New Jersey Sales Tax Guide
Chapter 8: Understanding New Jersey sales tax rules for shipping & handling
A common question we get from small business owners selling into New Jersey involves sales tax and shipping / handling charges. It doesn’t matter how the product is shipped; whether it’s done via a common carrier, your own truck, or an outside vendor, you are required to collect sales tax on your shipping charges in New Jersey. On the other hand, if the customer arranges delivery, the business making the delivery is responsible for collecting the tax.Shipping Tax-Exempt Purchases
This is where the New Jersey laws get a little quirky. In October of 2006, the laws were changed to stipulate that if you sell a combination of taxable and tax-exempt products to a customer, you have to separate out shipping charges for the portion of the shipment that is taxable and collect sales tax on that portion only. Do this by using either the total sales price or the weight of the entire package. The New Jersey Department of Treasury FAQ page says that if you fail to allocate which portion of the shipment is taxable, you are required to charge sales tax on delivery of the entire shipment.Local Taxability
New Jersey residents are subject to a statewide sales tax rate, so it’s not necessary to figure in local sales tax rates.
Wait… you didn’t think it would be that easy, did you?
New Jersey has 32 Urban Enterprise Zones that allow sellers to charge 50 percent of the 7 percent state tax. But in order for a seller to offer the reduced sales tax rate, the purchase must be made in person at the seller’s business, which must be located within the zone. If the product is shipped from another location, the reduced sales tax rate does not apply. So if you run an ecommerce business, you won’t be able to offer the reduced rates.Paying Up
Now that you’re armed with knowledge about how to tax shipping charges, get ready to pay up. Be aware that the New Jersey Department of the Treasury no longer accepts paper filings for sales tax returns. Now, taxpayers must file electronically by phone, online, or through the New Jersey Sales and Use Tax EZ File System.