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Published in U.S. 1 Newspaper on August 9, 2000. All rights
Sales Tax Law: Susan Feeney
If you thought doing your own taxes every April was
confusing, try doing it every day for a living and try concentrating
on sales and use tax — as tax managers at manufacturing companies
in New Jersey are doing. Susan Feeney
law firm McCarter & English LLP, will lecture about sales and use
tax at a seminar, called "New Jersey Sales and Use Tax for
on Wednesday, August 16, at 8:30 a.m. Also speaking will be Steven
P. Sukel, a sole practitioner. Hosted by the National Business
Institute, the seminar will be at the Holiday Inn on Route 1 South.
Cost: $189. Call 715-835-7909.
"Tax managers are the people who are making the tax decisions
within companies on a day-to-day basis," says Feeney,
on whether or not something is going to be taxed. They have to know
and interpret the rules."
And the rules about sales tax in New Jersey and whether or not
will be taxed can get pretty confusing, says Feeney. Many questions
come up for tax managers about what types of things are exempt and
those that aren’t, and there many gray areas, she says (E-mail:
A member of various local tax committees and state and county bar
associations, including New Jersey and New York, she went to Seton
Hall, Class of 1978, and Fordham law school. An amateur equestrian
she lives in Skillman with her Arabian horse "Sahara Hassan."
Feeney chose to focus on state and municipal tax law not only because
it is useful in everyday life but also because it offers substantive
answers. "I get to deal with controversy and to litigate but at
some point there is a yes or no answer." In 1979 New Jersey was
one of six states to have a tax court, and others have followed suit.
"Our tax court is very well-respected across the nation."
In the mid 1980s Feeney was involved with two cases against the state
Division of Taxation that established the tax rule that some retail
coupons are not subject to sales tax. "It’s equivalent to a cash
discount. Sales tax gets collected on how much goes into the cash
register," she says.
In one case, for Great Adventure, she helped establish that sales
tax on an admission charge need be collected only on the discounted
amount. In another case, she represented Burger King Corporation,
and proved that tax need not be paid on a cents-off coupon if the
discount comes out of the franchisee’s pocket. "Most fast food
companies charge tax on the coupon when they shouldn’t," says
Manufacturers’ coupons are different, however. A retailer can get
reimbursed for these, says Feeney, so the retailer must charge sales
tax. But if, for instance, a supermarket has a "double coupon"
policy, the customer should pay tax only on the value of the coupon,
not on the doubled coupon.
Retailers can also get reimbursed for bad debts that have been written
off. In the late ’80s, for instance, appliance dealers were supplying
appliances for condos but weren’t getting paid. Their cash flow
were made worse because sales tax is due when the goods change hands.
"If you wrote off a debt for federal tax purposes you can usually
apply for reimbursement for the state tax," says Feeney.
All sales on products — with 40 enumerated exceptions — are
subject to tax in New Jersey, but for services, only a half dozen
of them are taxable, she says. They include telecommunications,
and processing services, installation and maintenance to tangible
personal property (such as repairs to watches, cars, and televisions),
storage and safe deposit box rental, and utilities (electricity and
Some puzzling exceptions: Sales tax on real estate maintenance and
repair requires contract lawn and cleaning services to pay sales tax,
but not garbage removal services. Capital improvements, such as
landscaping, are also exempt. Also, a 1998 repeal on advertising
left in place a tax on direct mail services for offers mailed by a
New Jersey firm to an address in New Jersey, but no tax is collected
from out-of-state firms that do this mailing.
The seminar will focus mainly on manufacturing and the rules for tax
exemptions that affect businesses in this industry. "There are
many manufacturing businesses in New Jersey," says Feeney. And
"manufacturing is one area that has a broad range of rules
Decisions have to be made about the equipment and machinery used by
manufacturing companies, "such as whether or not new equipment
purchased will be exempt and on what conditions," and decisions
about the repair and installation of equipment. "If my machinery
is installed as part of the real estate, not just bolted to the floor,
I can make a case for not paying sales tax," says Feeney. Other
problem areas for exemption are research and development expenses,
chemicals and catalysts, and safety and recycling equipment.
Bottom line: follow the rules. Says Feeney: "Small companies that
do not collect the tax for years — and get audited — can be
— Crista DiCostanzo
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