On January 15, 2013, the NJ Division of Taxation issued a technical bulletin on the taxability of purchases made by lawyers and law firms. Lawyers who practice in New Jersey are not liable for collecting sales tax on charges for professional services performed by their practice. They are, however, required to pay sales or use tax on all purchases of taxable tangible property, specified digital products, and certain services used by their firm, unless otherwise exempted by law. Purchases subject to sales and use tax that are common to law firms include:
- Landscaping
- Cleaning Services
- Computer Equipment (e.g. computers, printers, copiers, faxes)
- Office Equipment & Supplies (e.g. teleconferencing equipment, projectors, paper, toner, ink)
- Alarm Monitoring Services (e.g. ADT)
- Detective and Private Investigator Services (e.g. for discovery purposes)
- Legal Library Materials
- Online Legal Research Aids
Law firms may report and remit any use tax due on the Annual Business Use Tax Return (Form ST-18B). However, if a law firm’s average annual use tax liability for the last three consecutive calendar years exceeds $2,000, the law firm must change its business registration to include sales tax eligibility. Moreover, it is required to begin to file quarterly/monthly sales and use tax returns by filing Forms ST-50/51. To view the bulletin click here: NJ Sales & Use Tax Bulletin for Lawyers