Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
Author: Scarinci Hollenbeck, LLC
Date: October 23, 2019
The Firm
201-896-4100 info@sh-law.comOn August 9, 2019, Gov. Phil Murphy signed legislation into law that amends the State’s regulations governing transient accommodations. The amendments change which rentals are subject to Sales Tax, the State Occupancy Fee, and other applicable taxes and fees, primarily by excluding transactions made directly between property owners and renters.
Given the complexity of the changes, the New Jersey Division of Taxation recently published a FAQ regarding the taxation of transient accommodations under the new law. The FAQs also discuss the potential for property owners to be owed refunds and set forth the process for obtaining a refund.
In 2018, New Jersey enacted a new law that imposes the State sales and use taxes, as well as several local taxes, on rentals made via “transient space marketplaces.” It further mandates that transient space marketplaces like Airbnb collect and pay the tax on behalf of the property owner. Transient space marketplaces are also subject to certain record-keeping requirements. They are required to maintain certain data for at least four years, including the name of the person who provided the rental, the name of the renter, and the rental rate.
As originally enacted, New Jersey’s transient accommodations law (P.L. 2018, c. 49) defined transient accommodation as a “room, group of rooms, or other living or sleeping space for the lodging of occupants, including but not limited to residences or buildings used as residences.” Under A4814/4520, which took effect upon signing, New Jersey’s transient accommodation law now only applies to “rentals of professionally managed units and rentals obtained through a transient space marketplace or travel agency, as long as the transient space marketplace or travel agency does not exclusively offer transient accommodations owned by the marketplace or travel agency.”
A rental is “obtained through a transient space marketplace” where the agreement for the rental is made through the marketplace or travel agency and where payment for the accommodation is made through a means provided by the marketplace or travel agency, regardless of who receives the payment.
As highlighted in the FAQs issued by the Division of Taxation, the following rentals are no longer subject to Sales Tax, the State Occupancy Fee, and other applicable taxes and fees as long as the owner does not offer three or more units for rent (a professionally managed unit):
The FAQs also note that owners of “professionally managed units” remain subject to the rental tax even if they deal directly with renters. A professionally managed unit is defined as a transient accommodation that is directly or indirectly owned or controlled by a person who offers three or more units for rent in New Jersey, and the rental unit does not share living or sleeping space with other units. Under the new law, rentals executed by a real estate broker remain excluded from taxes and fees.
The Division of Taxation also advises that some property owners may be entitled to refunds. Specifically, if the rental was obtained directly from the owner, and is not a professionally managed unit, and the rental period includes days on and after August 9, the renter is entitled to a refund of the taxes and fees paid for the dates of the rental on and after August 9. As the Division of Taxation explains in the FAQ:
The renter should request the refund from the owner that collected the taxes. The taxes due on rentals for the month of August are not filed and paid until September, so the owner should be able to refund the appropriate tax amount directly to the renter. If the owner has already remitted the taxes to the Division, the renter may request a refund directly from the Division by filing a Claim for Refund (Form A-3730). When submitting the refund request, the renter should include a copy of the rental agreement showing the date or dates of the rental and the taxes paid. The renter must also include proof of payment (e.g., copy of cancelled check, credit card statement, etc.).
According to the Division of Taxation, if a rental started before August 9, 2019, and ended on or after August 9, 2019, the refund will be determined by apportioning the total applicable taxes and fees between the number of days falling within the taxable period and the number of days after the taxable period.
If you have any questions or if you would like to discuss the matter further, please contact me, Ashley Brinn, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]
Author: Christopher D. Warren
Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]
Author: Dan Brecher
Cryptocurrency intimidates most people. The reason is straightforward. People fear what they do not understand. When confusion sets in, the common reaction is either to ignore the subject entirely or to mistrust it. For years, that is exactly how most of the public and even many in law enforcement treated cryptocurrency. However, such apprehension changed […]
Author: Bryce S. Robins
Using chattel paper to obtain a security interest in personal property is a powerful tool. It can ensure lenders have a legal claim on collateral ranging from inventory to intellectual property. To reduce risk and protect your legal rights, businesses and lenders should understand the legal framework. This framework governs the creation, sale, and enforcement […]
Author: Dan Brecher
For years, digital assets operated in a legal gray area, a frontier where innovation outpaced the reach of regulators and law enforcement. In this early “Wild West” phase of finance, crypto startups thrived under minimal oversight. That era, however, is coming to an end. The importance of crypto compliance has become paramount as cryptocurrency has […]
Author: Bryce S. Robins
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Author: Matthew F. Mimnaugh
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!