New Jersey: Get Sales Tax for Crowdfunding Campaigns Right
- May 4, 2015 | Gail Cole
As crowdfunding grows in popularity as a viable source of revenue for fledgling companies, state departments of revenue are examining its tax implications. Last year, the Washington State Department of Revenue published information regarding the New Jersey Division of Taxation has done the same.
As explained by the division, “Crowdfunding websites provide a platform for filmmakers, musicians, artists, authors, designers and others to solicit donations for their projects.” In the example provided, an author in New Jersey crowdfunds to raise money to publish a book and promises a copy of the finished book for each $10 donation.
The New Jersey Division of Taxation has determined that, in the above instance, there is no tax due on the ten-dollar donation. However, the author would be liable for either sales or use tax on the books given to contributors. Individual circumstances would dictate which tax is owed and how the author should collect and remit it.
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