Newark Urban Enterprise Zone

Reduced Sales Tax Collection

1. What is the reduced rate for collection of sales tax by vendors having a UZ-2 certificate?
2. Are qualified businesses located within an Urban Enterprise Zone-impacted business district eligible to collect sales tax at a reduced rate of 50%?
3. How does a reduced rate vendor qualify?
4. When may application be made?
5. How long is the certification effective?
6. Are motor vehicles eligible for the reduced sales tax rate?
7. Are motor vehicle parts eligible for the reduced sales tax rate?
8. Are there any other kinds of personal property which cannot be sold at the 50% sales tax rate?
9. A restaurant is a qualified business. Is the reduced sales tax rate available for restaurant meals?
10. Does the reduced sales tax rate apply to the sale of services, rooms or admissions?
11. Does the reduced sales tax apply to rentals and leases?
12. How does a reduced rate vendor report and remit sales tax?
13. A taxpayer holds a UZ-2. He usually files quarterly sales and use tax returns. Can he file the UZ- 50 on a quarterly basis?
14. I own a retail store and hold a UZ-2 certificate. Can I collect the half rate on mail, telephone or similar types of orders?
15. Must the customer pick up the property himself in order to qualify for the reduced sales tax rate?
16. Is the reduced rate limited to customers located in the zone or district?
17. A vendor holding a reduced rate sales tax collection certificate (UZ-2) receives an order by telephone and delivers the property, from its retail inventory, to the buyer by vendor's truck or by common carrier. The buyer then comes in and pays in person, whether by cash, check, credit card or otherwise. Does this transaction qualify as a reduced rate sales transaction?
18. Can blanket purchase orders be placed on a short-term basis i.e., three (3) months, six (6) months?

1. What is the reduced rate for collection of sales tax by vendors having a UZ-2 certificate?
50% of the regular sales tax rate.

2. Are qualified businesses located within an Urban Enterprise Zone-impacted business district eligible to collect sales tax at a reduced rate of 50%?
Yes. Collecting sales tax at the reduced rate is the only benefit available to qualified businesses located within an Urban Enterprise Zone-impacted business district.

3. How does a reduced rate vendor qualify?
First the vendor must be designated as a qualified business within a zone or district. Then, by separate application, the vendor must apply to the Division of Taxation on Form UZ-1 for authority to collect tax at the reduced rate. If the qualified business is a retailer and exhibits and has an inventory of items for retail sales, and is not primarily a catalog or mail order business, the application is approved and a UZ-2 Certificate is issued. (See also questions 57 and 58.) No business may collect sales tax at the reduced rate without a currently effective UZ-2. Recertification of the UZ-2 is automatic, unless the business loses its "qualified business" status or changes ownership or form, etc. Businesses have to reapply each year.

4. When may application be made?
At the same time the company sends its application to the UEZ Authority to become a "qualified business," or later, so long as the "qualified business" status exists.

5. How long is the certification effective?
The UZ-2 is valid for the duration of the qualified business's certification year. When the UEZ Authority recertifies the business as a "qualified business" a new UZ-2 is automatically sent.

6. Are motor vehicles eligible for the reduced sales tax rate?
No. The receipts from sales, leases, and rentals of motor vehicles and trailers are taxable at the regular sales tax rate.

7. Are motor vehicle parts eligible for the reduced sales tax rate?
Yes. Parts, but not services, may be eligible for the reduced rate sales tax - if the vendor meets the retail requirements discussed in question 29 and itemizes the parts separately from any service charges on the bill.

8. Are there any other kinds of personal property which cannot be sold at the 50% sales tax rate?
Yes. The retail sales tax on the sale of alcoholic beverages, cigarettes and energy do not qualify for the reduced sales tax rate. For alcoholic beverages, cigarettes and energy, sales tax must always be collected at the full rate.

