Could a qualified New Jersey Urban Enterprise Zone business buy alarm-monitoring services without Sales Tax?

Plain-English summary

A qualified Urban Enterprise Zone business could buy alarm-monitoring services tax-free when the services were used exclusively at its registered UEZ location and properly documented.

Alarm installation, repair, and monitoring were ordinarily taxable investigation and security services under N.J.S.A. 54:32B-3(b)(11).

The UEZ exemption changed the result for monitoring a security, burglar, or fire-alarm system located exclusively at the qualified business's UEZ site. To claim it:

• the purchaser had to be a qualified UEZ business;
• the monitoring had to relate exclusively to the registered UEZ location;
• the purchaser had to give the provider a completed Form UZ-5; and
• the exempt service charge had to be separately stated from taxable property or non-exempt services, such as phones, computers, or telecommunications.

What this means for you

UEZ businesses

Provide Form UZ-5 at purchase and verify that the service is tied only to the registered zone location.

Alarm-service providers

Separately state monitoring from equipment and other services so the supported exemption can be identified.

Common questions

Q: Were alarm-monitoring services normally taxable?
A: Yes.

Q: What made the UEZ monitoring exempt?
A: Exclusive use at the qualified registered UEZ location plus Form UZ-5.

Q: Could the monitoring be bundled with phones or telecommunications?
A: The exempt monitoring charge had to be separately stated from those other charges.

Citations and references

• N.J.S.A. 54:32B-3(b)(11) — investigation and security services
• N.J.S.A. 52:27H-79 — UEZ purchase exemption
• Form UZ-5 — Urban Enterprise Zone Exemption Certificate

Source

• Landing page: https://www.nj.gov/treasury/taxation/tam-pubs.shtml
• Original PDF: https://www.nj.gov/treasury/taxation/pdf/pubs/tams/tam2.pdf

Original ruling text

Urban Enterprise Zone – Alarm Monitoring Services
TAM 2010-2 – Issued November 1, 2010
Tax: Sales and Use Tax
The New Jersey Sales and Use Tax Act imposes tax on investigation and security services. The
definition of investigation and security services includes the installation, repair, or monitoring of
security, burglar, and fire alarm systems. N.J.S.A. 54:32B-3(b)(11)).
The Urban Enterprise Zone (UEZ) Sales Tax purchase exemption provided under N.J.S.A. 52:27H79 allows a qualified business operating in a UEZ to make purchases of tangible personal
property and services that are exempt from Sales and Use Tax when the property and services
are used or consumed exclusively at the qualified business’s registered location in the UEZ. The
Division has determined that a qualified UEZ business may purchase security, burglar, and fire
alarm system monitoring services without having to pay Sales or Use Tax when the services are
performed exclusively on an alarm system at the UEZ business location.
To claim the exemption, a qualified business must give the service provider a completed Urban
Enterprise Zone Exemption Certificate (Form UZ-5) upon purchase. Also, the services charge
must be separately stated from any other charges for tangible personal property and from
services that may not be exempt, but are purchased from the same supplier or provider (e.g.
mobile phones, laptop/notebook computers, telecommunications services).

Note: A Technical Advisory Memorandum (“TAM”) is an informational statement of the law,
regulations, or Division policies. It is accurate on the date issued. Subsequent changes in the law
or regulations, judicial decisions or changes in Division policies could affect the validity of the
information presented in a TAM.

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