NJ Taxing WDF?

[JamesD]

I just received the following from my accountant. It is supposed to start October 1. I don't know if it applies to general WDF or if it going to be pushed towards self-service as well. I know that some states are making a push towards taxing services as our economy is changing.

I am awaiting a reply from my accountant.

I thought CLA was monitoring this. Does anyone have more specific info inside or outside of CLA?

SEE ATTACHED FROM NJ:

Laundering (N.J.S.A. 54:32B-3(b)(2))
>
> The law specifically limits the sales tax exemption
> for laundering, dry
> cleaning, tailoring, weaving, and pressing to
> providing these services to
> clothing. As a result, all of these services will be
> taxable when performed
> on property such as draperies, carpets, blankets,
> comforters, slipcovers,
> tablecloths, napkins, dust cloths, mats, mops,
> industrial wiper cloths,
> fender covers, bed linens, hospital linens, table
> linens, linen supply
> towels and other cloths.

[BrianWallace]

Hello to all: CLA and NJCLA have been very active monitoring the NJ budget crisis and resulting legislation. As early as April, CLA and NJCLA retained a prominent lobbying firm in Trenton to protect the industry's interests related to sales tax. We took this action after the Governor made it clear that he intended to not only raise the rate of sales tax from 6% to 7%, but also review all existing sales tax exemptions - like the exemption enjoyed by self-service laundry in New Jersey.

Our lobbyist kept us well-informed through out the process; especially during the chaotic "overtime" days during which the Governor shut-down state government while pushing for a final budget deal. I personally monitored the bill referenced in JamesD's post. It was fast-moving bill A4901 - it was introduced on 7/6 and signed into law on 7/8.

The net result of the bill (among many other items not related to laundry) is to uphold the sales tax exemption for self-service laundry and clarifying the fact that sales tax is applicable to laundering of non-clothing items effective October 1 of this year. Those operators offering W-D-F will remain exempt; those doing commercial accounts for items other than clothing may be subject to sales tax as I read this bill. I confirmed this understanding in a call to the NJ Dept. of Revenue today.

Preserving the sales tax exemption for self-service laundry has always been the primary legislative goal for CLA and I am pleased that this exemption has been protected in NJ by the combined efforts of CLA and the New Jersey Coin Laundry Association. This work is a prime example of what CLA does everyday to protect the industry and the type of important projects funded by member dues.

I personally briefed members of NJCLA on this issue at their May 11th meeting. To learn more about this bill, I recommend visiting www.njleg.state.nj.us (http://www.njleg.state.nj.us) and using the bill search on the homepage. Enter Assembly bill number 4901 (or the identical Senate bill 1996) and you will have access to both a synopsis of the bill and the full language of the bill.

Please let me know if I can provide any further information on this issue. Brian Wallace, President and CEO, Coin Laundry Association

[JamesD]

Brain,

I appreciate your prompt response and detailed explanation of the bill. I was in attendance at the May NJCLA when you mentioned that a lobbyist was keeping an eye on the NJ Legislature.

However, how did you communicate the results of the legislation to the NJ CLA members?

Your response to this note was the first that I have heard about the law change or that it was even pending.

Maybe you should communicate to members directly on this forum when something important is brewing in the future.

Note that it looks like anyone doing WDF in NJ will have to charge, or at least pay sales tax starting 10/1 for comforters and blankets.

Thank you.

[Howard]

Thanks for working to help all of us in NJ!!!

I looked at the referenced bill and decided that reluctantly I will probably have to enroll in law school in order to comprehend its 36 pages of double talk /ubbthreads/images/graemlins/wink.gif

From what I understand, if one wants to fully comply with it, we will have to separate a customer's sack of laundry and charge separately for any sheets, blankets, towels, etc... which might be mixed in with their clothing. While I am glad we will not be burdened with tax for normal laundry, this is an example of how stupid government is that they want us to sort out laundry like this.

Since customers will soon be telling us that they "wear" their sheets and blankets I guess this will not be an issue /ubbthreads/images/graemlins/smile.gif

[Spin_City]

If you are near a college, many sheets may be worn during "toga" parties. How are these classified via the new rules?

