As we recognize Earth Day, New Jersey businesses should take a moment to revisit an often-overlooked obligation: the New Jersey Litter Control Fee, often referred to as the New Jersey “Litter Tax.” Despite its nickname, this isn’t a traditional tax on consumers but rather a regulatory fee imposed on businesses to support statewide cleanup and environmental programs.
The fee is grounded in New Jersey law. The Clean Communities Programs Act, codified at N.J.S.A. 13:1E-213 through 13:1E-223, establishes the “Litter Control Fee” and imposes it on manufacturers, wholesalers, distributors, and retailers based on their sales of litter-generating products sold within New Jersey or into the state.
The fee applies to manufacturers, wholesalers, distributors, and retailers that sell litter generating products for use or consumption within New Jersey or into the state. Importantly, physical presence in New Jersey is not required. Even out-of-state businesses may be subject to the fee if they have sufficient economic activity connected to the state.
New Jersey applies a broad, category-based approach when determining what qualifies as a litter-generating product. The focus is not on whether a specific item actually becomes litter, but whether it is commonly associated with waste in public spaces.
Covered categories include, among others, Food and other malt beverages, Cigarettes and tobacco products, Cleaning agents and toiletries, Distilled spirits, Food for human or pet consumption, Glass containers sold as such, Groceries, Metal containers sold as such, Motor vehicle tires, Newsprint and magazine paper stock, Drugstore sundry products, Paper products and household paper, Plastic or fiber containers made of synthetic material and sold as such, Soft drinks and carbonated water and Wines of any kind.
How the Fee Is Calculated
Although the rates are relatively small, the fee applies to gross receipts rather than profit, which can increase its impact depending on sales volume.
In general, wholesale sales are subject to a rate of 0.03 percent, while retail sales are subject to a rate of 0.0225 percent. Because the calculation is based on total sales without deductions for expenses, the structure resembles a gross receipts tax rather than a traditional income-based tax.
There are limited exemptions available under the law. Retailers with less than $500,000 in annual sales of litter-generating products are exempt from the fee. Certain intercompany transactions between wholesalers or related entities may also be excluded, and some restaurants may qualify if most of their sales are for on-premises consumption.
New Jersey allows businesses to use one of several methods to determine their liability, depending on the nature and complexity of their operations. The general method involves calculating the fee based only on actual sales of litter generating products. The total sales method applies the rate to all sales for simplicity, although this may result in a higher estimated liability. The percentage method allows businesses to estimate their qualifying sales based on sampling, which can reduce administrative burden while maintaining reasonable accuracy.
Each method involves trade-offs between precision and ease of compliance, and businesses typically choose the approach that best fits their reporting capabilities.
Filing and Compliance Requirements
If your business is subject to the Litter Control Fee, there are ongoing compliance obligations you should be aware of. Businesses must register with the State of New Jersey if they have not already done so, file Form LF-5 annually, and remit payment by March 15 each year.
In addition, businesses are required to maintain supporting records for at least five years. These records should be sufficient to substantiate calculations in the event of a review or audit by the Division of Taxation..
Earth Day is a good reminder that environmental obligations and tax compliance often overlap. The New Jersey Litter Control Fee is a prime example—frequently overlooked, but enforceable and consequential.
If you are unsure whether your business is subject to the Litter Control Fee, or would like to review your current compliance, feel free to reach out to Admani Law.