Operations

Sales Tax May Drive EmpireCLS Out of New Jersey

LCT Staff
Posted on March 14, 2007

NORWOOD, N.J. — The chief executive of Bergen County-based EmpireCLS says he’s considering moving the company’s headquarters to New York to flee New Jersey’s new sales tax policy. CEO David Seelinger, whose company has 400 cars locally, expects to register $140 million in sales this year. But when his lease in Norwood expires at the end of December, he doesn’t “see that I have a choice other than to move to New York.”

The policy that has him eyeing the state line is a law change effective last November that assesses the state’s 7% sales tax on limousine trips occurring between two points in New Jersey. Limo rides were one of a group of items, including some landscaping services and health club membership fees, subjected to the sales tax for the first time last year. What has particularly inflamed local limousine operators is their belief companies based out of the state but serving customers here are getting away with ignoring the tax, placing local companies at a competitive disadvantage.

Barry Lefkowitz, executive director of the Limousine Associations of New Jersey, says that after conversations with associations in New York and Pennsylvania, he knows of no out-of-state companies collecting the tax. The state doesn’t even have a way to identify when companies are providing intrastate trips, he says. Jim Mosely, owner of James Limousine Service in Cherry Hill, agrees. “The state treasurer’s office tells us they will go after out-of-state companies, but how could they? They don’t know who they are.”

New Jersey treasurer’s office says the sales tax should be collected by all limousine companies on intrastate trips. Spokesman Mark Perkiss says out-of-state companies must register with the state through the Division of Revenue and a number of limousine businesses already have. “Payments are coming in,” he said. “It’s working, and it’s also new so we don’t have a lot of numbers.” He added, “We do enforcement as enforcement is warranted.”

All limousine companies that work between points within New Jersey are supposed to collect the levy. But a group of limousine company owners testified in Trenton last week that the state is not effectively enforcing collection on out-of-state limo companies that operate here.

The New Jersey operators support a bill (A-3751) sponsored by Assemblywoman Nilsa Cruz-Perez (D-Camden) that would exempt limousine services from the sales tax. Company representatives last week told the Assembly Appropriations Committee that if firms based in Philadelphia and New York don’t collect the tax, they can charge 7% less for their in-state trips, including popular routes between Cherry Hill and Atlantic City.

Source: NJ Biz

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