New Jersey Urban Enterprise Zone Limitations

Date January 3, 2022
Categories
Article Authors

New Jersey issued new guidance on changes to Urban Enterprise Zone program that goes into effect on January 1, 2021. The UZ-4 (contractor) and UZ-5 (business) exemption certificates are used by contractors and businesses, respectively, to make tax-free purchases of purchases of services and tangible personal property. In 2022, the amount of exempt purchases will be limited to the first $100,000 in taxable purchases at the UEZ location. There are two exceptions to the exemption limitations enacted by New Jersey. The caps will not apply to 1) purchases by a grocery store or supermarket in a food desert community; and 2) purchases of construction materials, supplies and services by a contractor when erecting new structures or substantially improving, altering or repairing a qualifying property.

The New Jersey Division of Taxation, in its notice on the UEZ changes, informed UEZ businesses of its intent to scrutinize the use of the UZ-4 and UZ-5 exemption certificates. Businesses located in and utilizing the sales tax benefits of the UEZ program should take measures to ensure proper tracking and reporting of the $100,000 limitations. The Division of Taxation indicated that taxpayers will be responsible for sales/use tax as well as penalty and interest if they exceed the annual purchase limitations. Please contact HBK’s SALT Advisory group at HBKSalt@hbkcpa.com with questions.

Speak to one of our professionals about your organizational needs

"*" indicates required fields

HBK uses the contact information you provide to send you information about our products and services. You may unsubscribe from these communications any time. For information on how to unsubscribe, as well as our privacy practices and commitment to protecting your privacy, check out our Privacy Policy.