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P.L. 2006, c. 85 requires New Jersey businesses to withhold 7% from payments to construction contractors who are unincorporated and not registered with the New Jersey Division of Revenue, and to forward withholdings monthly to the Division of Taxation.  Under this act, the business owner is also made liable for a contractor’s withholding of subcontractor or lower-tier subcontractor payments, unless the business owner obtains a copy of their unincorporated general contractor’s business registration form (see “Proof of Registration” below).    

All persons and businesses include those that own real estate and contract with unregistered, unincorporated contractors for repair and construction services to buildings (rental properties, investment properties, etc.) not deemed as their principal residences. 


Construction Contractor:  a contractor who “constructs, improves, alters or repairs a building, structure or improvement to real property.”  Home improvement contractors are only considered construction contractors when working for businesses.   

Unincorporated Construction Contractor: a construction contractor organized as a sole proprietor, partnership, individual or any business type not taxable as a corporation for federal tax purposes. 

Proof of Registration 

Proof of Registration with the Division of Revenue: possession of a New Jersey Business Registration Certificate. Businesses already registered can download a copy of the certificate at Non-registered businesses can apply for registration at or by calling 609-292-9292. 


Failure to file a withholdings return to the Division of Taxation by the due date (15th day following the end of the month) and/or failure to remit payments due will subject businesses to late filing penalties (5% per month on the balance due, not to exceed 25% of total balance, and a late payment penalty of 5% ) and interest charges (3% above prime rate assessed on balance due including interest and late payment penalties) or $100 for each month the return is late.  

For More Information 

Visit the Division of Taxation’s Web site for detailed guidance:

​Updated:   March 3, 2022