Sales Tax Updates in New Jersey

Tax Professionals' Resource
November 9, 2012 — 1,345 views  
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Sales Tax Updates in New Jersey

Each state has a need for funding that is used towards supporting state workers, maintaining parks and wildlife reserves, as well as the upkeep of public schools. Sales and use tax is a major portion of this funding in most states. The amount of sales and use tax collected can vary from state to state. In New Jersey, with the exception of Urban Enterprise Zones, the 7% sales tax is collected by a seller from a customer for items or services sold. The seller then reports and submits the sales and use tax to the federal government, usually on a monthly or quarterly basis. Over time, sales and use tax amounts are updated depending on the state's funding needs.

The most recent update to the New Jersey sales tax is in regards to the Cooperative Interstate Tax Program in conjunction with New York sales. Under the program, New Jersey and New York vendors who participated and conducted sales across state lines were able to collect the other state's sales tax amount on taxable sales. The selling state would then report and submit the tax amount to the purchasing state. This program was ended in December of 2010 and the official cutoff date to report sales tax within the program was September 1, 2012. After the cutoff date, all sales tax collected from New York residents sales will be paid directly towards the state of New Jersey accounts. The same update pertains to use tax as well.
Many businesses may find this update confusing or simply may not be aware of the change at all. If a New Jersey vendor reports the sales tax collected to New York, as required under the old program, in error, the vendor must fill out and submit a claim for refund form A-3730. Since New York's sales tax amount is slightly higher by 1%, there will be an overpayment amount due for refund. This request for overpayment must then be submitted to the state of New Jersey for correction and refund.

Prior updates to New Jersey sales and use tax have included increases. The most recent increase to sales tax in New Jersey was in 2006 from 6% to 7% due to a state budget dispute. This increase was in addition to Atlantic City's luxury tax and Cape May's tourism sales tax increases. These increases and updates may seem harsh to many business owners who battle with the decision of taking a hit or charging more to compensate, however when a need for the funds arises, there are very few alternate options.

 

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