Moderated by Srishti, Financial Technology Advisor at Hyperbots
Srishti: Hello, everyone! My name is Rishi Rajvir, and I’m a Fintech advisor here at Hyperbots today. I’m delighted to have John Silverstein as my guest. Thank you so much, John, for taking out the time today for our viewers. John is the VP of FP&A at Extreme Reach, and today we will be discussing New Jersey State sales tax and use tax as well as how businesses can stay compliant with these evolving requirements. So shall we get started, John?
John Silverstein: Yeah, let’s get started.
Srishti: Perfect. To get started, can you give us an overview of New Jersey sales tax and use tax rules, particularly regarding which goods and services are taxable and which are exempt?
John Silverstein: Yeah. In New Jersey, most things, particularly tangible personal property, are subject to sales tax—electronics, clothing over $110, and furniture. Certain items are exempt, though, such as groceries, prescription drugs, and medical devices. Similar to other states, New Jersey also imposes a use tax on goods purchased outside the state that are brought back to New Jersey. Many services are exempt, but some, like repairs, maintenance, and certain professional services, can be taxable as well. For example, plumbing repair services are taxable, while labor on a new construction job is not.
Srishti: Understood. And how does New Jersey’s sales tax rate vary across different jurisdictions?
John Silverstein: New Jersey’s sales tax is currently 6.625% and is relatively uniform across the state. However, certain urban areas like Camden, Jersey City, and Newark apply additional local taxes in enterprise zones or specific regional tax incentives. These are typically capped at 6.625% for most purchases. In contrast, certain counties may implement tax exemptions for specific industries, like manufacturing or research, to encourage growth in those sectors.
Srishti: I see. That’s very interesting. Can you share your insights on how frequently these sales and use tax rates change? And what factors contribute to these changes?
John Silverstein: Sales tax rates in New Jersey have been generally stable over many years. They adjust them less frequently than other states, making it easier to keep up with changes. The last major change occurred in 2018 when the rate went up to 6.625%. Changes typically stem from state budget adjustments, legislative actions, or new programs and tax reforms. Additionally, use tax rates are often aligned with sales tax rates. Businesses must monitor rules around out-of-state purchases, which is a unique challenge in New Jersey. Changes can also arise from state agreements or court decisions, like the Wayfair ruling, which altered how remote sales are taxed.
Srishti: That definitely makes sense. On to the next question—what are some of the challenges businesses face in keeping up with New Jersey’s sales and use tax regulations?
John Silverstein: One of the main challenges in New Jersey is ensuring that they correctly apply the state’s sales and use tax to both in-state and out-of-state transactions. With the increased complexity of online sales and cross-border commerce—especially with New Jersey’s proximity to New York and Pennsylvania—it can get tricky. Businesses need to track which goods are taxable, which are exempt, and which require use tax reporting. Keeping up with exemptions for different industries, like manufacturing or nonprofits, or specific zones like urban enterprise zones, can create confusion. The digital landscape adds further complexity, as New Jersey also taxes digital products like software and cloud services.
Srishti: Understood. Where can companies find reliable, up-to-date information on New Jersey sales tax and use tax rates?
John Silverstein: The primary source is the New Jersey Division of Taxation website, which provides accurate and up-to-date sales tax and use tax information. It includes tax rate tables, guides, details on specific exemptions, and examples to help businesses. Third-party resources like Hyperbots, Avalara, and AvaTax also provide real-time updates by monitoring these sites for tax law changes. These tools help automate compliance processes and integrate into ERP systems, making it easier to stay updated and apply correct rates.
Srishti: That is really helpful. Can you share an example of how a business might use these resources to stay compliant with New Jersey sales tax and use tax rules?
John Silverstein: Sure. For instance, an e-commerce company selling products in New Jersey and other states can use Hyperbots or Avalara to automatically calculate the correct sales tax based on the customer’s location. If the customer is in New Jersey, the system applies the 6.625% sales tax rate. If the business ships the product to New Jersey from a neighboring state, it ensures the correct use tax is applied as well. These tools can also track specific tax exemptions, preventing mistakes like charging sales tax on groceries or prescription drugs.
Srishti: I see. Given your experience, how can AI help companies stay on top of sales tax and use tax changes in New Jersey?
John Silverstein: AI is incredibly helpful and already providing huge benefits. It applies sales and use tax rates accurately with tools like Hyperbots or Avalara. AI automatically monitors rate changes at state and local levels, flags new rules or modifications, and updates systems immediately. It checks tax authority updates and learns over time, improving its understanding of specific transactions. This reduces human error and ensures proper categorizations of taxable products.
Srishti: Perfect and for the last question, are there any specific AI tools or features you would recommend for managing sales tax and using tax compliance in New Jersey?
John Silverstein: I highly recommend tools like Hyperbots or Avalara. These integrate with ERP systems, ensuring compliance without the added cost of manual oversight. They provide real-time updates, automatic application of rates, and seamless integration into your ERP. AI tools with features like jurisdiction mapping, exemption handling, and automated tax calculation streamline compliance and ensure accuracy across transactions.
Srishti: That’s amazing. This has been really helpful. Thank you so much, John, for providing valuable insights on managing sales tax and use tax in New Jersey and the role AI is playing in simplifying compliance. And to our viewers, thank you for staying with us. That’s all we have for today. Thank you so much. Goodbye, and see you next time!
