New Jersey — Sales & Use Tax

New Jersey imposes a 6.625% sales tax on receipts from every retail sale of tangible personal property and specified digital products, whether for permanent use or less than permanent use. The tax also applies to receipts from enumerated services, including producing, fabricating, processing, printing, or imprinting tangible personal property or specified digital products; installing, maintaining, servicing, or repairing tangible personal property or specified digital products not held for sale; telecommunications services; specified utility services; maintaining, servicing, or repairing motor vehicles and machinery; storage services; certain parking and garage services; and certain other enumerated services. The 6.625% rate has been in effect since January 1, 2018, when it was reduced from 6.875%.

Source: N.J.S.A. 54:32B-3

Effective November 1, 2018, a remote seller that makes retail sales of tangible personal property, specified digital products, or taxable services delivered into New Jersey must register, collect, and remit sales tax if the seller meets either of the following criteria during the current or prior calendar year: (1) gross revenue from such sales exceeds $100,000, or (2) the seller made 200 or more separate transactions of such sales delivered into the state. A remote seller that does not meet either threshold is not required to register with New Jersey. When calculating the $100,000 gross revenue threshold, all sales delivered into New Jersey are included, including nontaxable retail sales; sales for resale, however, are excluded because the Sales and Use Tax Act does not define them as retail sales. Once a remote seller meets the economic threshold, the seller must register and begin collecting tax on subsequent transactions, subject to a grace period of up to 30 calendar days; the seller is not required to collect tax on the specific transaction that caused the threshold to be exceeded.

Source: Remote Sellers information page, New Jersey Division of Taxation and Remote Sellers FAQ

Effective November 1, 2018, a marketplace facilitator must collect and remit New Jersey sales tax on retail sales of tangible personal property, specified digital products, and taxable services made through its marketplace and delivered into New Jersey. The facilitator must collect tax regardless of whether the marketplace seller is registered or would have been required to collect tax if the sale had not been facilitated through the marketplace. Marketplace sellers are relieved of the obligation to collect tax on transactions when the facilitator is required to collect it.

Source: P.L. 2018, c. 132 and Remote Sellers FAQ, New Jersey Division of Taxation

All registered sellers must file quarterly sales tax returns (Form ST-50) due by the 20th day of the month following the quarter. If the due date falls on a weekend or legal holiday, the return is due the next business day. Sellers must also make monthly payments (Form ST-51) for the first and second months of each quarter if they (1) collected more than $30,000 in sales tax during the prior calendar year and (2) collected more than $500 in the month. Monthly payments are due by the 20th of the following month. Returns must be filed even if no tax is due.

Source: Filing and Remitting Sales and Use Tax, NJ Division of Taxation

Sales for resale are exempt from New Jersey sales tax when the purchaser provides a fully completed resale certificate (Form ST-3) to the seller. Registered sellers who accept a fully completed exemption certificate within 90 days of the date of sale are relieved of liability for collecting sales tax on those transactions, even if the purchaser improperly claimed the exemption, in which case the purchaser becomes liable for the unpaid tax. Sellers must retain exemption certificates for at least four years from the date of the last sale covered by the certificate.

Source: Form ST-3, New Jersey Division of Taxation and Tax Topic Bulletin S&U-6, Sales Tax Exemption Administration

New Jersey imposes sales tax on "specified digital products," defined at N.J.S.A. 54:32B-2(zz) as electronically transferred digital audio-visual works, digital audio works, and digital books. The term "specified digital product" replaced the prior term "digital property" effective May 1, 2011, as part of New Jersey's conformity with the Streamlined Sales and Use Tax Agreement (SSUTA), though the substantive taxability treatment remained consistent with the rule in effect since October 1, 2006.

Definition components: A digital audio-visual work means a series of related images which, when shown in succession, impart an impression of motion, together with accompanying sounds, if any (N.J.S.A. 54:32B-2(aaa)). A digital audio work means a work that results from the fixation of a series of musical, spoken, or other sounds, including a ringtone (N.J.S.A. 54:32B-2(bbb)). A digital book means a work that is generally recognized in the ordinary and usual sense as a book (N.J.S.A. 54:32B-2(ccc)). A ringtone is separately defined as a digitized sound file that is downloaded onto a device and that may be used to alert the purchaser with respect to a communication (N.J.S.A. 54:32B-2(eee)).

