New Jersey and Louisiana: How to Tax a Nursing Home
- Aug 19, 2013 | Gail Cole
Baby boomers are growing older; 76 million boomers will be old enough to retire during the next decade. As a result, "the need for long-term care services is expected to surge." Cost of care is on everyone's mind. One way to reduce costs is through sales tax exemptions.
Louisiana now provides a sales tax exemption for "the sale of meals furnished to staff and residents of nursing homes, adult residential care providers, and continuing care retirement communities." Until Governor Bobby Jindal (R) signed SB169 into law in June, the exemption applied only to the staff and patients of hospitals. Act 271 took effect June 13, 2013.
In New Jersey, nursing homes are required to pay sales or use tax "on all purchases of tangible personal property, specified digital property, and certain services, unless otherwise exempt by law." A technical bulletin issued earlier this month by the New Jersey Division of Taxation explains that nursing homes in New Jersey may purchase items exempt from sales tax if they:
- Have an Exempt Organization Certificate (Form ST-5);
- Are operated by the federal government; or
- Are operated by a New Jersey State or local government agency.
The bulletin provides a list of services that are exempt or subject to sales tax when purchased by New Jersey nursing homes.
Exempt services include, but are not limited to:
- Creative advertising services (separately stated);
- General capital improvements;
- Media Buys ad time or space; and
- Professional accounting services
Exempt items include, but are not limited to:
- Ace bandages;
- Collection devices worn on the body (for bodily fluids);
- Diabetic supplies (single-use strips, swabs, syringes, wipes, etc.);
- Diapers and diaper liners; and
- Splints worn on body.
Taxable services include, but are not limited to:
- Tangible personal property produced for advertising purposes, such as posters;
- Electronic filing charges (used in accounting services);
- Building maintenance / repair;
- Business / restaurant meals, and catering services;
- Cleaning services (janitorial) and supplies;
- Computer equipment and disks, CD's, DVD's and USB drives;
- Disposable paper products;
- Flowers and gifts; and
- Telecommunications services.
Taxable items include, but are not limited to:
- Band aids;
- Blood pressure measuring devices;
- Craft supplies;
- Hair care products;
- Stethoscopes; and
A more complete list of exempt and taxable services and items is available through the New Jersey Division of Taxation, at technical bulletin #73. It's worth a look if you're in the business of nursing homes. Magazine subscriptions are exempt, for example, yet purchases of single magazines are subject to tax.
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