Pub. 1 2012-2013 Issue 1

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 9 new jersey auto retailer W W W . N J C A R . O R G BENEFITS & INSURANCE Our understanding of your business and your insurance needs is the basis for designing a benefits strategy that works. REAL SOLUTIONS FOR YOUR BUSINESS Call us today. 800.601.0816 SERVICES INC. Insurance division NJ CAR Services, Inc. powered by Fotek | 732.556.0446 NJ CAR S rvices, Inc. insurance division powered by Fotek forewarned is forearmed  continued from page 7 This is one of the more vague and inchoate definitions in the tax law, and on its face it seems it could apply to a lot of different scenarios, including even newspapers, or an attorney’s legal memorandum, or a credit report. Constitutional concerns over free- dom of the press prevent its application to newspapers, and the Division of Taxation has clearly indicated it was not meant to apply to professional opinions. Of significance to the retail automotive industry, the Division of Taxation has in- terpreted this provision to apply to those forms of internet marketing which involve paying a provider for leads. In a Technical Advice Memorandum issued in November of 2011, the Division explained that it be- lieves internet lead-providers are providing “information services” because they provide lists of potential customers, the vehicles they are interested in, and their contact informa- tion. The Division determined that this in- formation was not “personal or individual” information (which would be exempt from tax), because the same names and informa- tion might be provided to other dealerships. The Division may be applying an overly broad interpretation in this Memorandum, but for the present time, the Division clearly intends to seek sales tax for all internet marketing arrangements which involve a vendor that obtains contact information for potential customers and provides this information to dealerships. The Division has stated that the means of payment does not matter (per lead, or a flat fee) and that it also doesn’t matter if there is an “advertis- ing” component to the arrangement. Dealerships should be aware that if they are working with a lead provider that is not charging sales tax, the State will still seek the tax from the dealership. This is an item the Division will certainly be looking for during Sales and Use Tax audits in the coming year. Unclaimed Property Audits You may have seen the large legal adver- tisements that appear in newspapers, titled “Notices of Unclaimed Property,” which include long lists of names and addresses of people who are entitled to property and have not claimed it. Most people know that banks, trust companies, and other fiduciary or depository institutions are required to post these notices when they possess any property that seems to be abandoned, and if the owners do not respond, the property is turned over to the State. In law, this is called “escheat.”What most small business people don’t know is that the unclaimed property laws extend far beyond bank accounts and trusts and shareholder dividends. It has recently made the press that the same laws apply to gift cards, prompting at least one major seller of gift cards, American Express, to cease selling them in New Jersey. And technically, the unclaimed property laws extend to any check, written by any busi- ness, which is not cashed within two years. That means that every dealership that has written any checks which went uncashed is supposed to file yearly reports with the State, go through the advertising process, and then turn the funds over to the State. NJ CAR feels that this is an onerous and unreasonable requirement for an average business which might have a handful of uncashed checks, out of thousands writ- ten, in the course of a year. Nevertheless, the State has audited several dealerships for unclaimed property, and is taking a hard line. NJ CAR is working actively to find a reasonable solution, seeking either a complete exemption, or some simplified process, for its members. Patrick Cox is NJ CAR’s Director of Legal and Regulatory Affairs. He can be reached at 609.883.5056, ext. 350 or pcox@njcar.org. Every dealership that has written any checks which went uncashed is supposed to file yearly reports with the State, go through the advertising process, and then turn the funds over to the State.