Transfer requirement: "Transferred electronically" means obtained by the purchaser by means other than tangible storage media (N.J.S.A. 54:32B-2(ddd)). The taxable event turns on whether the product is delivered electronically to the customer at a New Jersey address. Specified digital products are subject to sales tax when the property is electronically delivered to the customer at an address in New Jersey, or when the seller's business records or the billing address provided by the purchaser during the sale indicate a New Jersey billing address. For example, if a New Jersey resident traveling in another state downloads music to a hand-held electronic device, the sale is subject to New Jersey sales tax because the customer's billing address is in New Jersey.

Access-only exemption — the critical distinction: Receipts from sales of a specified digital product that is accessed but not delivered electronically to the purchaser are exempt from tax under N.J.S.A. 54:32B-8.56. New Jersey does not tax digital property that is simply streamed or uploaded temporarily to a consumer to allow access to digital content; tax applies only when the customer receives permanent or less-than-permanent possession by electronic transfer. This exemption was codified in 2011 to clarify that mere access — for instance, streaming video or music without download — does not constitute a taxable transfer of a specified digital product. The statutory exemption for accessed-but-not-delivered products directly affects the treatment of cloud-based services: if a customer only accesses content hosted remotely and does not download or receive an electronic transfer, the transaction falls outside the specified-digital-product tax base.

Permanent vs. less-than-permanent use: Specified digital products are subject to tax regardless of whether the sale is for permanent use or less-than-permanent use, and regardless of whether continued payment for the product is required. The temporary nature of a license or subscription does not render a delivered digital product exempt.

Products explicitly excluded from "specified digital product": The definition does not include video programming services, including video-on-demand television services, and broadcasting services, including content to provide such services; these are statutorily exempt under N.J.S.A. 54:32B-8.55. Nor is tax imposed on other types of property delivered electronically that do not fall within the three enumerated categories (digital audio-visual work, digital audio work, digital book), such as digital photographs, digital magazines, and digital newspapers sold by subscription. These items are not specified digital products and are therefore not subject to tax under this provision.

Related services: Receipts from installing, maintaining, servicing, or repairing specified digital products are also subject to sales tax under N.J.S.A. 54:32B-3(b)(2). For example, if a company charges to load digital music onto an electronic device such as an MP3 player, the service of installing the music is taxable, in addition to the music itself.

Software as a Service (SaaS) and cloud computing distinction: SaaS and cloud computing services are generally not specified digital products because they do not fit within the three enumerated categories (audio-visual work, audio work, book). The Division of Taxation has stated in letter rulings that web-hosted services where software is only accessed by the user and not delivered or transferred to the user are not subject to sales and use tax. However, if a SaaS product constitutes an "information service" under N.J.S.A. 54:32B-3(b)(4) — defined as the furnishing of general or specialized news or other current information, including financial information, compilations, or the like — it may be taxable on that separate basis. The SaaS versus information-service classification is fact-specific and turns on whether the service provides access to curated information (taxable as an information service) or provides software functionality (generally exempt unless it is a specified digital product delivered to the customer).

Source: Tax Topic Bulletin ANJ-27, Specified Digital Products & New Jersey Sales Tax and NOTICE — Amendments to the Sales and Use Tax Act, effective May 1, 2011

Every vendor doing business in New Jersey must register with the state at least 15 business days before engaging in business activity. This advance-registration requirement applies regardless of whether the vendor has a physical presence in New Jersey or meets the state's economic nexus thresholds as a remote seller. Registration is accomplished by filing a Business Registration Application (Form NJ-REG) online with the Division of Revenue and Enterprise Services or by paper submission.

