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Urban Enterprise Zone Exemption Procedures Q&A
(Last Modified: 07/28/2006)


The following are responses to questions that the Division has received regarding changes to the Urban Enterprise Zones law (A-4702, effective July 15, 2006). This page will be updated as new issues arise, so check back frequently:
  1. An Urban Enterprise Zone qualified business enters into a lease agreement of tangible personal property prior to July 15, 2006 and provides the lessor with a UZ-5 Certificate. At the end of the lease term, which occurs after July 15, 2006, the qualified business decides to purchase or buy-out the property.

    If a lease is entered into prior to July 15, 2006 by a qualified UEZ business and the qualified business opts to purchase/buy-out the property at the end of the lease, then for purposes of claiming the point of sale exemption , the transaction will be treated under the law in effect prior to July 15, 2006 and the lessor is not required to collect the sales tax.


  2. An Urban Enterprise Zone qualified business enters into a lease agreement of tangible personal property prior to July 15, 2006 and provides the lessor with a UZ-5 Certificate. After July 15, 2006, the qualified business decides to extend the lease agreement.

    If the on-going agreement is simply extended (e.g. the same terms or conditions predetermined and stated in the original contract are 'extended' for an additional time period; the lease payment continues at the same amount or a pre-stated extension amount, without signing another contract), then for purposes of claiming the point of sale exemption, the transaction will be treated under the law in effect prior to July 15, 2006 and the lessor is not required to collect the sales tax.


  3. An Urban Enterprise Zone qualified business enters into a lease agreement of tangible personal property prior to July 15, 2006 and provides the lessor with a UZ-5 Certificate. After July 15, 2006, the qualified business decides to renew the lease agreement.

    If the UEZ qualified business chooses to renew (e.g. the term and payment amounts subject to negotiation and signing of another contract) a prior lease after July 15, 2006, then for purposes of claiming the point of purchase exemption, the renewal is treated as a new lease and the lessor must collect the tax at the rate in effect at the beginning of the renewal period (unless the business qualifies as a “small qualified business” and issues Form UZ-5-SB (Temporary) to the lessor).


  4. If an Urban Enterprise Zone qualified business that does not qualify as a “small qualified business” orders taxable property from an out-of-State vendor which is not registered with New Jersey for sales and use tax collection purposes, is the UEZ qualified business required to remit use tax and file a refund claim?

    Since the point-of-purchase exemption was removed by the new UEZ law (unless the business qualifies as a “small qualified business”), the qualified business is required to remit the applicable use tax and then file a claim for refund with the Division, in the same manner as if the purchase was made from a New Jersey vendor or a registered out-of-State vendor. Because the legislation resulting in this change in procedure was so recently enacted, the Division has not yet completed establishing policies and procedures for the filing of these refund claims. Information will be posted to our web site as it becomes available.


  5. An Urban Enterprise Zone qualified business that does not qualify as a “small qualified business” orders taxable goods from a mail-order vendor (located within or outside of New Jersey). The property is delivered prior to July 15, 2006, but the Urban Enterprise Zone business does not pay the invoice until after July 15th. Is the Urban Enterprise Zone business entitled to the sales tax exemption at the point of purchase?

    Yes, since the transaction took place prior to July 15, 2006 (i.e., date of delivery), the Urban Enterprise Zone vendor is entitled to the sales and use tax exemption regardless of the fact that they are actually paying the invoice after July 15th.

Last Updated: Wednesday, 08/20/14



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