New Jersey imposes a Litter Fee on wholesale and retail sales of certain consumer products in (or into) New Jersey. Although called a “user fee” by the statute, the Litter Fee is administered by the Division of Taxation and is effectively a gross receipts tax on the sale of “litter generating products.” As the name suggests, “litter generating products” includes food and beverages in disposable wrappers. Less intuitively, the tax also applies to things like checkbooks sold by banks. Anything that is “produced, distributed, or purchased in disposable containers, packages or wrappings” is potentially taxable.
It is not uncommon for taxpayers (especially out-of-state manufacturers and wholesalers) to overlook this “user fee.” If you sell consumer products for resale, but haven’t been filing Litter Fee returns, you may want to consider coming forward under voluntary disclosure. (You may be entitled to participate in a VDA even if you already file returns or are routinely audited for other New Jersey business taxes.)
If you’ve already been contacted for audit, there are statutory exclusions and apportionment methods that can help mitigate your potential exposure. For companies that are already paying the Litter Fee, these issues may even result in a refund opportunity. (Refund claims are due March 15.)
If you have questions about the New Jersey Litter Fee, please contact one of the authors of this alert or another member of the Reed Smith State Tax Group. For more information on Reed Smith’s New Jersey tax practice, visit www.reedsmith.com\njtax.
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Client Alert 2015-043