FISCAL NOTE TO

ASSEMBLY, No. 656

STATE OF NEW JERSEY

DATED: JULY 29, 1996

      Assembly Bill, No. 656 of 1996 clarifies the conditions under which schools or school-approved organizations may operate a "store" without being required to collect sales and use taxes. Under current law, charitable organizations and school groups may sell goods for fundraising purposes, but if the fundraising group begins to operate a store, the sales from the store are subject to the sales and use tax. Current law defines a store as any place that goods are sold with regularity, frequency and continuity. Technically, that definition includes the "lunchroom table" stores that student groups operate selling small items to raise funds for school trips or other activities.

      Because schools are given an exemption from collecting sales and use taxes when making sales for fundraising purposes, but are required to collect the taxes when a store is operated, there is uncertainty about whether "school stores" must collect taxes. To clarify this uncertainty, this bill provides a narrow exemption from sales and use tax collection to school stores which meet certain conditions. To be exempt a qualified school store must: be located in a primary or secondary school; make sales of tangible personal property valued at less than $5.00; not make sales to the general public; use all net receipts to support school-approved activities; be located on school property; and be operated and staffed by students, instructors, administrators, parents or guardians.

      The Department of the Treasury was unable to estimate the annual revenue loss associated with this legislation due to insufficient data. The department does note, however, that any administrative costs associated with this legislation can be absorbed in the department’s current operating budget.

      Due to the narrow size of the exemption created by this legislation, the Office of Legislative Services anticipates that no substantial revenue loss will result from this bill. The size of the population who may purchase items from schools stores is limited to only members of the school community and items for sale may not exceed $5.00 in cost. With these restrictions, among others, the sales and use tax revenue loss will be small.

This fiscal note has been prepared pursuant to P.L.1980, c.67.