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Division of Taxation

Notice to Retailers of Fur Clothing 7/18/05

Through the enactment of Public Law 2005, Chapter 126, New Jersey joined a national coalition of states in conforming the New Jersey Sales and Use Tax Act to the provisions of the Streamlined Sales and Use Tax Agreement (SSUTA). The SSUTA was developed over the course of several years through the joint effort of over forty states participating in the Streamlined Sales and Use Tax Project. The underlying purpose of the Agreement is to simplify and modernize the administration of the sales and use tax laws of the member states in order to facilitate multi-state tax administration and compliance. The provisions of New Jersey’s law are effective on October 1, 2005.

Fur Clothing and Footwear To Be Exempt From Sales Tax

Section 9 of the law amends N.J.S.A. 54:32B-8.4 to remove the provision that excluded fur clothing and footwear from the clothing exemption. As provided in the new law, all fur clothing (e.g. coats, stoles, collars, muffs, earmuffs and hats, etc.) and fur footwear are exempt from sales and use tax, effective for sales made on or after October 1, 2005. If the customer takes title (ownership) or possession of the goods prior to October 1, a sale has occurred, and it is subject to tax.

A seller may offer a layaway service to its customers. The term “layaway” implies the temporary storage of goods prior to sale, and the transfer of ownership or possession does not occur until the customer makes payment in full. If goods are placed on layaway, the actual sale does not take place until full payment is made and the goods are owned by the customer. This is different than a situation where the customer owns the goods prior to October 1, 2005 and the vendor is merely storing the garment until October 1, 2005 or later. In such case, even if the customer has not taken physical possession of the goods, the sale has taken place prior to October 1 and the customer owes the tax.

The exemption will also apply to charges for making or reconstructing/remodeling fur garments. Charges for tailoring and cleaning will remain exempt.

Please note that any charges made to a customer for storing fur clothing and footwear will remain subject to tax, under the sales tax provisions that apply to storage of tangible personal property. Accessories, such as fur handbags or ponytail holders are not considered clothing and remain subject to sales tax.

If you have any questions on the clothing exemption, please contact the Division’s Customer Service Center at 609-292-6400. For information about the Fur Clothing Retail Gross Receipts Tax, which is payable by the retail seller of fur clothing, view the notice .

Last Updated: Tuesday, 05/17/22