April 12, 2019 Jersey City, New Jersey quarterly reporting form and frequently asked questions released The Jersey City quarterly payroll tax return is now available on the Jersey City Office of Tax Collector website. The return for the first quarter 2019 must be received by April 30, 2019. Registration information is also available on the website. As we reported, New Jersey Superior Court judge held that the recently established Jersey City, New Jersey payroll tax is constitutional and valid and the lawsuit brought by several Jersey City employers and state employer groups is dismissed. The New Jersey Business and Industry Association (NJBIA) reports that an appeal of the decision was filed. (EY Payroll Newsflash Vol. 20, #046, 3-18-2019.) Frequently asked questions and answers The department has provided answers to the following frequently asked questions. 1. If my business has a quarterly payroll less than $2500 or if all of my employees are Jersey City residents, do I still need to file a tax return? No, but you must still register your business. 2. Is there a minimum amount of time worked in Jersey City needed for non-residents? No. 3. We have a sales person who does not live in Jersey City but one of his many locations is Jersey City. Would he qualify for the new tax? Yes. Per section 304-18 (Definitions) Payroll shall mean an amount equal to the total remuneration paid by an employer to employees which is subject to federal income tax withholding by the employer for federal income tax purposes for services rendered, other than domestic services in a private residence, if the services are performed within the City of Jersey City. 4. The new tax applies to payroll (a) for services performed within Jersey City or (b) services performed outside of Jersey City if supervised from within Jersey City. Regarding the former, what standards/thresholds will Jersey City employ with respect to payroll for services performed within Jersey City? For example, let's assume a non-Jersey City company sends employees into Jersey City to perform services within Jersey City. Assume for these purposes the employees are non-Jersey City residents. If the employees work within Jersey City for one day, does the tax apply? Yes. Per section 304-18 (Definitions) payroll shall mean an amount equal to the total remuneration paid by an employer to employees which is subject to federal income tax withholding by the employer for federal income tax purposes for services rendered, other than domestic services in a private residence if the services are performed within the City of Jersey City. 5. Is there a de minimis exception? No. 6. For example, let's assume a law firm located in Princeton sends a non-partner lawyer (a resident of Princeton) to a client in Jersey City. If the lawyer works at the client location for one week, does the law firm have a compliance obligation with Jersey City under the new tax? Let's assume the lawyer works in Jersey City for a single half-day meeting. Is this minimal activity sufficient to trigger a compliance obligation? Yes. 7. Assuming no, what if a team of (non-partner) lawyers (all non-residents) was sent from Princeton to Jersey City to work from the client's offices for several weeks? At what point should a taxpayer file? File/pay for the quarter in which the activities occurred. City of Jersey City — Payroll Tax Q&A 1. Now assume the law firm is located in New York City, as opposed to Princeton. Does the inter-state relationship alter the answers to the above questions? No. 2. We understand that litigation has been filed challenging the constitutionality and legality of the new tax. What is the status of the litigation? Does the litigation impact compliance obligations while the outcome of the litigation is pending? On March 15, 2019, Judge Peter Bariso ruled that Ordinance 18-133 is "valid as a matter of law." 3. We are an employer located in Pennsylvania. I am confused if we are required to pay the new payroll tax. We have one employee who lives in Bayonne but does work in Jersey City. We are a staffing agency and she works at a remote job site for one of our clients so we do not have a physical office in Jersey City. The FAQ page says the tax is for employers who are located in the city, therefore, does the tax apply to us? Yes. Per section 304-18 (Definitions) Payroll shall mean an amount equal to the total remuneration paid by an employer to employees which is subject to federal income tax withholding by the employer for federal income tax purposes for services rendered, other than domestic services in a private residence, if the services are performed within the City of Jersey City. 4. We are a corporation based out of Connecticut and have one employee who lives in New Jersey and services one customer in Jersey City. His territory is the entire state. Are his wages subject to the new tax when he performs work in Jersey City only? He is a Field Service Engineer who would perform work on equipment when it is down, so the actual visits to this customer are infrequent. Yes. Per section 304-18 (Definitions) Payroll shall mean an amount equal to the total remuneration paid by an employer to employees which is subject to Federal income tax withholding by the Employer for Federal income tax purposes for services rendered, other than domestic services in a private residence, if the services are performed within the City of Jersey City. 5. Will all wages for non-Jersey City residents be taxed or does the ordinance set a limit on the taxable wages? The ordinance exempts businesses with wages under $2500/quarter from the payroll tax, However if quarterly wages exceed $2500, ALL wages are subject to the 1% Background on the Jersey City payroll tax In November 2018 the Jersey City, New Jersey city council unanimously approved the establishment of a 1% payroll tax paid by employers. The mayor swiftly approved the ordinance. (Ordinance 18-133; EY Payroll Newsflashes Vol. 19, #190, 11-28-2018 and Vol. 20, #044, 3-12-2019.) This tax is paid by employers and is not withheld from wages paid to employees. All private for-profit employers located within Jersey City with a quarterly gross payroll of $2,500 or more are subject to the tax on the wages of non-Jersey City residents. According to the tax office, employers with zip codes 07302, 07304, 07305, 07306, 07307, 07310, 07311, and 07312 are covered by the ordinance. Employees living within these same zip codes are considered Jersey City residents for the purpose of exclusion. Services by employees are covered if:
The employer may be required to provide the tax office with written evidence and documentation of the relevant Jersey City residents to be excluded from the payroll tax calculation. Beginning first quarter 2019, employers are required to file and pay the new tax on a quarterly basis, with the first return and payment due by April 30, 2019. According to the Jersey City tax office, the payment must be received by the due date — payments postmarked on the due date are not considered to be filed timely. State legislation allowed for the new payroll tax AB 4163, enacted by the New Jersey state legislature in mid-2018, allows municipalities with a population of over 200,000 to establish an employer payroll tax of up to 1%. (EY Payroll Newsflash Vol. 19, #109, 6-27-2018.) Currently, only Newark and Jersey City meet the population requirement; however, Newark already imposes a 1% payroll tax on businesses. ———————————————
——————————————— EY Payroll News Flash
| |||||||
| |||||||
