RATE OF SALES TAX:
6.625%
LOCAL & COUNTY MAXIMUM RATES:
3.313%
Table of Contents
What are the taxable goods and services?
The first step in sales tax compliance is determining if the items or services your firm offers are taxable in New Jersey.
Traditional Products and Services
Physical property, such as furniture, household appliances, and automobiles, is subject to sales tax in New Jersey.
Prescription and non-prescription medication, food, fuel, and apparel are all tax-free.
In New Jersey, certain services are subject to sales tax. View this PDF from the New Jersey Division of Taxation website for a complete list of taxable services.
Digital Products and Services
A digital item or service is anything that is supplied electronically, such as a music downloaded from iTunes or a movie bought from Amazon.
Businesses in New Jersey are required to collect sales tax on the sale of digital products or services.
How to Register for Sales Tax in New Jersey
If you have concluded that you must charge sales tax on part or all of the products and services that your company sells, the next step is to apply for a seller’s licence.
This enables your company to collect sales tax on behalf of the municipal and state governments.
You will need the following information to register:
Federal Identification Number SSN Name Trade Name Ownership Type
New Jersey Business Regulations
Information about the owner, partnership, and corporate officers
Other general information (if the business is seasonal, entity, subsidiary, info about what you sell, etc.)
A Resale Certificate might help you save money.
When acquiring items for resale, your firm does not have to pay sales tax if you obtain a resale certificate, also known as a reseller’s permit.
Sales Tax Collection
After obtaining your seller’s licence and starting your company, you’ll need to figure out how much sales tax to charge various consumers. It is critical for company owners to collect the right rate of sales tax to avoid penalties and the danger of expensive audits.
When computing sales tax, consider the following types of transactions:
Store Sales Shipping Within-State Sales Outside-State Sales
Retail Sales
For conventional company owners who sell products or services on-site, calculating sales tax is simple: all sales are taxed at the rate determined by the store’s location.
Here’s an illustration of how this situation may look:
In Trenton, New Jersey, Mary owns and operates a bookshop. Because books are taxed in the state of New Jersey, Mary charges a flat 6.875% sales tax on all purchases.
Sales inside the state
New Jersey has what is known as a destination-based sales tax regime. This implies that long-distance transactions inside New Jersey are taxed based on the buyer’s address. This regulation applies to sales taxes levied by the state, county, and city.
Consider the following scenario:
Steve operates his own eBay electronics company from his home in Clinton, New Jersey. A buyer from Jersey City discovers Steve’s eBay website and buys a $350 set of headphones. Steve uses the 3.500% lower state tax rate for a New Jersey Urban Enterprise zone when computing the sales tax for this transaction. With no additional kinds of New Jersey sales tax, the total cost is $362.25 ($12.25 sales tax).
Out-of-State Purchases
Businesses in New Jersey must only pay sales tax on out-of-state sales if they have nexus in other states.
Nexus indicates that the company has a physical presence in another state.
Common nexus types include:
A physical place, such as an office, retail shop, or warehouse.
An employee who works from home or as a roaming sales representative.
An affiliate marketer
Dropshipping from a third-party vendor.
A temporary physical site, such as a festival or fair booth.
Submit Your Sales Tax Return
You’re ready to submit your sales tax return now that you’ve obtained your New Jersey seller’s permit and understand how to charge the correct amount of sales tax to all of your customers. You avoid penalties and fines, be sure to meet all filing dates.
How to File a Claim
Businesses in New Jersey are required to file sales tax forms and make sales tax payments online.
How Frequently Should You File?
The frequency with which you must submit is determined by the total amount of sales tax collected by your firm.
Quarterly filing: If your company receives less than $500.00 in sales tax every month, you should submit returns on a quarterly basis.
Monthly filing: If your company receives $500.00 or more in sales tax every month, you must submit returns on a monthly basis.
Deadlines for Filing
The deadline for all New Jersey sales tax returns is the 20th of the month, unless it is a weekend or federal holiday, in which case the deadline is postponed to the following working day.
Penalties for Filing Late
Late filing penalties in New Jersey are $100 + 5% every month or partial month, up to a maximum of 25% of the tax stated on the tax return.
In addition, New Jersey imposes a late payment penalty of 5% of the unpaid tax.
For any unpaid tax or penalty, the state assesses a compounded interest rate of 3% per year.