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Section 308 of the Streamlined Sales and Use Tax Agreement (“SSUTA”) prohibits members from having multiple sales and use tax rates. Therefore, the Compliance Review and Interpretations Committee (“Committee”) conducted a hearing on July 17, 2008 to determine if New Jersey was out of compliance with the SSUTA for having a gross receipts use tax rate imposed on fur (6%) which differs from the sales and use tax rate (7%). Clothing, including fur clothing, is exempt from sales and use tax; however, in another section of New Jersey statutes, a gross receipts and gross receipts use tax on fur clothing is imposed at a rate of 6%. The sales and use tax and the gross receipts and gross receipts use tax are determined to be separate and distinct taxes. Since they are different tax types, the gross receipt tax is not governed by the SSUTA and, on July 17, 2008, the Committee concluded that the Governing Board should find New Jersey in substantial compliance with the SSUTA and not in violation of Section 308. (Streamlined Sales and Use Tax Agreement Compliance Review and Interpretation Committee, Compliance Determination 2008-02, New Jersey


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)


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)


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)


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)



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