Effective Date: November 1, 2018
Threshold: $100,000 or 200 or more separate transactions
Measurement Date: The current or prior calendar year
Includable Transactions: Gross sales; Marketplace sales included towards the threshold for individual sellers
When You Need to Register Once You Exceed the Threshold: Next transaction
New Jersey has enacted economic nexus legislation that requires remote sellers that exceed an economic threshold to register, collect, and remit New Jersey sales tax, effective November 1, 2018. The New Jersey Division of Taxation previously issued economic nexus rules on August 14 with an October 1, 2018 effective date that they believed they could move forward with but preferred to have “safe harbor thresholds in the law.” The New Jersey Assembly’s passage of economic nexus legislation met this desire but pushed back the effective date to November 1, 2018.
A remote seller that makes gross sales of tangible personal property, specified digital products, or services for delivery to a location in New Jersey must register, collect, and remit New Jersey sales tax if the remote seller meets either of the following criteria:
Retail sales includes all sales of tangible property to all contractors, subcontractors or repairment of materials used in erecting, improving, altering, or repairing real property for others. However, it excludes sales for resale, sales of professional, insurance or personal service transactions which involved transfers of tangible property which are inconsequential as well as transactions related to sales of stock of a company or distributions of property related to corporate structure transactions.
According to the Division’s notice on remote seller requirements, a remote seller is a business that sells products online or by mail order or telephone to a customer located in a state in which the seller has no physical presence. New Jersey’s legislation is in response to the U.S. Supreme Court’s decision in South Dakota v. Wayfair. New Jersey will apply Wayfair decision on a prospective basis for remote sellers that do not have a physical presence in New Jersey. This prospective treatment does not apply if the seller has a physical presence in New Jersey or is otherwise legally obligated to collect and remit New Jersey sales and use tax.
A remote seller that does not meet the above criteria may voluntarily register to collect and remit New Jersey sales and use tax. Sellers, including remote sellers that are currently collecting and remitting New Jersey sales and use tax, should continue to do so.
Beginning November 1, 2018, a remote seller that is above one or both of the above thresholds should go to the Division of Revenue and Enterprise Services website and choose the option “Register as Remote Seller Only.” Remote sellers may also register through Streamlined. Once registered, the remote seller will receive a letter containing filing and payment information.
A remote seller that exceeds the economic threshold but solely sells through online marketplaces must register, but may request to be placed on a non-reporting basis for sales tax since New Jersey now requires marketplace facilitators to collect tax on all marketplace transactions on behalf of marketplace sellers. For more information on New Jersey marketplace nexus, read our news item.
A remote seller that is over the economic threshold, but only makes sales for resale or are otherwise nontaxable must register but may request to be placed on a non-reporting basis for sales tax.
In order to be placed on a non-reporting basis for sales tax purposes, Form C-6205-ST, Request to Be Placed on a Non-Reporting Basis, must be completed and mailed to the Division of Taxation. (A.B. 4496, Laws 2018, effective November 1, 2018 and Sales Tax Information for Remote Sellers (P.L. 2018, c. 132), New Jersey Division of Taxation, November 1, 2018).
For our previous reporting on New Jersey economic nexus, click here.