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New Jersey Sales Tax 2022 for Businesses: A Complete Guide

“The sales tax for businesses in New Jersey is 6.625%”

What Does The New Jersey Sales Tax For Businesses Mean?

Sales tax is a tax levied on the sale of certain products and services and paid to the government (local or state). In 1935, New Jersey enacted a general state sales tax at a rate of 2%, but it was quickly overturned. It was reinstated in 1966 at a rate of 3%, and the base sales tax rate has subsequently climbed to 6.625 percent. Although certain locations may impose special luxury or tourism sales taxes, New Jersey does not allow the imposition of local sales taxes in general.

When you offer taxable goods or services, you function as an agent for the state of New Jersey, collecting tax from customers and remitting it to the proper tax authorities. New Jersey’s sales and use tax are administered by the New Jersey Division of Taxation as of March 2019.

The state of New Jersey owns any sales tax received from customers, not you. It is your responsibility to keep track of the taxes you collect in accordance with state and municipal regulations. Penalties and interest charges may be imposed if this is not done.

How Much Is The Sales Tax For Businesses In New Jersey?

The current Sales Tax rate is 6.625 percent, with the rate in specifically designated Urban Enterprise Zones being half that. Food, clothing, pharmaceuticals, and manufacturing/processing apparatus and equipment, for example, are exempt from sales tax. The hotel room occupancy tax is 5%, however, occupancies of 90 days or more are exempt.

New Jersey Sales TaxThreshold Limit
6.625%$100,000 economic sales threshold limit and 200 transaction threshold limit

Read More: Illinois Sales Tax 2022 For Businesses: A Complete Guide

Do You Need To Collect New Jersey Sales Tax For Your Ecommerce Business?

If you have a nexus in New Jersey, you must collect sales tax. The nexus of a seller to a state can be either physical or economic. An entity must have a physical presence in a state in order to justify paying sales tax there. An economic nexus occurs when a company’s total income or a number of transactions exceeds the threshold of a given state.

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By the end of this Strategy Session, you will have a clear understanding of the next steps you can take for your business to take advantage of the tax deductions you are missing out on.

Therefore, this is what the New Jersey sales tax for eCommerce businesses is all about. Now the question arises: what types of goods and services are taxable under New Jersey sales tax? Let’s see.

What Types Of Goods and Services Are Taxable in New Jersey?

The first step in sales tax compliance is determining if your company’s products or services are taxable in New Jersey.

Traditional Goods or Services

Physical items, such as furniture, home appliances, and automobiles, are all subject to sales tax in New Jersey.

Tax-free purchases include prescription and non-prescription medicine, groceries, gasoline, and apparel.

Also, in New Jersey, some services are subject to sales tax as well. 

Digital Goods or Services

A digital good or service is anything that is delivered electronically, such as an album downloaded from iTunes or a video purchased from Amazon.

Businesses in New Jersey are required to collect sales tax on digital goods and services.

Therefore, if you are dealing in any of these goods or services, you are subject to a sales tax in New Jersey. Now let’s move on to see the tax collection and tax filing procedure in New Jersey.

Tax Collection

Once you get your seller’s permit and start your business, you’ll need to determine how much sales tax to charge different clients. To avoid fines and costly audits, it is crucial for business owners to collect the correct rate of sales tax.

Among the types of purchases that must be included in sales tax calculations are:

  • State Sales- Calculating sales tax for traditional business owners selling goods or services on-site is simple: all sales are taxed at the rate determined by the store’s location.
  • In-state Sales- New Jersey’s sales tax regime is known as destination-based sales tax. This means that long-distance sales in New Jersey are taxed based on the buyer’s address. State sales taxes, county sales taxes, and city sales taxes are governed by this regulation.
  • Out-of-state Sales- Businesses with a nexus in another state must pay sales tax only on out-of-state transactions. The term “nexus” refers to a company’s physical presence in another state.

Tax Filing

You’re ready to file your sales tax return now that you’ve applied for your New Jersey seller’s permit and learned how to charge the correct amount of sales tax to all of your clients. You avoid penalties and fines by adhering ti all filing deadlines.

Businesses in New Jersey are required to file sales tax forms and make sales tax payments online.

How often do you need to file the sales tax return in New Jersey?

This basically depends on the total amount of sales tax your business collects.

  • Quarterly filing- If your company receives less than $500.00 in sales tax every month, you should choose to file returns on a quarterly basis.
  • Monthly filing- If your company receives $500.00 in sales tax per month or more, you should file returns on a monthly basis.

What If You Fail To File The Tax Return Before The Deadline?

Filing Deadline

Unless there is a weekend or federal holiday, all New Jersey sales tax return deadlines fall on the 20th day of the month. If there is a weekend or federal holiday, the deadline is pushed back to the next working day.

Penalty For Late Filing

A late filing penalty of $100 + 5% every month or partial month, up to a maximum of 25% of the tax recorded on the tax return, is imposed by New Jersey.

New Jersey additionally imposes a late payment penalty of 5% of the unpaid tax.

For any unpaid tax or penalty, the state imposes a compounded interest rate of 3% per year to the state.

Need Assistance With New Jersey Sales Tax

You are welcome to contact us with any questions you may have regarding the New Jersey Sales Tax in 2022. FreeCashFlow is a tax and accounting firm in Los Angeles, California, with over 20 years of experience. With our tax and accounting services, we will be able to assist you in the best way possible.

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