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Updated
January 22, 2024
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Navigating sales tax compliance can be a complex task for businesses selling products or services in New Jersey. Failure to adhere to the state's sales tax laws and regulations can lead to penalties, interest charges, and other unnecessary costs.
This article provides an in-depth overview of New Jersey sales tax rules to help your business stay compliant and avoid issues with the state tax authority.
The New Jersey sales tax rate in 2023 is 6.625%. This comprises a base rate of 6.625% with no mandatory local rate. New Jersey does not have local sales tax jurisdictions, so the total tax rate remains 6.625% across the state.
New Jersey does not have local sales tax rates. The state-wide rate of 6.625% applies uniformly across all cities and counties.
The sales tax rate in New Jersey is 6.625% statewide. There are no local rates.
To calculate the sales tax on a $100 purchase in New Jersey, you would do the following:
Tax = 6.625% x $100 = $6.625.
New Jersey uses destination-based sales tax. Charge the rate based on where the customer is located.
Yes, New Jersey is a Streamlined Sales and Use Tax Agreement member. This simplifies sales tax compliance for businesses.
To be considered engaged in business, you need to meet specific criteria. These are known as nexus thresholds. If you reach nexus, it becomes mandatory to register for a sales tax license in the state.
Registering for a New Jersey sales tax license is free. You can apply for the permit online through the New Jersey Division of Taxation's website. There are no upfront fees for the application process. However, it's crucial to maintain compliance with filing and payment deadlines to avoid any penalties or fees in the future.
New Jersey wholesalers still need a seller's permit. This allows you to collect sales tax from customers when you make retail sales. You also use the permit to give suppliers a resale certificate, so you don't pay sales tax on items for resale.
Even temporary sellers in NJ need a seller's permit. This includes vendors at trade shows, craft fairs, or other short-term events in the state. The permit lets you legally collect and remit NJ sales tax on your sales.
Let’s start with a list of taxable products and services in New Jersey.
No, most groceries purchased for human consumption are not subject to sales tax in New Jersey.
No, most articles of clothing are exempt from sales tax in New Jersey.
Digital products that can be delivered electronically (ebooks, courses) are taxable in New Jersey. However, if the product can only be accessed and not delivered, you do not need to charge sales tax.
Software-as-a-service (SaaS) does not fall under the state's definition of an enumerated or taxable information service. New Jersey has stated that SaaS is exempt from sales tax unless the service meets the specific criteria to be classified as a taxable information service.
Excise taxes apply to specific goods or services in New Jersey. Discretionary taxes are local taxes that vary by city.
Here’s a list of excise taxes in New Jersey
Alcoholic Beverage Tax
Cigarette Tax: $2.70 per pack
Litter Control Fee
Motor Fuels Tax
Prearranged Ride Surcharge
Social Equity Excise Fee (SEEF): Cannabis – $1.52 per ounce
New Jersey does not have a general sales tax on food and beverages. However, there are excise taxes on some specific items like alcoholic beverages.
Remote sellers are subject to New Jersey sales tax if they meet the economic nexus threshold of $100,000 in annual sales or 200 separate transactions.
New Jersey does not have local sales taxes, but it does have Urban Enterprise Zones, where qualified businesses can charge a reduced sales tax rate.
Now, let’s look at the steps to collect sales tax in New Jersey.
If you are located outside New Jersey but sell to NJ customers over the $100,000 or 200 transaction thresholds, you must collect and remit NJ sales tax.
Yes, in New Jersey, if the item sold is taxable in New Jersey, the shipping charge is also taxable. For mixed shipments of taxable and non-taxable items, the entire shipping charge is taxable.
Let’s look at how to file and pay taxes in New Jersey. After registering your business for Sales Tax collection in New Jersey, you must submit quarterly returns and remit payments.
However, certain businesses are obligated to make monthly payments as well. Monthly payments are necessary if:
For quarterly filers, returns are due by the 20th of the month after each quarter ends.
You must file a return even if you didn't collect any sales tax, as you may be eligible for a refund.
