Note: This updates the notice Information for Direct Mail Vendors: Charges for Postage issued on September 27, 2006.
New Jersey imposes sales tax on sales of printed advertising material as well as printed advertising material processing services; however, there is an exemption for printed advertising material delivered to out-of-State recipients, as well as for the processing services performed in connection with such material. N.J.S.A. 54:32B-8.39; N.J.S.A. 54:32B-3(b)(5). Processing services are described as addressing, separating, folding, inserting, sorting and packaging advertising material, and transporting to the point of shipment. N.J.S.A. 54:32B-8.39.
The Sales and Use Tax Act defines "sales price" in N.J.S.A. 54:32B-2(oo) as:
… 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:
The law defines "delivery charges" as charges by the seller for preparation and delivery to a location designated by the purchaser of personal property or services including, but not limited to, transportation, shipping, postage, handling, crating, and packing. N.J.S.A. 54:32B-2(rr). If a shipment includes both exempt and taxable property, the seller should allocate the delivery charge by using either (1) a percentage based on the total sales price of the taxable property compared to the total sales price of all property in the shipment; or (2) a percentage based on the total weight of the taxable property compared to the total weight of all property in the shipment. N.J.S.A. 54:32B-2(rr). Thus, only the portion of the delivery charge that relates to the taxable property or services is subject to tax.
Since the definition of delivery charges includes postage and postage is the means by which printed advertising material is delivered, postage is part of the sales price. N.J.S.A. 54:32B-2(rr). Thus, postage charged to a customer as part of a receipt for printed advertising material and processing services is not taxable when the material is delivered out-of-State. N.J.S.A. 54:32B-8.39. However, since "postage" is specifically included in the definition of delivery charges, the postage expense for printed advertising material and processing services is part of the taxable sales price when the material is delivered to a location in this State.
Because delivery charges only refer to charges made by the seller of goods and services, the purchase of postage directly from the United States Postal Service ("USPS") is not taxable.