New Jersey Imposes Surcharge on Ride Services

New Jersey will tax ride services arranged through smartphone apps, imposing a 50-cent surcharge on  rides. Companies that offer the app services must collect the surcharge, beginning October 1, 2018.

For prearranged rides that are shared, a 25-cent surcharge is imposed on a rider.

Collection of Surcharge

New Jersey refers to a company that assists in prearranging rides over a digital network as a transportation network company. When collecting the surcharge, such companies must separately state the surcharge on the electronic sales receipt.

Electronic Receipt Required

Within 48 hours after a prearranged ride, the company must provide a rider with an electronic receipt. The receipt must include:

  • the origin and destination of the ride;
  • the total time and distance of the  ride;
  • an itemization of the total fare paid, if any; and
  • the surcharge.

Meaning of Terms in Ride Service Tax Law

The legislation defines terms in the statutes to clarify how the law applies.

Shared Ride

A“shared ride” means a prearranged ride in which a rider:

  • asked to share a ride with one or more riders; and
  • is charged a fare  based on the rider’s request to share all or part of the ride with other riders.

A rider does not have to actually share the ride.

Prearranged Ride

A prearranged ride occurs when a driver working for the ride service company gives a ride to customer in the driver’s personal vehicle. The ride begins when the driver accepts a request through a digital network controlled by the ride service company,. It continues while the driver transports the rider. Finally, the ride ends when the last rider leaves the driver’s vehicle.

The surcharge does not apply to transportation provided using an autocab, taxi, limousine, autobus, jitney, motor bus, or other for-hire vehicle. Also, a prearranged ride does not include ridesharing.

Transportation Network Company

“Transportation network company” means a corporation, partnership, sole proprietorship, or other entity that:

  • is registered as a business in New Jersey or operates in New Jersey; and
  • uses a digital network to connect a transportation network company rider to a transportation network company driver to provide a prearranged ride.

Transportation Network Company Rider

“Transportation network company rider” or “rider” means a person who uses a transportation network company’s digital network to connect with a transportation network company driver to receive a prearranged ride.

Ch. 47 (A.B. 4061), Laws 2018, effective July 1, 2018, except as noted

Login to read more tax news on CCH® AnswerConnect or CCH® Intelliconnect®.

Not a subscriber? Sign up for a free trial or contact us for a representative.



All stories by: CCHTaxGroup