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Information on
Novel Coronavirus

Have questions about COVID-19?
The NJ Poison Control Center and 211 have partnered with the State to provide information to the public on COVID-19:
Call: 2-1-1 for general information (24/7) or 1-800-962-1253 for medical information (24/7)
Text: NJCOVID to 898-211
Visit covid19.nj.gov or nj.gov/health for additional information

Division of Taxation

COVID-19 Related Tax Information
Information about the Federal Economic Impact Payment – Stimulus Check
Important Information About Retail COVID-19 Fees and Sales Tax

NOTICE: Sales Tax and Surcharges for COVID-19 Precautions

Some businesses have begun to include a surcharge for COVID-19 precaution and prevention costs (e.g., COVID-19 Fee, Coronavirus Fee, PPE Fee, Sanitation Fee, Cleaning Fee, etc.) on customers' invoices. Determining if the surcharge to cover COVID-19 costs, such as masks, gloves, and cleaning supplies, is subject to Sales Tax depends on whether the service provided or the product sold by a business is taxable.

The definition of "sales price," which is set forth at N.J.S.A. 54:32B-2(oo)(1) states that:

  1. (1) Sales price is the measure subject to Sales Tax and means the total amount of consideration, including cash, credit, property, and services, for which personal property or services are sold, leased, or rented, valued in money, whether received in money or otherwise, without any deduction for the following:
    • (A) The seller's cost of the property sold;
    • (B) The cost of materials used, labor or service cost, interest, losses, all costs of transportation to the seller, all taxes imposed on the seller, and any other expense of the seller;...

A separately stated surcharge, regardless of what it is called, to cover the cost of COVID-19 precautions is an expense that a seller incurs in order to perform a service or sell a product. As the surcharge is part of the sales price, the taxability of a COVID-19 precautions surcharge depends on the taxability of the service provided or the product sold. Thus, if a service or product a business is offering is not subject to Sales Tax, then the COVID-19-related surcharge is also not subject to tax. If the transaction is for a service or product that is subject to Sales Tax, then the COVID-19-related surcharge is subject to tax.

Examples:

  • A restaurant adds a "COVID-19 Fee" to a customer's bill for meals and beverages to cover the costs of personal protective equipment and sanitation supplies used by employees. When this expense is passed along to the customer, it becomes part of the sales price, regardless of whether it is included in a lump-sum charge for the product or as an itemized surcharge because it is part of the restaurant's overhead cost. Therefore, since the meals and beverages are taxable, the COVID-19 Fee is also taxable.
  • A hair salon adds a "Coronavirus Fee" to a customer's bill for a haircut and color services to cover the costs of personal protective equipment and sanitation supplies used by employees. When this expense is passed along to the customer, it becomes part of the sales price, regardless of whether it is included in a lump-sum charge for the sale or separately itemized to the customer, because it is part of the hair salon's overhead cost. Therefore, since the haircut and color services are not subject to Sales Tax, the Coronavirus Fee is also not subject to tax.
  • A dentist office adds a "PPE Fee" to a patient's bill to cover the costs of personal protective equipment used by employees. When this expense is passed along to the customer, it becomes part of the sales price, regardless of whether it is included in a lump-sum charge for the product or as an itemized surcharge because it is part of the dentist office's overhead cost. Therefore, since the dental service is not taxable, the PPE Fee is also not taxable.

Last Updated: Friday, 07/24/20