The New Jersey Division of Taxation will be letting the Urban Enterprise Zone designations of five of the thirty-two active zones expire at 11:59 P.M. on December 31st, 2016. The affected zones are Bridgeton, Camden, Newark, Plainfield and Trenton. The businesses located in these five zones will have their UZ-2, Urban Enterprise Zone Certificate of Authority replaced with the ST-2, Sales Tax Certificate of Authority. Businesses will lose all of their UEZ benefits including, but not limited to, collecting sales tax at a reduced rate and being eligible to provide vendors with UEZ Sales Tax exemptions certificates on purchases of tangible personal property and services used or consumed exclusively by the qualified businesses in their UEZ locations. The businesses will have to pay the full sales tax amount on all taxable purchases unless the business is eligible to issue the vendor with a non-UEZ exemption certificate. The list of eligible exemption certificates can be found here.
All affected UEZ businesses must file their last UEZ Sales Tax Returns by January 20th, 2017 and file a New Jersey Sales and Use Tax Quarterly Return (ST-50) by April 20, 2017.
The “full sales tax” rate of 7.000% currently in place in New Jersey is also set to change on December 31st, 2016. The State approved legislation earlier this year to reduce the New Jersey Sales & Use rate in two phases over the next thirteen months. First, on January 1st, 2017, the sales tax rate will be reduced to 6.875%. Then, on January 1st, 2018 the rate will be further reduced to 6.625%. These rate reductions are the first state wide sales tax reductions since 1994 and were initially announced earlier this year as a part of the new tax plan.