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Legislation has been enacted that amends New Jersey sales and use tax laws to conform with various changes to the Streamlined Sales and Use Tax (SST) Agreement.
Fur Clothing
The bill repeals the 6% gross receipts tax on retail sales of fur clothing and replaces it with a 7% sales and use tax on "fur clothing" as that term is defined in the Agreement.
Telecommunications
The legislation revises and replaces current telecommunications definitions with the defined terms provided under the Agreement. Specifically, the bill does the following:
-- replaces the current sales and use tax definition of "telecommunications"" with a more specific, narrowly focused definition of "telecommunications services;"
-- redefines "intrastate" and "interstate" telecommunications;
-- revises "pre-paid calling" and "mobile telecommunications" services definitions; and
-- incorporates a series of previously undefined terms, including "international telecommunications," "ancillary service," "directory assistance," and "voice mail service," into the statute of defined terms.
The bill also eliminates the current statutory language imposing tax on mobile telecommunications and certain prepaid calling services, and explicitly imposes tax on telephone answering and radio subscription services. These changes do not extend the base of the sales and use tax to new services or omit previously taxed telecommunications from coverage.
In addition, the bill makes certain other telecommunications changes that allow New Jersey to incorporate SST provisions within the state's existing telecommunications framework. These changes include:
-- the adoption of the SST administrative rule for unbundling taxable and nontaxable components of a sale of mixed telecommunications services;
-- the clarification of imposition of use tax on radio subscription services;
-- the reorganization of the telecommunications definition that requires the deletion of a use tax measurement rule for prepaid calling services;
-- a provision to make explicit the "purchase for resale" exemption for purchases of telecommunications services for use as a component part of telecommunications services provided to a final end user;
-- an exemption for certain "in house" use of telecommunications services; and
-- a full exemption for receipts from coin-paid sales of telecommunications services using pay phone devices.
Other Changes
The bill also does the following:
-- amends the direct mail definitions to allow for the continuation of taxation on mail processing services;
-- eliminates the differentiation between sales of food, food ingredients, and dietary supplements sold in liquid or solid form;
-- narrows a broad limitation affecting all medical equipment to affect only certain medical supplies, while limiting the exemption for mobility enhancing equipment to that sold by prescription;
-- modifies the definition of "sales price" to codify the current policy on the effect of coupons and rebates;
-- incorporates use tax provisions for delivery charges made by a seller; and
-- repeals the multiple points of use (MPU) exemption.
Technical Revisions
The bill makes certain technical modifications to eliminate inconsistencies and clarify omissions related to previous statutory revisions. These modifications and clarifications extend to:
-- the research and development exemption to explicitly include receipts from sales of digital property;
-- the business prewritten software exemption to eliminate contradictory language concerning prewritten computer software delivered electronically;
-- administrative provisions regarding tax records to lengthen the time period for maintaining tax records from three to four years;
-- an extension of the current hold harmless provisions for vendors to certain purchasers who rely on tax rates, boundaries, or the taxability matrix provided by the state; and
-- administrative provisions concerning the collection and return of tax to stipulate the process of collecting and providing returns for tax imposed on charges in the nature of initiation and membership fees and dues, as well as charges for parking, storing, or garaging motor vehicles.
Subscribers to CCH Tax Research NetWork can view the Senate Budget and Appropriations Committee Statement.
Ch. 123 (A.B. 3111), Laws 2008, effective December 19, 2008, applicable January 1, 2009; Senate Budget and Appropriations Committee Statement, December 11, 2008
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