# Sales Tax in New Jersey



## artswear (Jun 20, 2011)

I'm hoping someone can clear up the confusion I am having about when to charge sales tax in New Jersey. I have read the state tax online documentation and have even called to speak with someone, yet still can't get a definite answer.

My home based business sells decorated apparel on garments that I purchase, but decorate inhouse. I know that clothing in NJ is exempt (except certain types that I am not working with). However, I am not sure if the process of putting the design on the shirt is considered a "service" and is therefore taxable? ANd if so, do I just tax on the cost of the design, or on the entire garment? Another scenario I have heard is that I shouldn't charge tax at all unless the customer provides the garments. 

Anyone from NJ who can clarify this? Thanks.


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## proworlded (Oct 3, 2006)

I do not think it matters how you construct the product. Clothing in N.J. is not taxable.


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## KB Graphics (Feb 26, 2007)

As long as you are suppling the garment then there is no tax collected. If the customer brings in the garments then yes you have to collect the tax.


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## tfalk (Apr 3, 2008)

What you are doing is not taxable. That doesn't mean you don't have to file
quarterly returns with NJ Division of Taxation... You need to report quarterly
even though your taxable amount is zero.


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## artswear (Jun 20, 2011)

KBGraphics.... thanks, that's exactly what I thought. If the customer supplies the garment, then my part is a "service" and therefore must be taxed. Otherwise, I am selling clothing, and regardless of the fact that I decorate it, it is still not taxed.


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## T-Shirtprinter (Aug 8, 2010)

From what I understand and do is that there is no sales tax if you are purchasing garments and decorating them with the exception if you are a screen printer and charging for screens which then the screen charges would be taxable.


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## apeman77 (Apr 29, 2014)

Service part of printing the shirt if the customer brings their blanks is taxable, otherwise clothing should be exempt in NJ


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## Lees Custom (Mar 1, 2013)

I went to school for accounting. Tax law is inherently grey areas leaving it up to interpretation so depending on who you ask you will constantly get a different answer for this. Number one notion with taxation, if you haven't been told (by the IRS, an Accountant, and it isn't explicitly written in the tax code) that you can't do something, you can.

Clothing is not taxable in NJ. I would interpret that part of the tax law to entail that if you are producing clothing to sell online or out of a store (that is not produced as part of an order) to be non-taxable. Additionally if you are just selling blank apparel (reselling), there is no tax on clothing.

Certain organizations and companies are also tax exempt and will need to provide you a tax exempt form for your records. 

Customers that are placing orders for the purpose of fundraising and/or reselling are not subject to sales tax, but need to provide a resale certificate for your records.

However, when someone places or brings in an order, you are providing a service. In both cases, the clothing itself is not subject to taxation, but the service of printing, embroidering, etc. should be subject to taxation. 

Example 1:

Customer orders 10 Shirts that you charge $6 a piece for the garment and printing that will cost $4 per shirt. The order total is $100. Of that $40 should be subject to the 7% sales tax to the extent of $2.80 making the entire order total $102.80 with the service sales tax.

Example 2:

Customer brings in 10 shirts that you are going to charge $4 per shirt to print. The order total is $40 and is entirely subject to the 7% sales tax to the extent of $2.80. The entire order should be $42.80.

You can see in both examples the result is the same amount of tax liability regardless that they purchased the garments or brought them in.


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