You can request an extension, but it must be sent in one month after the original due date and payment.
You can amend New Jersey returns by phone, online, or by filing Form A-3730 for a refund.
New Jersey charges a 5% penalty for late or inaccurate filings, plus another 5% if you miss the due date. But penalties won't exceed 25% of the tax amount for that filing period.
The sales tax audit process in New Jersey is a formal and thorough examination of a business's financial records, sales transactions, and tax reporting to ensure full compliance with state tax laws and regulations.
The New Jersey Division of Taxation may initiate a sales tax audit on a business for a variety of reasons, such as:
If you disagree with an audit assessment, you can file a complaint with the Tax Court of New Jersey. This must be done within 90 days from the date of the audit notice.
If your business is selected for a sales tax audit, you can expect auditors to comprehensively inspect your sales records, purchase invoices, bank statements, and any other documents that detail your sales transactions and tax collection activities.
Auditors may request additional records and ask clarifying questions. If issues arise during the audit, the auditors may expand the scope to dig deeper into your documents. A lack of cooperation can also trigger an expansion in the audit.
Once the audit is completed, you'll receive a notice of assessment detailing audit findings. If you disagree with it, you can file a written appeal within 90 days requesting an informal conference to resolve issues.
If you’re unsatisfied after initial appeals, you can file a petition with the Tax Court, which will issue a legally binding determination after a formal hearing.
You can appeal the Tax Court's decision, but this won't stop collections. A safer option is to pay first and then seek a refund if the dispute is unresolved before your filing due date.
If you are an online business selling taxable goods or services to New Jersey customers, you must register to collect and remit NJ sales tax.
Don’t forget to keep detailed sales records and comply with any audit requests as you engage in business in the state.
For sales tax filing and appeals in New Jersey, you can contact:
There you have it—a comprehensive guide on New Jersey's sales tax regime. Need help filing taxes for your ecommerce store? Get a demo with Numeral now.
The New Jersey sales tax rate in 2023 is 6.625%. This comprises a base rate of 6.625% with no mandatory local rate. New Jersey does not have local sales tax jurisdictions, so the total tax rate remains 6.625% across the state.
New Jersey does not have local sales tax rates. The state-wide rate of 6.625% applies uniformly across all cities and counties.
The sales tax rate in New Jersey is 6.625% statewide. There are no local rates.
To calculate the sales tax on a $100 purchase in New Jersey, you would do the following:
Tax = 6.625% x $100 = $6.625.
New Jersey uses destination-based sales tax. Charge the rate based on where the customer is located.
Yes, New Jersey is a Streamlined Sales and Use Tax Agreement member. This simplifies sales tax compliance for businesses.
To be considered engaged in business, you need to meet specific criteria. These are known as nexus thresholds. If you reach nexus, it becomes mandatory to register for a sales tax license in the state.
Registering for a New Jersey sales tax license is free. You can apply for the permit online through the New Jersey Division of Taxation's website. There are no upfront fees for the application process. However, it's crucial to maintain compliance with filing and payment deadlines to avoid any penalties or fees in the future.
New Jersey wholesalers still need a seller's permit. This allows you to collect sales tax from customers when you make retail sales. You also use the permit to give suppliers a resale certificate, so you don't pay sales tax on items for resale.
Even temporary sellers in NJ need a seller's permit. This includes vendors at trade shows, craft fairs, or other short-term events in the state. The permit lets you legally collect and remit NJ sales tax on your sales.
Let’s start with a list of taxable products and services in New Jersey.
No, most groceries purchased for human consumption are not subject to sales tax in New Jersey.
No, most articles of clothing are exempt from sales tax in New Jersey.
Digital products that can be delivered electronically (ebooks, courses) are taxable in New Jersey. However, if the product can only be accessed and not delivered, you do not need to charge sales tax.
Software-as-a-service (SaaS) does not fall under the state's definition of an enumerated or taxable information service. New Jersey has stated that SaaS is exempt from sales tax unless the service meets the specific criteria to be classified as a taxable information service.
