The New Jersey Division of Taxation has issued a notice containing economic nexus provisions for remote sellers. Effective October 1, 2018, a remote seller that makes retail 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:
Per the notice, 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 notice is issued 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. This action is being enforced without legislation even though legislation was passed and is awaiting the governor’s signature. The legislation includes marketplace provisions which are not included in the Notice. We will continue to monitor the status of the Bill A.B. 4261. (Notice, New Jersey Division of Taxation, August 14, 2018)
UPDATE: On August 27, 2018, New Jersey Governor Phil Murphy conditionally vetoed A.B. 4261. He returns the bill to the state Assembly with recommendations for reconsideration before he will sign the bill. The Division of Taxation believes it can move forward with the rules issued on August 14 without statutory changes but that it would be preferred to have “safe harbor thresholds in the law.”
UPDATE: New Jersey has enacted economic nexus legislation that requires remote sellers that exceed an economic threshold to register, collect, and remit sales tax, effective November 1, 2018. This date was delayed from October 1, 2018 and is now based on legislation rather than an administrative pronouncement. For more information, read our updated tip: New Jersey Enacts Economic Nexus Legislation.