Services are tax free in NJ?

WhereIsK

I am currently looking for DJ's and while speaking to them I came across an interesting tidbit "Entertainment, like any service, is tax free in New Jersey..."  Interesting.  Has anybody heard of this?  Photography (outside of the album) is a service,  so is the arrangement of the flowers from a florist (the actual flowers of course is a "good" not a "service").  Tax free or not?  What is your experience with this?

alliecarrie41

that is not true.  everything is subject to tax. 

tvlirene

It's very unfair but photographers are taxed on everything, including their service.

ballandchain10

NJ is tricky with what's taxed/not taxed DJ = tax free Photography = taxed (because you are receiving an actual good, the photos).  we are being taxed on the entire quote. Florist = taxed.  again, you are receiving actual goods. Just looked at my video contract...he is not charging tax, which is weird.  But I'm not going to complain. A word of caution though- some vendors will say, "oh pay cash and avoid the sales tax".  Do not do this.  You will have no record of the transaction, and if the guy's a scammer or goes bellyup, you have no recourse.  Always pay with checks or a credit card (buyers protection) where you can.   

caketime

BallandChain - that is not true about the cash.  Just make sure to get a receipt if you do pay in cash.  Some venues will only accept cash as your last payment.

uppereastgirl

The list of what is and isn't taxed in NJ is listed here:http://www.state.nj.us/treasury/taxation/pdf/pubs/sales/su4.pdf(starting at page 16)The other poster is right that you should be wary of vendors who will not charge you sales tax if you pay in cash.  They're probably trying to hide the income.  I wouldn't deal with someone like that.  If they're lying to the IRS, why should I trust them?Giving a discount for not using a credit card is another issue-- vendors are charged fees by the credit card company.  But then, you should ask yourself whether you're willing to give up all the protection that using a credit card affords in order to save 3% (and hey, you get points too-- on my credit card the points add up to 3% back in gift cards anyway).

I <3 Seabass

BallandChain ~ If you pay in cash (whether to avoid tax or not) all you have to do is note the deposit amount on your contract or ask for a receipt. If you pay with a check you're still pretty much SOL if the vendor goes bankrupt. Also if they just take your money and run and the check has already been cashed you're gonna need to go through some type of legal action, your bank is not just going to give you your money back because you paid by check.A credit card is really the only thing that will offer you any type of protection.

USER876

Then why are service charges taxed?

uppereastgirl

User, tips and gratuities (separately stated and paid in full to employees) are tax exempt.  But many "services," including catering services, are taxed.  So if the service charge covers catering services, it is taxed.  I have no idea what the public policy behind that is, so my answer to your "Why?" would be "Because NJ says so."

mhande

Thanks for the clarification on which services are taxed, Ball And Chain. I was so confused by this. I know that NJ started taxing services a few years ago, so I was really confused that the DJ was tax-free. Another weird thing is my photographer is in NY, and the studio said we didn't owe NY taxes because the wedding's out of state. I didn't say anything, BUT you'd think the prints/albums/etc. themselves would be subject to tax ...So strange. Maybe I should have just had the wedding back home in Oregon, where tax is 0% on everything! Cheap and simple to understand!

USER876

DW's sister lives out in oregon......they jsut bought a new 4 bedroom house  for 270K..and they make close to NYC salaries......nice lifestyle.

ballandchain10

not a problem WhereisK, it does get confusing.The NY vendor is being very nice about the no sales tax.  Technically you are supposed to pay NJ use tax on this transaction (you declare it on a NJ ST-50 form), but the state has far better things to check up on, so don't worry about it.Use tax is more for if you buy a car, boat or large purchase out of state.  If you ever do that, pay the use tax.  That the state will not ignore.  (BTW, it's the same rate as sales tax, 7%)My business had a NJ sales tax audit a couple years ago, so I know a lot about taxation, yippee.As far as the "don't pay cash" policy.  Yes, you don't have as much recourse with a cancelled check versus a credit card, but it still better proof to have in hand g-d forbid something shady happens.   I just don't like dealing with vendors who off the bat say, "pay cash and I won't charge you tax"  It means they're burying the income, and that doesn't fly well with me. 

ballandchain10

USER...I wonder why any of us should stay in NJ.  My property taxes are INSANE!

USER876

Yeah I have to admit, just about everyone I know that lives out of state has a better "lifestyle" than most people here in NJ......even if they make less money because the cost of housing and taxes are so much lower.......they spend less % of their income on housing and have more leftover to do other things with.  I think the taxes on that house in Oregon are like $4,500.  That house in north jersey would about 700-800K with 15K+ taxes.So assuming mortgaging both at 80% of the sell price, thats a monthly payment of $1650 a month for the Oregon house and $4850 for the NJ house....crazyBut this is a topic for another thread.....

LarissaAnn

Actually NOT "everything" is subject to sales tax in NJ, only it's not separated by "goods" vs. "service." When I worked at CVS many moons ago, the rule was necessity vs. luxury. So shampoo was not taxed but conditioner was. Meanwhile, on the service side face painting, temp tats, and henna are not taxable, while permanent tattoos are.

uppereastgirl

It is all relative User... I envy your lower cost of living!  But no-one forces us to live where any of us live, and we probably choose to stay where we are for a reason. It is really going to hurt to now have to pay 8.75% or whatever in tax on every piece of clothing or shoes...

alliecarrie41

you can get receipt/proof of payment for cash.  i paid nearly all my vendors in cash.

allywed

One photographer I met with told me that if I paid with a check from out of state (my mom live in VA), I could avoid the taxes. I am still unclear if this is legit, or if he was sketchy. It would be nice to find out though. By the way...I am not using that photographer.