Excise taxes apply to specific goods or services in New Jersey. Discretionary taxes are local taxes that vary by city.
Here’s a list of excise taxes in New Jersey
Alcoholic Beverage Tax
Cigarette Tax: $2.70 per pack
Litter Control Fee
Motor Fuels Tax
Prearranged Ride Surcharge
Social Equity Excise Fee (SEEF): Cannabis – $1.52 per ounce
New Jersey does not have a general sales tax on food and beverages. However, there are excise taxes on some specific items like alcoholic beverages.
Remote sellers are subject to New Jersey sales tax if they meet the economic nexus threshold of $100,000 in annual sales or 200 separate transactions.
New Jersey does not have local sales taxes, but it does have Urban Enterprise Zones, where qualified businesses can charge a reduced sales tax rate.
Now, let’s look at the steps to collect sales tax in New Jersey.
If you are located outside New Jersey but sell to NJ customers over the $100,000 or 200 transaction thresholds, you must collect and remit NJ sales tax.
Yes, in New Jersey, if the item sold is taxable in New Jersey, the shipping charge is also taxable. For mixed shipments of taxable and non-taxable items, the entire shipping charge is taxable.
Let’s look at how to file and pay taxes in New Jersey. After registering your business for Sales Tax collection in New Jersey, you must submit quarterly returns and remit payments.
However, certain businesses are obligated to make monthly payments as well. Monthly payments are necessary if:
For quarterly filers, returns are due by the 20th of the month after each quarter ends.
You must file a return even if you didn't collect any sales tax, as you may be eligible for a refund.
You can request an extension, but it must be sent in one month after the original due date and payment.
You can amend New Jersey returns by phone, online, or by filing Form A-3730 for a refund.
New Jersey charges a 5% penalty for late or inaccurate filings, plus another 5% if you miss the due date. But penalties won't exceed 25% of the tax amount for that filing period.
The sales tax audit process in New Jersey is a formal and thorough examination of a business's financial records, sales transactions, and tax reporting to ensure full compliance with state tax laws and regulations.
The New Jersey Division of Taxation may initiate a sales tax audit on a business for a variety of reasons, such as:
If you disagree with an audit assessment, you can file a complaint with the Tax Court of New Jersey. This must be done within 90 days from the date of the audit notice.
If your business is selected for a sales tax audit, you can expect auditors to comprehensively inspect your sales records, purchase invoices, bank statements, and any other documents that detail your sales transactions and tax collection activities.
Auditors may request additional records and ask clarifying questions. If issues arise during the audit, the auditors may expand the scope to dig deeper into your documents. A lack of cooperation can also trigger an expansion in the audit.
Once the audit is completed, you'll receive a notice of assessment detailing audit findings. If you disagree with it, you can file a written appeal within 90 days requesting an informal conference to resolve issues.
If you’re unsatisfied after initial appeals, you can file a petition with the Tax Court, which will issue a legally binding determination after a formal hearing.
You can appeal the Tax Court's decision, but this won't stop collections. A safer option is to pay first and then seek a refund if the dispute is unresolved before your filing due date.
If you are an online business selling taxable goods or services to New Jersey customers, you must register to collect and remit NJ sales tax.
Don’t forget to keep detailed sales records and comply with any audit requests as you engage in business in the state.
For sales tax filing and appeals in New Jersey, you can contact:
There you have it—a comprehensive guide on New Jersey's sales tax regime. Need help filing taxes for your ecommerce store? Get a demo with Numeral now.
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Deb Mukherjee
Deb is the head of marketing at Numeral. He has worked with the likes of Shopify and Wonderment and has helped countless ecommerce stores scale through seamlessly. With a background in finance, he often finds himself advising stores on sales tax and good financial systems.
With Numeral, you spend five minutes or less every month on sales tax. We’re the white-glove service you are looking for that’s run by ecommerce operators and CPAs.
No long-term contract. No credit card required.
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