9. A restaurant is a qualified business. Is the reduced sales tax rate available for restaurant meals?
No. The reduced sales tax rate only applies to the sale of tangible personal property. The sale of restaurant meals or prepared foods or beverages is not considered the sale of tangible personal property under the Sales and Use Tax Act.

10. Does the reduced sales tax rate apply to the sale of services, rooms or admissions?
No. The reduced sales tax rate only applies to the sale of tangible personal property. If a "reduced rate" vendor sells both services and personal property, the reduced sales tax rate may apply to sales of property (not services), but only if the cost of the property is itemized separately on the bill. Storage space and safety deposit box rentals are "services" (not eligible for reduced sales tax rate).

11. Does the reduced sales tax apply to rentals and leases?
Yes. Sales tax law defines a sale as including the rental or leasing of personal property. If the transaction is a lease (more than 28 days) and meets the face-to-face requirements discussed below, the lessor may pay use tax at the reduced rate. However, if the property is later leased to another customer who does not have the required face-to-face transaction, use tax is then due at the full rate.

12. How does a reduced rate vendor report and remit sales tax?
Form UZ-50, covering sales tax at the regular rate for non-qualifying sales, and at the half rate for qualifying sales, must be filed monthly. The UZ-50 replaces forms ST-50 and ST-51. If you file the New Jersey/New York combined Sales Tax ST-20 and ST-21, you must file those and the UZ-50. On the UZ-50, take the regular rate sales as a deduction, leaving only the reduced rate sales for calculating sales tax to remit. For the ST-20 and ST-21, calculate tax on all other sales, with the New Jersey reduced rate sales being taken as a deduction.

13. A taxpayer holds a UZ-2. He usually files quarterly sales and use tax returns. Can he file the UZ- 50 on a quarterly basis?
No. Taxpayers collecting reduced sales tax must file the UZ-50 combined return on a monthly basis.

14. I own a retail store and hold a UZ-2 certificate. Can I collect the half rate on mail, telephone or similar types of orders?
Only if the customer picks up the order at the store in the zone, and the business is not primarily a mail or telephone order business (see question 51 above). All sales of tangible personal property, which qualify for the reduced rate, must be "face-to-face" transactions at the store.

15. Must the customer pick up the property himself in order to qualify for the reduced sales tax rate?
No. Delivery may be made by the vendor, or by a carrier for the vendor, to a destination within or outside of the zone, as long as the property was ordered in person at the location in the zone and the property was delivered from the location in the zone.

16. Is the reduced rate limited to customers located in the zone or district?
No. The residence or location of the customer has no bearing on the application of the reduced rate to a "face-to-face" sale of tangible personal property in a zone or district, as long as the order is picked up by the customer or is delivered to a New Jersey address from inventory at the location in the zone or district. (NOTE: Reduced sales tax does not apply to "out-of-state" sales, because no New Jersey sales tax is collected.)

17. A vendor holding a reduced rate sales tax collection certificate (UZ-2) receives an order by telephone and delivers the property, from its retail inventory, to the buyer by vendor's truck or by common carrier. The buyer then comes in and pays in person, whether by cash, check, credit card or otherwise. Does this transaction qualify as a reduced rate sales transaction?
No. Payment is not part of the sale transaction for this purpose. For reduced sales tax, either the buyer must order in person or pick up the purchase in person at the qualified vendor's place of business. If those requirements are met, reduced sales tax applies, regardless of the payment time or method (cash, check, credit card, etc.).

18. Can blanket purchase orders be placed on a short-term basis i.e., three (3) months, six (6) months?
For a UZ-2 certified business to be able to charge 3.5% sales tax, the sales contract must: specify a numerical quantity and a numerical price; specify, in detail, the item(s) that will be bought; and require that all deliveries will be completed by the next "qualification" ending date of the business. Please note that the Division may, in the near future, establish more stringent requirements for the delivery provision that must be in the contract. The sales must also meet the face-to-face transaction and delivery from the zone inventory requirements.