John Silverstein: Alright. Thank you.
Moderated by Kate, Financial Technology Consultant at Hyperbots
Kate: Hello, everyone! Good morning. My name is Kate, and I’m a financial technology advisor here at Hyperbots. Today, I’m thrilled to have John with me. Hey, John, how are you doing today?
John Silverstein: Great, thanks for having me again.
Kate: Thank you for joining us. So, a little bit about John—he’s the Vice President of Finance Process and Accounting at XR Extreme Reach. Today, John and I will be discussing the nuances of New York State’s sales tax system and how businesses can keep up with the complexities of compliance. Let’s get started. So, coming to the first question, can you provide an overview of New York State sales tax rules, particularly regarding which goods and services are taxable, and which are exempt?
John Silverstein: Yeah, in New York State most things are taxable for personal goods, including electronics, clothing above $110, and home goods. Essential items, however, are not, such as unprepared foods. Prescription medications are exempt. Services are generally exempt, though there are exceptions to that as well. For example, admission to entertainment events and some repair services are taxable. Utilities, like electricity, are taxed differently across jurisdictions.
Kate: Understood. So how does New York State’s sales tax rate vary across different jurisdictions?
John Silverstein: Yeah. New York sales tax has a base tax rate of 4%. However, local jurisdictions add additional rates, which leads to significant variation across the state. For example, New York City has a combined rate of 8.875%, while other areas, such as Nassau County, have rates around 8.625%. These local adjustments mean that companies across the state with a presence need to be especially diligent in tracking local rates and what they would have to charge if they were in multiple jurisdictions.
Kate: I agree. So how frequently do these sales tax rates change in New York State, and what factors contribute to these changes?
John Silverstein: Yeah, so the sales tax rates in New York can change every quarter. That’s often—many other states only make annual adjustments, or it’s not as frequent. However, New York allows for changes every quarter, especially when local governments adjust the rates to meet revenue needs or when special district taxes are implemented. The State Department of Taxation and Finance oversees these updates, but the local jurisdictions have flexibility in setting their own rates, especially in the urban areas where there’s higher demand for public services.
Kate: That does make a lot of sense. Moving on, what are some of the biggest challenges for businesses trying to keep up with these fluctuating sales tax rates?
John Silverstein: The biggest challenge is the complexity created by having over 70 counties, cities, and school districts with all their own tax rates. Companies with multiple New York locations or an e-commerce presence have to continually monitor and apply these changes accurately. This can quickly become a manual and error-prone process, particularly for businesses processing a large number of transactions. And the key point there, too—it’s not just your presence in retail, it’s also e-commerce, where you’re selling in customer locations.
Kate: Wow! That sounds like quite a task. So where do companies find reliable information on New York State sales tax rates and any recent changes?
John Silverstein: Yeah, similar to most states, the New York State Department of Taxation is the primary source for sales tax rates and regular updates. It also has a sales tax web file tool with a downloadable list of the tax rates by jurisdiction.
There are other resources, too, that include tax compliance platforms like Hyperbots and Avalara’s AvaTax. They automate these tax calculations and track the updates across jurisdictions in real-time.
Kate: I understand. Could you maybe give an example of how a business might use these resources to stay compliant?
John Silverstein: Sure. Suppose a retail company operates across New York and sells both online and in-store products. Hyperbots and Avalara can automatically apply the correct sales tax rates for each sale, whether it’s in Manhattan or Buffalo. These tools continuously sync with the state’s databases, so if New York City adjusts its rates, the tools automatically reflect that change, minimizing your risk of under- or over-collecting sales tax.
Kate: That’s insightful. The next question: How can AI help companies stay updated and compliant with sales tax regulations, especially given the variability in New York’s local rates?
John Silverstein: AI can give you some peace of mind in this because it can have a significant role in tracking, updating, and implementing these sales tax rates. With AI-powered tools like Hyperbots, companies can monitor the Department of Taxation and Finance for updates. They can receive alerts when rate changes are detected. The AI system can even apply the correct tax rates based on customer zip codes, which ensures accurate compliance across New York’s many jurisdictions, not just at the state level.
Kate: That makes a lot of sense. So we have reached almost the end of our discussion today. The last question for today: Are there any specific AI tools or features you’d recommend for managing sales tax compliance in New York?
John Silverstein: Yeah. Hyperbots and Avalara’s AvaTax are both excellent choices. There are, of course, other tools out there. Real-time rate calculations and tracking are critical. You need to invest in these so you’re not trying to do it manually, where you run the risk of errors. It’s generally not worth it, particularly if you have any sort of volume in these jurisdictions. These platforms integrate with ERP systems, so it’s automatic. You can file your taxes and reports directly.
So you don’t have to deal with the administrative burden of hiring people to manage it. AI can also track and calculate rates and help companies focus on their operations instead of worrying about which rate should be applied to the invoice.
Kate: I couldn’t agree more with you, John, on this. Thank you so much, John, for sharing these valuable insights into managing New York’s sales tax requirements and how AI is transforming the compliance landscape. Thank you so much for joining us today.
John Silverstein: No problem. Have a great day.
Kate: Have a great day.
