Notice: Exemptions from State Occupancy Fee
and Municipal Occupancy Tax
(10/02/03)
Effective August 1, 2003, a State Occupancy Fee is imposed on the rental of a room in a hotel, motel or similar facility in every New Jersey municipality other than Jersey City, Newark, Atlantic City, Wildwood, Wildwood Crest, and North Wildwood. In those municipalities, the State Occupancy Fee is imposed at a lower rate. In Jersey City, Newark and Atlantic City, it is 1%; in the Wildwoods, it is 3.15%. For a list of the municipalities that have done so, see the Municipal Occupancy Tax list, available at: http://www.state.nj.us/treasury/taxation/munitaxlist.shtml
In addition, municipalities other then Jersey City, Newark, Atlantic City, Wildwood, Wildwood Crest, and North Wildwood may enact an ordinance imposing a Municipal Occupancy Tax.
There is an exemption from paying the State Occupancy Fee for:
The Municipal Occupancy Tax, if enacted by a municipality, is administered in the same manner as the State Occupancy Fee. If a customer is exempt from the State Occupancy Fee, they are also exempt from the Municipal Occupancy Tax.
Exempt Organization Certificate Holders (ST-5)
Although certain qualified non-profit organizations are exempt from New Jersey sales tax under the New Jersey Sales & Use Tax Act, the new law does not provide an exemption from the State Occupancy Fee or the Municipal Occupancy Tax for these exempt organizations (ST-5 holders).
If you receive or have on file an ST-5 for a particular customer, which is the required documentation for sales tax exemption for a non-governmental exempt organization, you must collect the State Occupancy Fee and the Municipal Occupancy Tax, if applicable, on such room occupancies.
There are certain exempt organizations offering rooms or shelter as part of their operation. Such exempt organizations which, by law, are not required to collect sales tax on occupancies which are directly related to their organizational purposes, are also not required to collect and remit the State Occupancy Fee or Municipal Occupancy Tax (e.g.Y.M.C.A).
Educational Institutions
New Jersey local school districts and public educational institutions are considered to be instrumentalities of New Jersey and are exempt from the Sales Tax, the State Occupancy Fee and the Municipal Occupancy Tax . New Jersey government entities, including public schools, are not issued ST-5 Certificates. Their official letterhead or official purchase order is sufficient proof that they are exempt from fee. Payment must be made by school check or voucher.
Private educational institutions, as well as out of state school districts, are not instrumentalities of New Jersey. Although they are exempt from New Jersey Sales Tax upon presentation of an ST-5 Certificate, they are not exempt from the State Occupancy Fee or the Municipal Occupancy Tax.
Governmental Exemption
If you receive or have on file a government entity letter issued by the Division of Taxation, the letter is valid documentation that the customer is a government entity, so you are not required to collect the Sales Tax, the State Occupancy Fee or the Municipal Occupancy Tax, if applicable, on such room occupancies.
An official purchase order or contract on Federal or New Jersey government letterhead is also valid documentation for a government entity, so if you receive or have on file such a document, you are not required to collect the Sales Tax, the State Occupancy Fee or the Municipal Occupancy Tax, if applicable, on the room occupancy.
In addition to the appropriate governmental documentation, payment must be made by one of the following methods:
For Federal Employees:
U.S Government check or voucher
U.S. Government IMPAC Card
U.S. SmartPay Credit Card having #0,6,7,8 or 9 as the sixth digit (charge is directly billed to & paid by the U.S. Government.)
For State of New Jersey:
State of New Jersey agency, instrumentality or political subdivision check or voucher.
NOTE: If payment is made with a government employee's own funds, the governmental exemption does not apply, even if the employee will be reimbursed by the government entity.
Permanent Resident Exemption
There is an exemption in the New Jersey Sales & Use Tax Act for the rental of a room to a "permanent resident," which is defined as a person who occupies a room in a hotel for 90 consecutive days. The same exemption is available for the State Occupancy Fee and Municipal Occupancy Tax. For more information about this exemption, see the Division's Notice available at: http://www.state.nj.us/treasury/taxation/occexempt.shtml
Rooms for Assembly Purposes
The Sales Tax, the State Occupancy Fee and the Municipal Occupancy Tax are not imposed on the charge for the rental of a room in a hotel/motel for the purpose of assembly, e.g. a meeting, seminar, wedding, etc.
