certain area to park on the street or in a specified lot would qualify for the residential parking exception and is not subject to sales tax.
The sales tax applies to the sale of parking but does not apply to the sale of employee parking when provided by an employer, or when provided at a facility owned or operated by the employer. If the employer does not own or operate the parking facility, and employees pay for their own parking, such charges are subject to tax, even if they are reimbursed by the employer. If the employer does own or operate the parking facility, then parking charges paid directly by employees are exempt.
For parking facilities that provide both employee parking and non-employee parking, the operator or parking vendor must keep a record of the sale including the name of the employer, the employer’s address, and the amount of the sale in order to substantiate that the sale is for employee parking purposes.
Municipal Metered Parking
Between October 1, 2006 and June 30, 2007, the exclusion for municipal parking was limited to municipal metered parking, which means:
- parking spaces or stalls located on a public street where the right to park is purchased through a parking meter on a post, whether or not coin operated.
- parking spaces or stalls located in an open air lot where each space is controlled by an individual parking meter on a post, whether or not coin operated.
- Parking spaces or stalls located on a public street where the right to park is purchased through a pay and display device.
As of July 1, 2007, the law was amended by P.L. 2007, c. 105 to exclude all municipal parking
, storing or garaging, not just municipal metered parking.
“Municipal parking, storing or garaging” means any motor vehicle parking, storing or garaging provided by a municipality or county, or a parking authority thereof. The exclusion does not apply to parking provided by a State governmental agency or entity, so such parking continues to be taxable.
For purposes of this exclusion from tax, these services are "provided by a municipality or county, or parking authority thereof..." if the parking facility is 1. owned or leased by the municipality; and 2. operated by the municipality.
The sales tax applies to the sale and purchase of parking which includes valet parking. Valet parking charges made in connection with parking space are subject to 7% sales tax on and after October 1, 2006.
The purchase of valet staffing services are not subject to sales tax under this provision.
Sales Tax Included in Price
The Sales and Use Tax law requires that sales tax be separately stated and charged to purchasers of taxable goods and services. However, there is an exception available upon written application to the Director of Taxation, asking that for a particular business, the Director find that it would be impractical for the seller to separately charge the tax to the purchaser. The Division has recognized that this exception applies to the sale of parking. Thus, the sales tax may be included in the rate charged for parking, but the seller must indicate to the purchaser that the rate includes the sales tax. This can be accomplished by a sign, a notation on a parking receipt, or by any other public means.
Parking Receipts Currently Subject to Other Taxes
Municipal Parking Tax
The sales tax applies to the sale of parking but does not apply to such receipts subject to tax pursuant to any other law or ordinance
. Newark , Jersey City, Elizabeth and Fort Lee currently have a parking tax. Municipalities in Hudson County are authorized to enact a municipal parking tax. There is nothing in the law which would prevent a municipal parking tax that is enacted subsequent to the new sales tax law (P.L. 2006, c. 44) to be included in the exception.
Parking Fee at Atlantic City Casino Hotels
Between October 1, 2006 and June 30, 2007, the Parking Fee at Atlantic City Casino Hotels imposed pursuant to N.J.S.A. 5:12-173.2, including any charges over and above the minimum charge (currently $3.00 per day), was subject to the 7% sales tax because it is not a “receipt subject to tax pursuant to any other law or ordinance.” N.J.S.A. 54:32B-3 (i).
As of July 1, 2007, the law was amended to exclude the Atlantic City Parking Fee from the imposition of tax. There is also an exclusion for parking charges or fees imposed pursuant to an agreement between the Casino Reinvestment Development Authority (CRDA) and a casino operator which was in effect as of June 28, 2007. Any amount collected over and above these fees remains subject to sales tax.
As a result of the imposition of sales tax on parking, currently registered businesses may have to revise their tax records with the Division of Revenue in order to enable the collection and remittance of New Jersey sales and use tax. See Registration Information for Businesses Affected by the Changes to the Sales and Use Tax Act Effective October 1, 2006
Parking facilities must register to collect and remit New Jersey sales and use tax. A facility may register online at the Division of Revenue Online Business Registration Service