New Jersey Provides Information on Revised UEZ Refund Filing Procedures

New Jersey has issued a revised sales and use tax notice informing taxpayers that as a result of legislation that became effective April 1, 2011, all Urban Enterprise Zone (UEZ) businesses are eligible to receive a sales tax exemption at the point of purchase regardless of annual gross receipts generated in the prior annual tax period. The changes permit any duly certified qualified UEZ business to claim a sales tax exemption at the point of purchase for eligible exempt purchases of tangible personal property and services that are used or consumed exclusively at the UEZ business location when an Urban Enterprise Zone Exempt Purchase Certificate (UZ-5) is issued to sellers. The law also sets forth two major changes in the UEZ refund process. First, all refund claims based on the UEZ purchase exemption are subject to a one year statute of limitations. The four year statute of limitations period for refund claims for the erroneous payment of sales or use tax no longer applies. Second, as of April 1, 2011, the one year statute of limitations no longer applies from the date of sale. Instead, the one year statute of limitations applies from the date of payment of the tax.

The following rules apply to transactions prior to April 1, 2011. For UEZ businesses that did not qualify for the point-of-purchase exemption (that were not small qualified businesses), refund claims may be filed for purchases having an invoice date on or before March 31, 2011. These claims may still be filed within one year from the date of sale using form A-3730-UEZ. UEZ businesses that did not qualify for the point-of-purchase exemption had a use tax obligation on purchases where sales tax was not charged and then had to file for a refund. A request for refund of use tax paid by a UEZ business not considered a small qualified business had to be filed within one year from the date of sale or from the date that items were removed from inventory. A UEZ business that was eligible for the point-of-purchase exemption but erroneously paid tax on UEZ exempt purchases could file a refund claim using Form A-3730 within four years of payment of the tax.

The following rules apply to transactions on and after April 1, 2011. Refund claims submitted by any qualifying UEZ business based on the sales and use tax purchase exemption should be filed using Form A-3730-UEZ. UEZ businesses that did not qualify for the point-of-purchase exemption no longer have a use tax obligation for UEZ eligible exempt purchases when no tax was collected or when tax was collected at a lower tax rate than New Jersey’s. Payments made to satisfy audit assessments are included in the shortened time period for filing refund claims. UEZ businesses that pay an assessment after April 1, 2011 have one year from the date of payment of the assessed tax to file a refund for any assessments paid for purchases that were eligible for exemption under the UEZ law. Refunds requested for erroneously paid tax are now subject to the shortened time period for filing refund claims. A UEZ taxpayer that improperly pays tax at the point of purchase after April 1, 2011 has one year from the date of payment of the tax to file a refund for any portion of the tax paid for eligible UEZ exempt purchases. Refund claims based on exemptions other than the UEZ purchase exemption may be submitted using Form A-3730 within four years of payment of the tax. The amended UEZ law does not affect the statute of limitations for filing a refund based on these exemptions. (Notice – Urban Enterprise Zones Refund Procedures Revised, New Jersey Division of Taxation, February 10, 2012)

Posted on May 21, 2012