Bulletin: NJ000117

Limited information is available about the new requirement for the 7% sales tax on "Information Services" that goes into effect on October 1st.

The new law [N.J.S.A. 54:32B-3(b)(12)] defines "Information Services" as the furnishing of information of any kind, which has been collected, compiled, or analyzed by the seller, and provided through any means or method, other than personal or individual information which is not incorporated into reports furnished to other people.

The New Jersey Division of Taxation has now published information on their web site that addresses the definition of "information services" at:

http://www.state.nj.us/treasury/taxation/infoservices.htm

While the State memo makes it clear that the sales tax does not apply to title insurance services when we are insuring title, it does not clearly define whether the tax must be collected when we prepare foreclosure searches or special searches where insurance will not be required.  While it appears that the tax may not apply to these non-insurance searches, we can not advise our agents in this regard and we refer you to your accountant or other tax professional.

We have been informed by abstractors and vendors providing tax and assessment searches, judgment searches, tidelands searches, etc., that they will be charging the 7% sales tax.   When sales taxes are charged on search items that normally constitute pass through charges, the new tax will likewise be passed through to the consumer and the full charge with the tax should be listed on your title bills.  Since the county search does not constitute a 'pass through charge' the cost of that search to you will increase by the 7% tax. 

The New Jersey Land Title Association Rating Bureau is applying for an amendment to section 7.6 of the Rate Manual, "Other Miscellaneous Charges", to include sales and use taxes levied by the State of New Jersey .  Should the Department of Banking and Insurance approve that filing, the sales tax will become a pass through charge at that time.

We will keep you informed of any further developments or available information regarding the sales tax issues as warranted.