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During the June 18th, 2008 Chicago SST Governing Board meeting, New Jersey was found to be out of compliance with the Streamlined Sales and Use Tax (SST) Agreement. By a vote of 15-2, the Board found that New Jersey was not in substantial compliance with the Agreement because of its failure to enact certain telecommunication provisions. By a unanimous vote, the Board approved a set of staggered sanctions: 1) if New Jersey does not come into compliance by January 1, 2009, it will lose its right to vote on amendments to and interpretations of the Agreement and determinations of whether a petitioning state is in compliance; 2) if not compliant by July 1, 2009, sellers will be relieved of the obligation to collect sales and use taxes on sales into New Jersey, if they are collecting on a voluntary basis solely because of their registration under the Agreement; and 3) if still non-compliant after January 1, 2010, the Board will consider additional sanctions, including expulsion. Once the Board has approved a finding made by the Compliance Review and Interpretations Committee (CRIC) that New Jersey is in compliance with the agreement the above sanctions will end. Additional rules apply. (Streamlined Sales Tax Governing Board and State and Local Advisory Council Meetings, Chicago, June 16-18, 2008)

(08/07/2008)

Sales tax assessments on food items sold by certain New Jersey vendors operating kiosks and free-standing carts at a sports complex and mall were upheld in a recent court case. The Court indicated that the interpretation of “premises” includes the area in which customers had to enter to make their food purchases and that “for consumption on the premises” was based on their suitability for immediate consumption at the particular location. Also, the definition of “premises” focused on the location from which customers could make their purchases, rather than on whether particular areas within a larger facility were under the vendor’s exclusive control (as the taxpayers argued). (Campo Jersey, Inc. v. Division of Taxation, New Jersey Superior Court, Appellate Division, No. A-5384-04T5)

(03/30/2008)

New Jersey sales and use tax regulations disqualified a laboratory’s purchases of vacutainers (sealed test tubes used to collect blood or other specimen samples) from exemption because they did not qualify as “nonreturnable containers” or “other wrapping supplies” as indicated by the taxpayer. Although the vacutainers served as containers in which samples are transported to the laboratory, and once punctured or filled with blood they were not reusable, they were still considered returnable containers. The exemption statute dictates that vacutainers are subject to tax, even though they are an essential part of the operation and function of the laboratory’s business. (Quest Diagnostic, Inc. v. Division of Taxation, New Jersey Superior Court, Appellate Division, No. A-0901-04T2)

(02/13/2007)

Charges for furnishing of space for storage of tangible personal property by a person engaged in the business of furnishing space became taxable effective October 1, 2006. Additionally, charges for the service of storing all tangible personal property not held for sale in the regular course of business and the rental of safe deposit boxes remain subject to tax. The difference is that the new law extends tax to transactions where the facility merely provides the space, but not to services. However, charges for storage space that is used to store property that is held for sale is not subject to sales tax. (New Jersey Division of Taxation, Tax Notes, December 19, 2006)

(02/13/2007)

As a revision to its notice regarding the taxability of information services, which became taxable effective October 1, 2006, the state modified its position with respect to businesses operating as an application service provider (ASP) which provides access to software and services on a monthly basis. The state indicated that this is not an example of a service that is considered an “information service”, but rather it is a license to use prewritten computer software delivered electronically. (Tax Notes, Information Services, New Jersey Division of Taxation, January 22, 2007)

(02/09/2007)

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