SALES TAX TUESDAY 2018: New Jersey

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It’s hard to believe that it’s been 11 years since the end of television’s ‘The Soprano’s’ drama series about the fictional mobster Anthony J. Soprano, better known as ‘Tony’. The Soprano character was loosely based on real-life New Jersey mobster Vincent ‘Vinny’ Palermo (who became a ‘government informant and witness’ of the DeCavalcantes crime family operating in much of New Jersey including Atlantic City. 

The DeCavalcantes ‘territory’ essentially surrounded an area of New Jersey, inclusive of what is now J.F.K. International Airport, under the control of the infamous Lucchese crime family which also controlled various neighborhoods in New York City.  The movie ‘Goodfellas’ depicted one gang of the Lucchese family that was responsible for both Air France and Lufthansa Airlines robberies when the airport was formerly called New York International (commonly known as Idlewild).   

Where other than New Jersey could eight young people shacked up near a beach with names like ‘Snookie’, ‘JWOWW’, ‘Sammi Sweetheart’ and ‘The Situation’ make it big time for just being themselves, getting sauced, and generally doing nothing while collecting royalties and residuals from both their live and rerun television shows?

The reality is that every summer, thousands of kids flock to the Jersey Shore to take part in ‘whatever’ they can get into.  New Jersey officials do their best to cite the amazing ocean quality, swimming, fishing, boating and shore-side dining and recreation as the benefits of ‘the Jersey Shore.’

And when it comes to the Jersey shore, you can’t forget Atlantic City that I mentioned earlier in connection with the ‘Mafia’.  Did you know that ‘Park Place, Boardwalk, Marvin Gardens, Saint James Place, and numerous other ‘properties’ found on the board game ‘Monopoly’ all existed in Atlantic City at the time the game was invented.  Apparently so the phrase ‘Go to Jail, go directly to jail, do not pass Go, do no collect $200’ was coined there as well. 

One of the things you will find in New Jersey that they swear is better than anywhere including New York and Chicago is Pizza.  In fact, you will find almost as many pizza places in New Jersey as you will find ‘diners’…Jersey tourism advertises that the state has ‘more diners per person than anywhere else in the world!’ 

But guess what? Whether you are drinking-it up at a club with ‘Sammi and Situation’, or chowing down on a turkey blue plate at a Jersey diner, taking in the amusements on the Boardwalk, or spending the night in a swanky room at one of Atlantic City’s casino hotels, you will be paying State Sales tax of 6.625% at a minimum. Tack on 9% luxury tax on some sales, 3% tax on alcoholic beverages and a 1% room tax, plus local tourism, lodging, restaurant and amusement taxes and you may wish you only owed ‘the vig’ to a Mafia loan-shark.

And when it comes to making sure that every cent of sales tax is collected within New Jersey it might just be that the New Jersey Division of Taxation took collection lessons from their old Mafia buddies with one possible exception.  As it happens the State is preparing to offer a 'tax amnesty program' to encourage taxpayers with outstanding taxes to pay the taxes they owe before they send out 'their enforcers.' 

Their amnesty period will apply to taxes for periods from February 1, 2009 all the way through September 1, 2017.  The amnesty filing period will last only 90 days and taxpayers who apply for amnesty must file and remit their taxes in full by no later than November 1, 2018.  The savings comes in the form of only owing 1/2 (one-half) of any interest owed on the delinquent taxes. Penalties for collection costs, delinquency, late filing fees, late payment penalties, and recovery fees are all being waved as part of the amnesty program.  In other words, you still 'owe the man and owe 1/2 the Vig, but you won't get your legs broke too.'

All 'mafia joking aside folks' the New Jersey Amnesty Program offers an outstanding opportunity for delinquent taxpayers to pay the tax, save on interest and avoid collection hassles and penalties/fines.

Assuming you are 'paid up to date' on your sales taxes, then you problem know the specifics of New Jersey tax but just in case here are 'the fact':

  • New Jersey’s state sales tax rate is 6.625% as of January 1, 2018. It is one of the few single rate states that doesn’t allow local jurisdictions to impose sales tax.
  • The exceptions to the single-rate provision are Atlantic City, which has a 9% luxury tax on certain sales, a 3% tax on alcoholic beverage sales and a 1% tax on room rentals, and Cape May County which assesses a 2% tourism tax on lodging, restaurants, and amusements in addition to state sales tax.
  • New Jersey has 27 Urban Enterprise Zones covering economically distressed cities. Certified businesses within these zones pay a reduced sales tax and qualifying retailers may charge half the current sales tax rate or 3.44%.
  • New Jersey is a destination sourcing states. This means that sales tax is based on the location of the buyer, not the seller.
  • New Jersey is a member of Streamlined Sales Tax (SST)
  • Amazon.com owns and operates a fulfillment center in New Jersey. This likely creates nexus (a sales tax obligation) for sellers participating in Amazon’s Seller Central and Fulfillment by Amazon (FBA) programs.
  • Anyone making retail sales in the Garden State, including seasonal or “one-time” vendors, are required to register with the state.
  • Out-of-state businesses believing they do not have nexus in NJ must file form NJ-REG.
  • Sales and use tax returns must be filed electronically in New Jersey. It's not necessary to file and remit payments for periods in which less than $500 is due. Businesses that collected more than $30,000 in sales and use tax during the preceding calendar year must file monthly returns.

The reason states offer 'sales tax amnesty' programs is because so many businesses get into trouble failing to collect, track and properly remit sales taxes.  One reason for this failure is the sheer amount of work involved in administering sales tax properly within your own sales environment.  Knowing what to collect sales taxes on, know which taxes apply to which items, know when extra taxes should be applied, knowing where and when sales are exempt, and knowing where the applicable boundaries impacting sales tax liability exist.  Which sales tax applies to Park Place, as opposed to Boardwalk?

And then there is all this 'nexus business' and the recent Supreme Court Ruling related to internet sales across state borders. Here a nexus, there a nexus, everywhere a nexus, nexus. 

A little retailer can hardly do the work of keeping track of it all and that's where Avalara, the Sales Tax People can help. When the Sales Tax Enforcers come knocking at your door, who will be on your side?  When the guy on the phone tells you he doesn't need a sales tax exemption certificate, he is 'out of state', who are you going to believe?  When you miss-compute your taxable sales because you mistakenly coded a product in your accounting software, who is going to catch the mistake before the 'tax man' does?

This is exactly when you need the automated solutions that Avalara offers for small business. When it comes to sales tax compliance, no matter where you or your clients do business, and no matter where they are located, you can count on Avalara to  provide the most complete set of transaction tax compliance services available, including tax calculation, exemption certificate management, returns processing and 1099 filing and reporting. Automation via Avalara allows growing businesses to leverage limited resources of time and money to remain fully sales tax compliant without sacrificing productivity. Absolutely nobody knows sales tax better than Avalara.