New Jersey Sales Tax Issues for Comic Convention Organizers and Vendors
October 19, 2017
Since State & Local Tax Laws Vary, Sales Tax Obligations Must Be Assessed Prior To Each Comic Convention, Especially In New Jersey
Comic conventions have become big business, attracting thousands of visitors and generating millions of dollars in revenue. For organizers and vendors, there are several of sales tax issues that must be addressed.
Because state and local tax laws vary, sales tax obligations must be assessed prior to each event. In New Jersey, the New Jersey Sales and Use Tax Act governs many of the sales tax issues that event producers, promoters, and vendors will likely encounter. The state’s Sales and Use Tax rate is currently 6.875 percent.
Admission Tickets Subject to NJ Sales Tax
The New Jersey Sales and Use Tax Act imposes a tax on any admission charge to or for the use of any place of amusement in New Jersey or to any entertainment event or sporting activity that takes place in the state. Admission charges to any theater, show, pier, exhibition, place of amusement, or ride located in Atlantic City are also subject to Atlantic City Luxury Tax in addition to Sales Tax, which brings the total tax to 12.875 percent.
When all the proceeds are for the exclusive benefit of a qualified New Jersey exempt organization and do not personally benefit any individual stockholder or other members of that organization, the charges for admission are exempt from sales tax. The exemption does not apply to admissions to carnivals, rodeos, or circuses in which a professional performer or operator participates for compensation.
Promoters and other entities that sell taxable admission tickets must register with the New Jersey Division of Taxation by completing an Application for Registration (Form REG-1). Registered vendors receive and are identified by a Certificate of Authority to collect New Jersey sales tax. In addition, if the tickets state the price of admission, they must also include the amount of sales tax collected.
Vendors Required to Obtain Licenses
Under the New Jersey Sales and Use Tax Act, most sales of tangible personal property are subject to sales tax, including occasional or seasonal sales. For convention vendors, notable exempt items include footwear and clothing.
New Jersey law also mandates that any individual or entity engaging in business, trade, profession/occupation within New Jersey must register for a sales tax permit. Accordingly, a vendor of taxable goods or services at a comic convention must obtain a Certificate of Authority. Notably, vendors must register 15 business days before starting to conduct business in the state.
For vendors, the good news is that the process can be completed online through the NJ Division of Revenue’s website. In addition, there are no fees associated with obtaining a Certificate of Authority, and the Certificate of Authority does not need to be renewed. Vendors must display the Certificate of Authority at their tables, booths, etc.
Vendor Space Rental Not Subject to Sales Tax
Convention organizers and facilities are also required to register with the state and pay any applicable sales taxes. They are also required to charge and collect sales tax on the sale or rental of any taxable tangible personal property to concessionaires and vendors (i.e., display counters, racks, tables, etc.) However, the rental charges for space within the convention are not subject to sales tax.
If you have any questions or if you would like to discuss the matter further, please contact me, Jeffrey Pittard, at 201-806-3364.