Following the June 21, 2018 U.S. Supreme Court decision in South Dakota v. Wayfair to overturn the requirement that remote sellers must have a physical presence in a state in order to be required to collect that state’s sales tax, the state of New Jersey has enacted economic nexus provisions consistent with that ruling.
On June 21, 2018, the U.S. Supreme Court overturned South Dakota v. Wayfair, which had required remote sellers – that is, out-of-state sellers – to have a physical presence in a state to be required to collect that state’s sales tax. The state of New Jersey has enacted “economic nexus” provisions consistent with the Supreme Court ruling. Effective Oct. 1, 2018, a remote seller of tangible personal property, specified digital products, or services for delivery into New Jersey must register, collect and remit New Jersey sales tax if that seller meets either of two thresholds: gross revenue from those sales in excess of $100,000, or that has completed 200 or more separate sales transactions.
Only remote sellers that meet at least one of those criteria is obligated to register and comply with New Jersey tax liabilities. However, a remote seller who fails to meet either of these criteria may choose to voluntarily register with the state, collect tax and remit. The provision applies on a prospective basis as of October 1 and will not alter a taxpayer’s obligations for any sales activity prior to that date.
Clients selling remotely into the state of New Jersey should be taking steps to determine if the total amount of sales they will generate will push them over the thresholds.
Please remember that this law is effective on and beyond October 1st 2018 prospectively. Prospective treatment will not be granted to taxpayers who have physical presence within the state.
If there are any questions as to whether you will be required to register with the state of New Jersey due to this change, or with any other state tax question, please contact a member of the HBK Tax Advisory Group.