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Audit just Finished, New Jersey

Discussion in 'Business Operations' started by TJLANDS, Nov 3, 2007.


    TJLANDS LawnSite Bronze Member
    Posts: 1,669

    Took them 5 visits(2 auditors) over 2 months but we just settled.
    They did a full NJ State audit for 03-06. Sales tax, personal income tax and a full company audit. Every check, every invoice what a royal PITA.
    When it was all said and done the only thing they got me on was
    USE TAX. For me even after all the years in business and two accountants I still had something to learn. Use Tax.
    The only reason I am writing this is to make sure other Landscapers are aware of this.
    Every time a supplier, for anything, doesn't charge you sales tax you are responsible to pick it up as USE tax on your monthly sales tax. I had many suppliers, bulk mulch from out of state, Synthetic putting green suppliers from out of state, rock salt from out of state, even a couple garden centers that did not charge me sales tax.
    In NJ no landscape company is exempt from paying tax on materials purchased. For any reason. ST3 etc doesn't matter.
    For this I had to pay up 5 figures. Supposedly they are targeting Lawn and landscape companies right know, my auditor said they have 5 of them doing audits on landscapers. And mine was good compared to the stuff she had seen.
    I personally feel that paying sales tax on a mulch delivery and then charging the customer again the sales tax when we deliver and install it is double taxation but what do I know.

    Anyway maybe you guys are aware and maybe you aren't
  2. MLI

    MLI LawnSite Senior Member
    from Ma
    Posts: 464

    what triggered the audit? random?

    TJLANDS LawnSite Bronze Member
    Posts: 1,669

    Just random, I know a couple that have been done lately. It is just the state of NJ looking for money.
  4. JimmyStew

    JimmyStew LawnSite Senior Member
    Posts: 367

    Maybe NJ is different but here in Maine, USE tax is paid on any item that I don't resell and didn't pay sales tax on from my supplier whether because they sell to me wholesale or I purchased from out of state. If I buy an item tax free and then sell it to a customer and charge them sales tax, I don't pay a use tax on it.

    I'm hoping that you are misunderstanding your state law because if it is as you described it...:nono:

    TJLANDS LawnSite Bronze Member
    Posts: 1,669

    It is exactly how i described it.
  6. lawnMaster5000

    lawnMaster5000 LawnSite Senior Member
    Posts: 589

    In MO any material once installed permanently becomes "real property" and not "personal property" since you are making those materials part of the "Real Estate". Real property is not subject to a state sales tax the same way personal property is. The "permanently" thing is very confusing but most things not just handed to the client qualify.

    Therefore if I purchase a material tax free and install it at a clients property then no tax has yet been paid. I am required to then pay a use tax on those materials. I have the option of paying a sales tax when I purchase (if bought in state) those materials and then i am not required to pay the use tax. Anything I bring in from out of state I am pretty sure I am required to pay a use tax on.

    Disclaimer: This is my understanding of the local laws and as we all know they are guaranteed to be different in actuality than what we understand them to be.

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