Urban Enterprise Zones Come To An Abrupt End

The following is an excerpt from a notice that was issued by the Division of Taxation in the Department of Treasury of the State of New Jersey.


Effective December 31, 2016 at 11:59 p.m.

On December 31, 2016, at 11:59 p.m., five Urban Enterprise Zones (UEZ) will expire. Your UEZ-qualified business will be immediately affected if located in one of these five zones.

Beginning January 1, 2017, your business can no longer collect Sales Tax at a reduced rate. Your business must collect and remit Sales Tax at the full effective Sales Tax rate of 6.875%.

Your business will receive an ST-2, Sales Tax Certificate of Authority, which will replace your UZ-2, Urban Enterprise Zone Certificate of Authority. Your UZ-2 expires December 31, 2016, at 11:59 p.m.

The Bottom Line

This change will require taxpayers to modify software and procedures to comply. Invariably, there will be mistakes that state auditors will find and use to establish an error rate in sales and use tax audits. What is more difficult to determine is the impact that this will have on budgets and projections for operations in those districts. Many projects counted on the savings for those services that were not exempt from sales tax.

Do you have any questions? Would you like to discuss the matter further? If so, please contact me, James McDonough, at 201-806-3364.

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James F. McDonough, Jr. concentrates on wealth preservation and estate planning for high net worth individuals, closely held business matters and ownership succession, estate administration and income tax planning. He worked for three years for the public accounting firm, then known as Touche Ross, where he obtained his license as a Certified Public Accountant in 1983. In 1984, he was employed as a tax attorney by Union Camp Corporation where he engaged in planning for corporate income deferred compensation, qualified plan and tax-free exchanges. In 1986, Mr. McDonough was employed as Tax Manager for Monroe Systems For Business, Inc. Thereafter, he was employed as a tax attorney for five years where he engaged in corporate and estate tax planning and estate administration and litigation. For more information, please visit James McDonough's full biography at Scarinci Hollenbeck

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