This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The Taxman Trolls the Interstate

BERKELEY HEIGHTS, N.J. ( TheStreet) -- As the year-end holiday and the New Year celebrations fade into the background, tax season is upon us. Given the economic slowdown and the state's enormous looming financial obligations (pensions, retiree health) states are getting more aggressive in looking to raise tax revenues.

For example New Jersey has a form called the "New Jersey Sales and Use Tax Form." The New Jersey Sales and Use Tax act has been around for awhile and requires a tax be paid when goods and services are purchased for use in New Jerseyand sales tax was not collected by the retailer in the state of purchase, or was collected at a lower rate than the New Jersey rate of 7%. So what is different this year? New Jersey residents are required to answer the following questions right on their 2011 tax return:

  • Did you make untaxed purchases from out-of-state retailers (e.g., on Internet)?
  • Did you have individual purchases less than $1,000?
  • For purchases less than $1,000, do you have all the receipts to enter below?
  • If you answer "No," the optional use tax table will be compared to the use tax on entered purchases less than $1,000, and the greater tax will be used. If you answer "Yes," the use tax will be calculated based on your entries below.
  • Did you have individual purchases of $1,000 and greater? You must enter individual purchases below.

The State of New Jersey wants you to self-report all single taxable purchases greater than $1,000 with out-of-state retailers and pay the New Jersey 7% sales tax. Also, for smaller individual purchases (under $1,000 each) you provide untaxed individual purchases and apply the 7% rate. If you don't have the receipts the State of New Jersey is happy to provide a table to calculate a use tax based on your New Jersey gross income.

For New Jersey residents with untaxed out-of-state individual purchases greater than $1,000, keep in mind it is likely the state is attempting to collect sales data from out-of-state retailers. As technological advances continue the states will be in a better position to evaluate how truthful you have been about purchases.

Many states other than N.J. are in tough financial straits so it is not hard to imagine this fast becoming the norm, no matter where one resides. The bottom line is, the days of making out-of-state purchases to avoid sales tax are likely ending.

Michael Maye is the founder and president of MJM Financial Advisors (www.mjmfinadv.com), a registered investment advisory firm in Berkeley Heights, N.J. He is a member of the National Association of Personal Financial Advisors (NAPFA) and has been a speaker covering tax topics at NAPFA's national and regional conferences. Maye has also been a frequent contributor to the Star Ledger of New Jersey's "Biz Brain" and "Get With the Plan" articles. In addition to NAPFA, he is a member of Financial Planning Association, American Institute of Certified Public Accountants, New Jersey State Society of CPAs and the Estate Planning Council of Northern New Jersey.

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,416.85 +225.48 1.31%
S&P 500 2,021.25 +19.09 0.95%
NASDAQ 4,683.4070 +45.4130 0.98%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs