Ó£»¨ÊÓƵ

Notice – Sales and Use Tax
Requirement for Out-of-State Sellers to Collect Sales Tax if Soliciting Business in Ó£»¨ÊÓƵ (P.L. 2014, c. 13)

Amendment to the Sales and Use Tax Act, enacted June 30, 2014

Section 4 of P.L. 2014, c. 13 amends N.J.S.A. 54:32B-2(i)(1) to modify the definition of “seller” under the Sales and Use Tax Act for sales occurring on or after July 1, 2014. 

The new law creates a rebuttable presumption that an out-of-State seller who makes taxable sales of tangible personal property, specified digital products, or services, is soliciting business and has nexus in Ó£»¨ÊÓƵ if that seller:

1. Enters into an agreement with a Ó£»¨ÊÓƵ independent contractor or other representative for compensation in exchange for referring customers via a link on their website, or otherwise, to that out-of-State seller; and
2. Has sales from these referrals to customers in Ó£»¨ÊÓƵ in excess of $10,000 for the prior four quarterly periods ending on the last day of March, June, September, and December.

Out-of-State sellers that meet both conditions must register for sales tax purposes and collect and remit sales tax on all sales delivered to Ó£»¨ÊÓƵ.

Because the law creates a rebuttable presumption, the out-of-State seller may provide proof that the independent contractor or representative did not engage in any solicitation on their behalf in Ó£»¨ÊÓƵ. The burden is on the seller to prove that they are not required to collect and remit sales tax.

For example, a Florida retailer (FLR) that sells office supplies wants to sell supplies to Ó£»¨ÊÓƵ customers via the Internet. FLR enters into agreements with several Ó£»¨ÊÓƵ sellers to place ads on their websites that link to FLR’s website. When a customer reaches the FLR’s website by clicking the link on those websites, a “click-thru” is logged. Under these agreements, if FLR makes a sale as a result of a click-thru, the Ó£»¨ÊÓƵ seller is paid a commission. If FLR’s cumulative sales from these referrals to customers in Ó£»¨ÊÓƵ exceed $10,000 in the previous year, FLR is presumed to be soliciting business and is required to register with Ó£»¨ÊÓƵ and collect and remit sales tax on sales of taxable items delivered into this State. 

An out-of-State seller that is soliciting business in Ó£»¨ÊÓƵ is required to register with Ó£»¨ÊÓƵ and collect and remit sales tax on charges for taxable items delivered to a Ó£»¨ÊÓƵ location. To register, a Business Registration Application (Form NJ-REG) must be filed. Form NJ‑REG may be filed online through the Division of Revenue and Enterprise Services’ NJ Business Gateway Services website. A Public Records Filing may also be required depending on the type of business ownership.

More information on Public Records Filing is available in the Ó£»¨ÊÓƵ Complete Business Registration Package or by calling 609-292-9292.