N.J. Admin. Code § 18:24-34.3

Current through Register Vol. 56, No. 11, June 3, 2024

Section 18:24-34.3 - Investigation and detective service

(a) Investigation and detective services, including the services of detective agencies and private investigators, and fingerprint, polygraph, missing person tracing, and skip tracing services are subject to tax as investigation services.

(b) Such services are taxable regardless of whether the service provider has a license.

(c) Examples of services taxed as investigation and detective services include, but are not limited to:

1. Lie detection services;

2. Background checks (that is, criminal background, tenant/employee screening, employment and education verification);

3. Insurance claim investigation (whether performed by a licensed private investigator, a third-party administrator, or any other type of business);

4. Online or in-person research services to track down unclaimed assets; and

5. Online or in-person research services to track down birth parents, kidnap victims, debtors, lost pets, missing persons, or others.

(d) The following are not deemed to be investigative or detective services and are not taxable:

1. Charges by a business hired by an attorney to issue subpoenas and court summonses;

2. Skycap services performed at an airport;

3. Ticket and baggage checks to verify the passenger's identity; and

4. Insurance claim adjustment services, for example, evaluation of liability or damages, settlement negotiations, trial preparation, or settlement of claim.

(e) The amount of the receipt subject to sales tax includes the fee charged for the investigation and security service, as well as any expenses and overhead costs incurred by the seller, which are passed on to the purchaser of the service, regardless of whether they are separately itemized. For examples, charges for transportation, employees, telephone, Internet, and other expenses incurred by the seller and billed to the purchaser of the service are subject to tax as part of the receipt for the taxable investigation and security service.

(f) Investigation and detective services are sourced for sales tax purposes to the jurisdiction where the purchaser of the service makes first use of the service. "First use" is deemed to be the location where the investigative report is delivered, or, if the report is delivered electronically, to the purchaser's billing address.

(g) The service provider may claim a resale exemption from sales tax when purchasing property and services that are actually transferred to the purchaser of the services, such as photographs, DVDs for surveillance records, printing and copy charges related to the investigative report, and when purchasing investigative and detective services subcontracted to another service provider.

N.J. Admin. Code § 18:24-34.3

Amended by 48 N.J.R. 824(a), effective 5/16/2016