New Jersey – Guidance Issued Regarding Nursing Home Purchases

SALT Report 2854 – The New Jersey Division of Taxation issued a technical bulletin that discusses the application of sales and use tax to purchases made by nursing homes. Generally, New Jersey nursing homes are required to pay sales or use tax on all purchases of tangible personal property, specified digital property, and certain services, unless an exemption applies.  However, nonprofit nursing homes that have an Exempt Organization Certificate – Form ST-5, or nursing homes that are operated by the federal government or a state or local government agency, are exempt from sales and use tax.

Under, N.J.S.A. 54:32B-8.1 purchases of prescription and over-the-counter drugs, diabetic supplies, medical oxygen, human blood and any derivatives, prosthetic devices, durable medical equipment for home use, and mobility enhancing equipment when sold by prescription are exempt from sales and use tax.  However, purchases of durable medical equipment are taxable when sold in conjunction with a compensated medical service and the item will not be transferred to the purchaser of the service.

Additionally, if a nursing home does not pay, or underpays, sales tax at the time of purchase they must remit use tax to the State.  To report and remit use tax, the nursing home should do so on their Annual Business Use Tax Return – Form ST-18B.

If a nursing home’s average annual use tax liability for three calendar years exceeds $2,000, the nursing home will be required to change its business registration to include sales tax and they will be required to file a quarterly/monthly sales and use tax return Form ST-50/51.

Lastly, the bulletin includes a list of items commonly purchased by nursing homes and business and indicates whether the item is taxable or exempt.

For Further Information

New Jersey Division of Taxation – Technical Bulletin TB-73