Sales and Use Tax (N.J.S.A.54:32B-1 et seq.)
Sales and Use Tax applies to receipts from retail sale, rental, or use of tangible personal property or digital property; retail sale of producing, fabricating, processing, installing, maintaining, repairing, and servicing tangible personal property or digital property; maintaining, servicing, or repairing real property; certain direct-mail services; tattooing, tanning, and massage services; investigation and security services; information services; limousine services; sales of restaurant meals and prepared food; rental of hotel and motel rooms; certain admission charges; certain membership fees; parking charges; storage services; sales of magazines and periodicals; delivery charges; and telecommunications services, except as otherwise provided in the Sales and Use Tax Act.
A compensating use tax is also imposed when taxable goods and services are purchased and New Jersey sales tax is either not collected or is collected at a rate less than New Jersey’s sales tax rate. The use tax is due when such goods, or the goods on which taxable services are performed, come into New Jersey. If sales tax was paid to another state, the use tax is only due if the tax was paid at a rate less than New Jersey’s rate.
All persons required to collect the tax must file a Business Registration Application (Form NJ-REG). Each registrant’s authority to collect the sales tax is certified by a Certificate of Authority issued by the Division, which must be prominently displayed at each place of business to which it applies.
Major exemptions include: sales of newspapers; magazines and periodicals sold by subscription and membership periodicals; casual sales except motor vehicles and registered boats; clothing; farm supplies and equipment; flags of New Jersey and the United States; unprepared food and food ingredients purchased for human consumption; food sold in school cafeterias; prescription and certain nonprescription drugs and other medical aids; motor fuels; textbooks; professional and personal services unless otherwise taxable under the Act; real estate sales; tangible personal property used in research and development; production machinery and equipment.
The Sales and Use Tax Act was amended, effective October 1, 2005, to conform New Jersey’s law to the requirements of the Streamlined Sales and Use Tax Agreement
(SSUTA), which is a multi-state effort to simplify and modernize the collection and administration of sales and use taxes. The adoption of the SSUTA resulted in significant changes in New Jersey’s tax policy and administration, including uniform product definitions and changes in the taxability of specific items. In addition, the SSUTA
provided for the creation of a new central registration system, certain amnesty provisions, and minor changes in the treatment of exemption certificates.
The rate of tax is 6.875% on taxable sales occurring on or after January 1, 2017. Formerly, the tax rate was 7%.
Disposition of Revenues
Revenues are deposited in the State Treasury for general State use.