In addition, municipalities other then Jersey City, Newark, Atlantic City, Wildwood, Wildwood Crest, and North Wildwood may enact an ordinance imposing a Municipal Occupancy Tax.
There is an exemption from paying the State Occupancy Fee for:
- agencies and instrumentalities of the United States;
- agencies, instrumentalities, public corporations or political subdivisions of the State of New Jersey;
- the United Nations or any international organization of which the U.S. is a member.
The Municipal Occupancy Tax, if enacted by a municipality, is administered in the same manner as the State Occupancy Fee. If a customer is exempt from the State Occupancy Fee, they are also exempt from the Municipal Occupancy Tax.
Exempt Organization Certificate Holders (ST-5)
Although certain qualified non-profit organizations are exempt from New Jersey sales tax under the New Jersey Sales & Use Tax Act, the new law does not provide an exemption from the State Occupancy Fee or the Municipal Occupancy Tax for these exempt organizations (ST-5 holders).
If you receive or have on file an ST-5 for a particular customer, which is the required documentation for sales tax exemption for a non-governmental exempt organization, you must collect the State Occupancy Fee and the Municipal Occupancy Tax, if applicable, on such room occupancies.
There are certain exempt organizations offering rooms or shelter as part of their operation. Such exempt organizations which, by law, are not required to collect sales tax on occupancies which are directly related to their organizational purposes, are also not required to collect and remit the State Occupancy Fee or Municipal Occupancy Tax (e.g.Y.M.C.A).
Educational Institutions
New Jersey local school districts and public educational institutions are considered to be instrumentalities of New Jersey and are exempt from the Sales Tax, the State Occupancy Fee and the Municipal Occupancy Tax . New Jersey government entities, including public schools, are not issued ST-5 Certificates. Their official letterhead or official purchase order is sufficient proof that they are exempt from fee. Payment must be made by school check or voucher.
Private educational institutions, as well as out of state school districts, are not instrumentalities of New Jersey. Although they are exempt from New Jersey Sales Tax upon presentation of an ST-5 Certificate, they are not exempt from the State Occupancy Fee or the Municipal Occupancy Tax.
Governmental Exemption
If you receive or have on file a government entity letter issued by the Division of Taxation, the letter is valid documentation that the customer is a government entity, so you are not required to collect the Sales Tax, the State Occupancy Fee or the Municipal Occupancy Tax, if applicable, on such room occupancies.
An official purchase order or contract on Federal or New Jersey government letterhead is also valid documentation for a government entity, so if you receive or have on file such a document, you are not required to collect the Sales Tax, the State Occupancy Fee or the Municipal Occupancy Tax, if applicable, on the room occupancy.
In addition to the appropriate governmental documentation, payment must be made by one of the following methods:
For Federal Employees:
U.S Government check or voucher
U.S. Government IMPAC Card
U.S. SmartPay Credit Card having #0,6,7,8 or 9 as the sixth digit (charge is directly billed to & paid by the U.S. Government.)
For State of New Jersey:
State of New Jersey agency, instrumentality or political subdivision check or voucher.
NOTE: If payment is made with a government employee's own funds, the governmental exemption does not apply, even if the employee will be reimbursed by the government entity.
Permanent Resident Exemption
There is an exemption in the New Jersey Sales & Use Tax Act for the rental of a room to a "permanent resident," which is defined as a person who occupies a room in a hotel for 90 consecutive days. The same exemption is available for the State Occupancy Fee and Municipal Occupancy Tax. For more information about this exemption, see the Division's Notice available at: http://www.state.nj.us/treasury/taxation/occexempt.shtml
Rooms for Assembly Purposes
The Sales Tax, the State Occupancy Fee and the Municipal Occupancy Tax are not imposed on the charge for the rental of a room in a hotel/motel for the purpose of assembly, e.g. a meeting, seminar, wedding, etc.
