54:32B-7 Special rules for computing price and consideration.

7. (a) The retail sales tax imposed under subsection (a) of section 3 and the compensating use tax imposed under section 6, when computed in respect to tangible personal property and specified digital products wherever manufactured, processed or assembled and used by such manufacturer, processor or assembler in the regular course of business within this State, shall be based on the price at which items of the same kind of tangible personal property or specified digital products are offered for sale by him.

(b) Tangible personal property or a specified digital product, which has been purchased by a resident of the State of New Jersey outside of this State for use outside of this State and subsequently becomes subject to the compensating use tax imposed under this act, shall be taxed on the basis of the purchase price of such property or product, provided, however:

(1) That where a taxpayer affirmatively shows that the property or the product was used outside such State by him for more than six months prior to its use within this State, such property or product shall be taxed on the basis of current market value of the property or the product at the time of its first use within this State. The value of such property or product, for compensating use tax purposes, may not exceed its cost.

(2) That the compensating use tax on such tangible personal property or specified digital product brought into this State (other than for complete consumption or for incorporation into real property located in this State) and used in the performance of a contract or subcontract within this State by a purchaser or user for a period of less than six months may be based, at the option of the taxpayer, on the fair rental value of such property or product for the period of use within this State.

(c) Leased tangible personal property or specified digital product which has been purchased outside this State for lease outside of this State and subsequently becomes subject to the compensating use tax imposed under this act shall be taxed on the basis of the purchase price of such property or product, provided however, that the compensating use tax on such property or product brought into and used within this State may be based on the total of the lease payments attributable to the lease of that property or product attributable to the period of the lease remaining after first use in this State.

(d) Sales tax imposed on the lease or rental of tangible personal property or a specified digital product in New Jersey shall be based on either the total of the periodic payments required under the agreement or the original purchase price of the property or product. The full amount of sales tax due on the complete term of a lease or rental for more than six months shall be remitted with the monthly or quarterly sales and use tax return due for the period in which the leased personal property or product was delivered to the lessee in this State. However, if the tax is paid on a lease or rental based on the original purchase price of the tangible personal property or specified digital product, a subsequent lease or rental of the same property or product shall not be subject to the tax imposed under P.L.1966, c.30 (C.54:32B-1 et seq.).

If leased property or a product is subsequently removed on a permanent basis from this State, the lessee shall be entitled to a refund of the tax allocable to the portion of the lease or rental that remains in effect after the property or the product has been removed from this State, but only if the other state does not allow a credit for the sales or use tax paid to this State on the lease or rental transaction, and further, in the case of property or a product removed to a state that imposes or computes tax on leases or rentals based on a lump sum or accelerated basis, only if the other state also allows a corresponding refund with respect to the lease of property or product upon which a sales or use tax is due and paid to this State.

(e) The purchase of energy shall be subject to the compensating use tax imposed under section 6 on the basis of the purchase price of the energy, including any charges for utility service.

L.1966, c.30, s.7; amended 1989, c.123, s.3; 1997, c.162, s.20; 2005, C.126, s.5; 2006, c.44, s.6; 2011, c.49, s.5.