New Jersey Enacts Marketplace Nexus Legislation
New Jersey has enacted marketplace nexus legislation that requires marketplace facilitators to collect sales tax on sales made by marketplace sellers using their platforms, effective November 1, 2018. Marketplace facilitators are required to collect and remit tax on any facilitated sales into New Jersey regardless of whether the marketplace seller is required to have a certificate of registration or would have been required to collect the tax if the sale was not made on the facilitator’s platform.
After each retail sale is made, the marketplace facilitator must provide the purchase a sales slip, invoice, receipt, or other statement or memorandum of the price paid or payable, which shall state, charge, and show the tax separately.
To ensure that taxes are collected accurately and timely, the Division of Taxation has the discretion to temporarily suspend or delay a marketplace facilitator’s collection and/or reporting requirements for up to 180 days. For more information on how to make a Request for Delay of Collection and Reporting Requirements, read this notice from the state. However, on October 26, the New Jersey Division of Taxation released an update standing by the November 1, 2018 effective date.
A “marketplace facilitator” means a person, including any affiliate of the person, who facilitates a retail sale of tangible personal property, specified digital products, or taxable services by satisfying both (1) and (2):
(1) The person directly or indirectly does any of the following:
- Lists, makes available, or advertises tangible personal property, specified digital products, or services for sale by a marketplace seller in a forum owned, operated, or controlled by the person; or
- Facilitates the sales of a marketplace seller’s product through a marketplace by transmitting or otherwise communicating an offer or acceptance of a retail sale of tangible personal property, specified digital products, or taxable services between a marketplace seller and a purchaser in a forum including a shop, store, booth, catalog, internet site, or similar forum; or
- Owns, rents, licenses, makes available, or operates any electronic or physical infrastructure or any property, process, method, copyright, trademark, or patent that connects marketplace sellers to purchasers for the purpose of making retail sales of tangible personal property, specified digital products, or taxable services; or
- Provides a marketplace for making retail sales of tangible personal property, specified digital products, or taxable services or otherwise facilitates retail sales of tangible personal property, specified digital products, or taxable services regardless of ownership or control of the tangible personal property, specified digital products, or taxable services that are the subject of the retail sale; or
- Provides software development or research and development activities related to any activity described in this paragraph, if such software development or research and development activities are directly related to the physical or electronic marketplace provided by a marketplace facilitator; or
- Provides or offers fulfillment or storage services for a marketplace seller; or
- Sets prices for a marketplace seller’s sale of tangible personal property, specified digital products, or taxable services; or
- Provides or offers customer service to a marketplace seller or a marketplace seller’s customers, or accepts or assists with taking orders, returns, or exchanges of tangible personal property, specified digital products, or taxable services sold by a marketplace seller; or
- Brands or otherwise identifies sales as those of the marketplace facilitator; and
(2) The person directly or indirectly does any of the following:
- Collects the sales price of a retail sale of tangible personal property, specified digital products, or taxable services; or
- Provides payment processing services for a retail sale of tangible personal property, specified digital products, or taxable services; or
- Charges, collects, or otherwise receives selling fees, listing fees, referral fees, closing fees, fees for inserting or making available tangible personal property, specified digital products, or taxable services on a marketplace, or other consideration from the facilitation of a retail sale of tangible personal property, specified digital products, or taxable services, regardless of ownership or control of the tangible personal property, specified digital products, or taxable services that are the subject of the retail sale; or
- Through terms and conditions, agreements, or arrangements with a third party, collects payment in connection with a retail sale of tangible personal property, specified digital products, or taxable services from a purchaser and transmits that payment to the marketplace seller, regardless of whether the person collecting and transmitting such payment receives compensation or other consideration in exchange for the service; or
- Provides a virtual currency that purchasers are allowed or required to use to purchase tangible personal property, specified digital products, or taxable services.
Marketplace sellers that sell solely through online marketplaces must register if they exceed New Jersey’s economic nexus threshold. However, because marketplace facilitators are required to collect the tax on all marketplace transactions on behalf of marketplace sellers, marketplace sellers may request to be placed on a non-reporting basis for sales tax.
Beginning November 1, 2018, marketplace facilitators should go to the Division of Revenue and Enterprise Services (DORES) website and choose the option, “Register as a Remote Seller Only.” Once registered, a marketplace facilitator will receive a letter containing Sales Tax filing and payment information.
Marketplace facilitators that are already registered to collect Sales Tax in New Jersey will need to establish a sub-account to report and remit the tax collected for marketplace sellers. (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).