Perspectives

New Jersey adopts sales tax rules for software and related services

Multistate Tax alert | December 15, 2014

The New Jersey Division of Taxation (“Division”) recently released new regulations that address the imposition of sales and use taxes on sales of software and software-related services.

Sales and use tax on software

The New Jersey Division of Taxation (“Division”) recently released new regulations1 that address the imposition of sales and use taxes on sales of software and software-related services. The new regulations, which are effective December 1, 2014 through October 28, 2015, address the following:

  • Modification of the definitions of custom software and installation services
  • Addition or clarification of the definitions of customer support service, modified software, servicing of software and certain software maintenance contracts

In this Tax Alert we summarize the new regulations, which in some instances codify or clarify the Division’s informal policies and practices. Accordingly, taxpayers may wish to revisit their historical New Jersey sales and use tax practices and discuss the new regulations with their vendors.

1 N.J. Admin. Code 18 §§ 18:24-25.1A; 25.6; 25.7; 25.8 (Dec. 1, 2014).

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The Multistate Tax Alert Archive includes external tax alerts issued by Deloitte Tax LLP's Multistate Tax practice during the last three years. These external alerts highlight selected developments involving state tax legislative, judicial, and administrative matters. The alerts provide a brief summary of specific multistate developments relevant to taxpayers, tax professionals, and other interested persons.

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