Official Site of The State of New Jersey

Sales Tax Treatment of Tariff Mark Ups

Tariffs are a federal tax imposed on importers when goods are imported. The imposition of tariffs could result in an increased product cost passed down to distributors, wholesalers, and, finally, the retail sellers that are responsible to collect New Jersey Sales Tax from the end user. When a seller passes along the cost of a tariff to the consumer/purchaser, the charges are subject to Sales Tax as part of the taxable sales price, even if the tariff is separately stated to the purchaser.

The New Jersey Sales and Use Tax Act defines the “sales price” as the amount subject to Sales Tax. It means the total amount of consideration – including cash, credit, property, and services – for which personal property or services are sold, leased, or rented, without any deduction for the following:

1. The seller's cost of the property sold;
2. The cost of materials used, labor or service cost, interest, losses, all costs of transportation to the seller, all taxes imposed on the seller, and any other expense of the seller;
3. Charges by the seller for any services necessary to complete the sale;
4. Delivery charges.

For example, if the U.S. government imposes a tariff on furniture imported from another country, that tariff is passed along to the furniture seller. A seller may increase the sales price of the furniture sold to customers to maintain its profit margins. If the seller marks up the price of the furniture, even if it is billed as a separately stated fee, the increased cost and/or fee is subject to Sales Tax since it is part of the taxable sales price.