Who must register. The registration obligation applies to any person or entity making retail sales of tangible personal property, specified digital products, or taxable services delivered into New Jersey. "Vendor" is defined broadly under the Sales and Use Tax Act to include individuals, corporations, partnerships, LLCs, and other legal entities. The requirement covers both in-state sellers with a physical location and remote sellers who exceed the state's economic nexus thresholds ($100,000 in gross revenue or 200 separate transactions delivered into New Jersey during the current or prior calendar year). Seasonal businesses, occasional vendors (such as artists selling at periodic craft shows), and one-time vendors participating in events such as flea markets must also register if they are regularly engaged in the business of selling taxable property or services, even if those sales occur only a few times per year. By contrast, a "casual sale"—defined as an isolated or occasional sale of tangible personal property purchased for the seller's own use (for example, a one-time yard sale of household items)—is not subject to tax and does not trigger a registration obligation.

Certificate of Authority. When a registrant indicates on Form NJ-REG that it will collect sales tax or purchase materials for resale, the Division of Revenue and Enterprise Services issues a Certificate of Authority (Form CA-1). This certificate is the registrant's legal authorization to collect New Jersey sales tax and to issue or accept exemption certificates. The certificate must be displayed prominently at the business location where customers can see it at all times; for vendors operating at multiple locations (such as a flea-market concessionaire who also has a permanent shop), a duplicate Certificate of Authority should be obtained for display at each site. Certificates of Authority are nontransferable and nonassignable.

Pre-registration requirements for entities. Any domestic or foreign corporation, limited partnership, limited liability company, or limited liability partnership that has tax nexus in New Jersey must first obtain legal authority to operate in the state before submitting Form NJ-REG. This is generally accomplished by filing a Certificate of Incorporation or Formation with the Division of Revenue; for foreign entities, an Application for Authority to do business in New Jersey is required. Individuals and unincorporated construction contractors with no business-tax or employer obligations may use a simplified Form REG-A instead of Form NJ-REG to obtain a Business Registration Certificate, though individuals who have created and are operating as a business entity (for example, an LLC) may not use Form REG-A.

Business Registration Certificate distinguished. In addition to the Certificate of Authority for sales-tax collection, registrants receive a Business Registration Certificate (BRC) after completing Form NJ-REG. The BRC serves a distinct administrative purpose: it is proof of valid registration with the state and is required for contractors and subcontractors doing business with New Jersey public agencies and the casino service industry under N.J.S.A. 54A:7-1.2 (Chapter 85, P.L. 2006). The BRC is not required for all businesses—only those contracting with the public sector or the casino industry—but every vendor that collects sales tax receives both the BRC and the separate Certificate of Authority. When registering online, the BRC is available for immediate printout, with a paper copy mailed within a few weeks; the BRC includes a control number used solely to verify that the certificate is current.

Timing and penalties. The 15-business-day advance-registration requirement is strictly enforced. Operating without a Certificate of Authority after triggering nexus exposes the seller to back taxes, penalties, and interest from the date nexus was established, not the date the seller registered. Remote sellers who cross the economic-nexus threshold must register and begin collecting tax on subsequent transactions; they are not required to collect tax retroactively on the specific transaction that caused the threshold to be exceeded, but they must register promptly and may receive a grace period of up to 30 days to complete registration. Failure to register before making taxable sales can result in civil penalties, and the Division of Taxation may assess tax, penalty, and interest on unreported sales going back to the date the vendor first had a collection obligation.

Streamlined Sales Tax registration option. New Jersey is a member state of the Streamlined Sales and Use Tax Agreement (SSUTA). Remote sellers, marketplace sellers, and marketplace facilitators may register through the central Streamlined Sales Tax Registration System (SSTRS) instead of filing Form NJ-REG directly with New Jersey. SSTRS registration is accepted as equivalent to direct state registration and allows multistate sellers to register in multiple SSUTA member states through a single online portal.

Source: NJ Division of Taxation — Information For Vendors Source: Tax Topic Bulletin S&U-9, Business Purchases Source: NJ Division of Taxation — Promoter/Event Organizer & Vendor Q&A