Note: Updated by Publication ANJ-23, Parking, Storing, Garaging Motor Vehicles & New Jersey Sales Tax and Bulletin S&U-11, Admission Charges.
REVISION HIGHLIGHTED IN RED
Initiation Fees, Membership Fees or Dues (N.J.S.A. 54:32B-3(h))
As of October 1, 2006, New Jersey sales tax is imposed on charges for initiation fees, membership fees or dues for access to facilities of a health and fitness, athletic, sporting or shopping club or organization. The sales tax was imposed on these charges regardless of whether the club or organization selling the membership was a state or local government entity, a qualified exempt organization (ST-5 Certificate holder), or a non-profit. (See Tax Note on this subject)
Effective July 1, 2007, the law was amended to exclude such charges for initiation fees, membership fees or dues when made by the following:
1. The State of New Jersey, or any of its agencies, instrumentalities, public authorities, public corporations or political subdivisions; for example, municipal and county pools, golf courses, tennis clubs and similar facilities; or
2. Religious, charitable, scientific, literary or educational organizations which applied to the Division of Taxation and were granted sales tax exemption. Such organizations qualify for exemption under Internal Revenue Code Section 501(c)(3) and have been issued an Exempt Organization Certificate (ST-5); for example, YMCAs and YWCAs.
Note: The newly enacted exclusion for memberships sold by an organization described in #2 above is not based on the status of the seller as a "non-profit" organization. Rather, it is limited to organizations that are qualified under IRC Section 501(c)(3) and which have been issued an ST-5 Certificate.
All other charges for initiation fees, membership fees or dues for access to facilities of a health and fitness, athletic, sporting or shopping club or organization remain subject to sales tax.
Municipal Parking, Storing or Garaging a Motor Vehicle (N.J.S.A. 54:32B-3(i))
As of October 1, 2006, New Jersey sales tax is imposed on charges for parking, storing or garaging a motor vehicle, excluding residential parking, employee parking and municipal metered parking. (See Tax Note on this subject)
Effective July 1, 2007, the law was amended to exclude all municipal parking, storing or garaging, not just municipal metered parking. Municipal parking, storing or garaging means any motor vehicle parking, storing or garaging provided by a municipality or county, or a parking authority thereof. Thus, in addition to metered parking, the following types of municipal parking are no longer subject to tax:
1. Any system where payment is made at a device in a central location(s) in an open air lot.
2. Parking spaces or stalls in a structure of any kind, whether controlled by meters on a post, by an attended or unattended kiosk pay system, by parking attendants, or by lift gates.
Other than residential and employee parking, all other charges for parking, storing or garaging a motor vehicle remain subject to tax.
Atlantic City Casino Parking Charges
Pursuant to N.J.S.A. 5:12-173.3, parking at Atlantic City casino hotels is subject to a minimum fee of $3. As of October 1, 2006, this $3 fee, in addition to any other amount the casino hotel charged for parking, was subject to sales tax.
Effective July 1, 2007, the law was amended to exclude the $3 minimum fee from the receipt subject to tax. There is also an exclusion for parking charges or fees imposed pursuant to an agreement between the Casino Reinvestment Development Authority (CRDA) and a casino operator which was in effect as of June 28, 2007. Any amount collected over and above these fees remains subject to sales tax.
Ending Sales and Use Tax Eligibility
As a result of the repeal legislation, if a state or local government agency, entity or exempt organization is no longer required to collect New Jersey sales tax, steps must be taken to end the sales tax eligibility on the Division's records. To do so online, the person responsible for filing sales and use tax returns must go to the Division of Revenue's website and follow this procedure:
1) Select the link for "online" (alternative is to print a paper document)
2) Select "Change Tax/Employer Registration Records"
3) Select "Business Entity"
4) Type the entity's FEIN followed by 3 zeros, then the entity's Sales Tax PIN
5) Select "End Tax Eligibility"
6) Select "Sales" and the date of 6/30/2007
NOTE: Do not end the sales tax eligibility if the agency, entity, or exempt organization makes sales of other property or services which are subject to tax.
Availability of a Refund of Sales Tax
The provisions of the recently enacted law are not retroactive; thus, the above described memberships and parking charges are subject to 7% sales tax for the period October 1, 2006 to June 30, 2007.
However, these charges are no longer taxable on and after July 1, 2007. Therefore, if prior to July 1, 2007, a customer paid for a membership or parking charges as described above, which covers periods on and after July 1, 2007, the customer may apply for a sales tax refund. The refund is based on a pro rata allocation between the amount paid for periods prior to July 1, 2007 and the amount paid for periods after July 1, 2007.
In order to submit a Claim for Refund (Form A-3730), the claim form must be accompanied by documentation of the amount of sales tax that was paid for periods on and after July 1, 2007, such as evidenced by a contract, bill, invoice, or similar statement issued by the facility. The claim form must also include proof of payment of the tax, such as a copy (not original) of a cancelled check, credit card payment receipt, credit card bill statement, electronic funds transfer (bank statement), or a cash payment receipt.
Example 1 - In January 2007, customer purchased an annual YMCA membership and paid in full. The membership cost $1200 plus 7% sales tax of $84, for a total of $1284. The customer can apply for a refund of the tax paid for the six month period between July 1 and December 31, 2007, which is $42. ($84 divided by 12 months= $7, then multiplied by 6 months)
Example 2 - In April 2007, customer purchased a seasonal membership at a municipal pool. The membership cost $750 plus 7% sales tax of $52.50, for a total of $802.50 and covered the period from May 26 through September 3. The customer can apply for a refund of the tax paid for the 2 month period between July 1 and September 3, 2007, which is approximately $35. ($52.50 divided by 3 months= $17.50, then multiplied by 2 months)
Example 3 - In January 2007, customer purchased an annual parking pass to park at a municipal lot. Parking facilities were granted authorization to include the tax in the parking charge. The facility included the tax in the $240 charge, which meant that the parking charge was $224.30 and the 7% sales tax was $15.70. The customer can apply for a refund of the tax paid for the six month period between July 1 and December 31, 2007, which is $7.85. ($15.70 divided by 12 months= $1.31, then multiplied by 6 months)
Since the sales tax was included in the parking charge rather than stated separately, the customer may have to obtain a statement from the facility indicating how much sales tax was collected and remitted.
Questions concerning the information in this Notice can be directed to: email@example.com.
General sales and use tax questions should be directed to:
Email to firstname.lastname@example.org or by telephone to the Division's Customer Service Center, (609) 292-6400.