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The New Jersey Division of Taxation technical bulletin for the taxability of purchases made by lawyers and law firms.

NJ Taxability of Lawyer/Law Firm Purchases

The New Jersey Division of Taxation recently issued a technical bulletin (TB-69) regarding the taxability of purchases made by lawyers and law firms.  As provided in N.J.S.A. 54:32B-2(e)(4)(a), lawyers who practice in New Jersey are not required to collect sales tax on charges for professional services they perform for their firm or practice.  Examples of these non-taxable professional services include:  

  • Court Appearances,
  • Filing of Pleadings,
  • Opinions,
  • Legal Forms,
  • Consultations, and
  •  Writing wills or briefs

However, New Jersey law firms are required to pay sales or use tax on any purchases of taxable tangible personal property, specified digital products, and certain services used by the firm, unless an exemption applies.  Some examples of taxable services include:

  •  Detective and Private Investigative Services  - for discovery purposes,
  •  Legal Library Materials,
  • Trade Magazines and Journals, and
  • Online Legal Research Aids – LexisNexis, Westlaw, BNA, RIA, CCH, etc.

Law firms should report and remit any use tax due on the Annual Business Use Tax Return (Form ST-18B).  However, if the annual use tax liability for the law firm exceeds $2,000 over the last three years, then the law firm must change its business registration to include sales tax and begin to file quarterly/monthly sales and use tax returns (Forms ST-50/51).

For further information and an extensive list of purchases common to law firms and the taxability, please refer to New Jersey Division of Taxation – Technical Bulletin TB-69.
 

 

Andria Siciliano is a Senior Manager in the State and Local Tax Group with expertise in state and local sales and use taxation, plus payroll, property and income tax compliance and consulting.

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