Are storage, repair, and replacement-part charges for cargo containers and chassis exempt at a New Jersey marine terminal facility?

Plain-English summary

New Jersey exempted qualifying cargo-container and chassis storage and repair services at a marine terminal facility, but location and the type of property or part controlled the result.

The TAM applied N.J.S.A. 54:32B-8.12 after the New Jersey Tax Court's Ironbound Intermodal Industries decision. Using the statutory definition, an off-site container depot could still be a marine terminal facility when it was necessary or convenient to accommodate vessels and their cargo.

Storage services

Storage of cargo containers and chassis at a qualifying marine terminal facility was exempt. Storage at another location was taxable.

Repair services

Repairs to cargo containers were exempt because cargo containers were treated as components of commercial ships.

Chassis repairs were also exempt when the chassis were used to load, unload, and handle cargo and the services were performed at the marine terminal facility.

Repair and replacement parts

Parts for cargo containers were exempt because the containers were ship components.

Parts for chassis, which the TAM treated as motor vehicles, were not exempt under N.J.S.A. 54:32B-8.12. They might instead qualify under N.J.S.A. 54:32B-8.43's exemption for commercial trucks and their repair or replacement parts.

What this means for you

Terminal operators and depots

Document why the location qualifies as a marine terminal facility and connect the services to vessel cargo handling. The same storage outside a qualifying facility was taxable.

Container and chassis repair businesses

Do not apply one blanket rule to containers and chassis. The TAM reached the repair services through different statutory language and treated their parts differently.

Parts sellers

Container parts and chassis parts did not share the same exemption under N.J.S.A. 54:32B-8.12. Evaluate the separate commercial-truck exemption for chassis parts.

Common questions

Q: Was container and chassis storage always exempt?
A: No. The exemption applied at a qualifying marine terminal facility; storage elsewhere was taxable.

Q: Were cargo-container repairs exempt?
A: Yes. The TAM treated cargo containers as components of commercial ships.

Q: Were chassis repairs exempt?
A: Yes, when the chassis were used in cargo handling and the repairs occurred at the marine terminal facility.

Q: Were chassis replacement parts exempt under the marine-industry statute?
A: No. The TAM said N.J.S.A. 54:32B-8.12 did not cover them, though N.J.S.A. 54:32B-8.43 might.

Q: Could an off-site depot qualify as a marine terminal facility?
A: Yes, under the Tax Court analysis described in the TAM, if it was necessary or convenient to vessel and cargo accommodation.

Citations and references

• N.J.S.A. 54:32B-8.12 — marine-industry exemption
• N.J.S.A. 40:68-18 — marine-terminal definition
• N.J.S.A. 54:32B-3(b)(3) — storage services
• N.J.S.A. 54:32B-3(b)(2) — repairs to tangible personal property
• N.J.S.A. 54:32B-3(a) — sales of parts
• N.J.S.A. 54:32B-8.43 — commercial trucks and repair/replacement parts
• Ironbound Intermodal Industries, Inc. v. Director (012089-2008, July 19, 2013)

Source

• Landing page: https://www.nj.gov/treasury/taxation/tam-pubs.shtml
• Original PDF: https://www.nj.gov/treasury/taxation/pdf/pubs/tams/tam2014_1.pdf

Original ruling text

Charges for Storage Services and Repair Services to Cargo Containers and
Chassis Performed at a Marine Terminal Facility
TAM – 2014-1 – Issued June 16, 2014
Tax: Sales and Use Tax
This TAM is issued to clarify the application of N.J.S.A. 54:32B-8.12 in light of a recent Tax Court
decision on charges for storage services and repair services to cargo containers and chassis
performed at a marine terminal facility.
The Sales and Use Tax Act provides the following exemption from Sales Tax:
Receipts from sales or charges for repairs, alterations or conversion of commercial ships
or any component thereof including cargo containers of any type whatsoever, barges
and other vessels of 50-ton burden or over, primarily engaged in interstate or foreign
commerce, machinery, apparatus and equipment for use at a marine terminal facility in
loading, unloading and handling cargo carried by those commercial ships, barges and
other vessels, and storage and other services rendered with respect to such loading,
unloading and handling cargo at a marine terminal facility, ferryboats that are primarily
engaged in the transportation of passengers during peak hours of commutation, or
other vessels, regardless of tonnage, primarily engaged in commercial fishing or shell
fishing, including equipment necessary for harvesting fish, shellfish and other
crustaceans and aquatic organisms, or other vessels primarily engaged in commercial
party boat (head boat) sport fishing and subject to annual inspection by the United
States Coast Guard, and of governmentally-owned ships, barges and other vessels and
property used by or purchased for the use of such vessels, machinery, apparatus and
equipment for fuel, provisions, supplies, maintenance and repairs (other than articles
purchased for the original equipping of a new ship) are exempt from the tax imposed
under the Sales and Use Tax Act.
N.J.S.A. 54:32B-8.12 (emphasis added).
MARINE TERMINAL FACILITY
In Ironbound Intermodal Industries, Inc. v. Director, (012089-2008, July 19, 2013), the Tax Court
reviewed the applicability of the exemption in N.J.S.A. 54:32B-8.12 to container storage services
and chassis repair services. The Court referred to the definition of a marine terminal provided by
N.J.S.A. 40:68-18, which defines it as “a development consisting of one or more piers, wharves,
docks, bulkheads, slips, basins, vehicular roadways, railroad connections, side tracks, sidings and
other buildings, structures, facilities or improvements, necessary or convenient to the
accommodation of steamships or other vessels and their cargos and passengers.” The Court
determined that the statutory use of the term “marine terminal facility” includes Ironbound’s offsite container depots, since they are “necessary or convenient to the accommodation of
steamships or other vessels and their cargoes.”
Having concluded that Ironbound is a marine terminal facility, the Court then determined the
following:

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STORAGE SERVICES
The law imposes Sales Tax on charges for storage services, other than storage of
inventory. N.J.S.A. 54:32B-3(b)(3). However, storage services for cargo containers and chassis
that are provided at a marine terminal facility as defined above are specifically exempt. The
storage of cargo containers and chassis at a location other than at a marine terminal facility is
subject to Sales Tax.
REPAIR SERVICES
Charges for repairs to tangible personal property are subject to Sales Tax. N.J.S.A.
54:32B-3(b)(2). However, the exemption in N.J.S.A. 54:32B-8.12 applies to repairs to “commercial
ships or any component thereof including cargo containers.” Thus, charges for repair services to
cargo containers are exempt. N.J.S.A. 54:32B-8.12 also exempts charges for “other services
rendered with respect to such loading, unloading and handling cargo at a marine terminal
facility.” According to the Court decision, this includes charges for repair services to chassis
which are used to load, unload, and handle cargo, when such services are performed at a marine
terminal facility.
REPAIR PARTS AND REPLACEMENTS PARTS
Charges for parts are subject to sales tax. N.J.S.A. 54:32B-3(a). However, N.J.S.A.
54:32B-8.12 exempts “property used by or purchased for the use of such vessels”; this includes
repair parts and replacement parts for cargo containers because cargo containers are
component parts of commercial ships. Repair parts and replacement parts for chassis, which are
treated as motor vehicles, are not exempt under 8.12. Such parts may be exempt under N.J.S.A.
54:32B-8.43, which provides an exemption for commercial trucks and repair parts and
replacement parts.

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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