Howard - You are 100% correct. How can the State spend months working on such a bill, and utterly fail to understand the impact it will have on the businesses it affects? Are these guys working for us or against us?

[mjwalsh]

The washing of non clothing items & the burden of defining it could be something to watch out for. They exempt labor from sales tax in our state of North Dakota when it comes to machine shops & repair etc. but the sales tax department tends to conveniently make the burden of showing the separation on the business owner. When a machine shop customer comes in & has to provide his own material to get the labor exemption---- well guess what.... the labor exemption isn't as likely to occur.... so it isn't that great after all. The impact can be significant especially if the manufacturers are not being as true as they need to be.

Brian, I do appreciate your support & standby assurance in our state back in 2003 & 2005 but you should make it clear to the NFIB that they should not allow a state director to send out misleading surveys to their members & let them wave them in front of the legislators as gospel. I kid you not.... that is exactly what happened both in 2003 & 2005. When I tried to reason with the state director he stated "What do you care.... your not the one paying the tax" as if we should not really care about our customers! What is your true & firm stand when it comes to eliminating a state income tax in favor of putting on sales tax on services similar to ours. Would the CLA have the courage to stand up to the NFIB or other similar organizations that may actually be lobbying for the less logical gross receipts tax or sometimes also called sales tax?

[BrianWallace]

James - You're point is well taken. We need to do more to get the word out, especially when it comes to legislative victories. I reported back to the NJCLA leadership and I understand that they plan to send a letter to the state membership. As far as using the forum as a way to communicate this type of information, again I think you have a great point. In fact, CLA has been working during the past several months to develop an all-new coinlaundry.org which we expect to launch in approximately one month. We are making a major investment in the future of our website. Our plans include e-newsletters and bulletins, as well as an opportunity to post new information throughout the site. Stay tuned...Brian Wallace, President/CEO, Coin Laundry Association

[BrianWallace]

Mike - Thank you for all of your efforts on behalf of laundry and car wash owners in ND over the past several years.

CLA is a member of NFIB and we find them to be a good source of legislative information that we in turn pass along to our members. However, we do not agree on each and every issue that comes forward. Fighting sales tax has literally been one of the foundations of CLA going back to the 1960s - in fact many of our state affiliates were originally formed to oppose the application of sales tax to coin laundries. CLA's position is clear - we oppose the application of sales tax to our services regardless of the context. We all know that sales tax in the traditional sense (paid directly by our customers) is simply not practical in a self-service laundry setting. In the remaining five states where sales tax on self-service laundries is still in place (Iowa, New Mexico, Hawaii, West Virginia, and Louisiana), it has the net effect of a gross receipts tax on the business owners. Mike, keep up the good fight in North Dakota. As always, CLA is ready to lend a hand. Brian Wallace, President and CEO, Coin Laundry Association

[JamesD]

Thank you Brian. I didn't mean to appear ungrateful. I appreciate your and CLAs effort in making sure that the NJ Tax Bills did not effect WDF of clothing and self-service laundry.

However, I and others were expecting to mobilize to fight this at the local level in NJ and the news came as a bit of a shock. Note that the first news that I heard was an excerpt from the bill that I received from my accountant. It was far from clear what the impact to our business was before your response. I can sleep well again. Or at least I won't worry about the NJ legislature for now. Should I?

I assume that this is a dead issue for now.

[BrianWallace]

Hi James - I didn't take your comments as ungrateful at all - I appreciate the feedback. Often times, CLA and its members have done very well with a vocal, grassroots response to a bad bill. In this case, however, the effective strategy was to work more discreetly - behind the scenes. It was a fine line between showing our strength to protect our interests and our fear of making enough noise to draw too much attention to our exemption as a potential source of revenue for the state. We wanted to monitor the situation without giving them any new ideas! The net result of the bill is a "no change" - just a further clarification of the current administrative rule for the application of the tax for non-clothing items.

As for going forward, CLA always monitors each and every one of the 50 state legislatures, as well as Congress, for bills that may impact the industry. We should receive an early "heads up" on anything brewing in New Jersey in the future. One of the benefits of hiring a lobbyist for a short-term project is that they will be very vigilant going forward in hopes of selling us another lobbying contract - they will be watching the legislature very closely for us. Brian Wallace, President and CEO, Coin Laundry Association.