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Membership
Benefits & Application |
(???) NJSSA SALES TAX QUESTIONS
(???) Since the
adoption of the State Budget on July 8, which includes the expansion of the state
sales tax to self storage, our office has been inundated with questions about
the tax and what it means to owners/operators. Here is a sample of the
questions, some of which we are able to answer and some which we can’t
because the NJ Div. of Taxation has not yet issued proposed regulations. If you
have any other questions, please do not hesitate to contact the NJSSA office! Q. When will the tax on self storage go into effect? A. October 1, 2006 Q. Are
insurance, truck rentals, late fees included? A. No. Q. If someone signs a 6 month rental agreement
and pays cash up front for the whole term, do they pay the tax up front, or
is it billed monthly? A. Sales tax is
paid up-front. Pre-paid customers must pay sales tax on and after October 1,
2006. Even if they have already paid, you must invoice them the sales tax
portion. Q. If someone’s rental period begins on the 15th
of the month - do you collect ˝ month sales tax the first month, and then a
full month after that? Will sales tax be pro-rated? A. You collect
sales tax at the rate of 7% on the amount of the rent you actually receive
from the occupant for that period; if you pro rate the month’s rental, you
collect 7% of the amount you actually collect when you pro-rate. Q. Are we legally required to notify all
tenants? How should notice be mailed? A. While there
is no legal requirement, it is just good business and common sense to do so;
mail can be sent by regular mail, there is no requirement to mail RRR. Q. What about the urban enterprise zone - will
we be able to charge the 3.5% sales tax? A. The reduced sales tax rate only applies to the sale
of tangible personal property. Sales of services are not eligible for the
reduced rate of collection. Storage space and safety deposit box rentals are “Services”
(not eligible for reduced sales tax rate). Similarly, since tanning,
massaging and tattooing are services they are not eligible for the reduced
sales tax rates either. Q. How do we treat delinquent accounts or
deceased tenants? A. Sales tax should be collected on a “cash basis”; if you collect rent,
you collect and remit sales tax; if you don’t collect rent, then you don’t
collect sales tax either. |
