New Jersey Reacts to South Dakota v. Wayfair Remote Sales Ruling

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.

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About the Author(s)
Cassandra Baubie is an Associate at HBK CPAs & Consultants and is a member of its Tax Advisory Group (TAG).

Ms. Baubie joined HBK in 2017. She works in the firm’s Youngstown, Ohio office after earning a dual Bachelor of Arts degree in Legal Studies and Psychology from the State University of New York, The University at Buffalo and a Juris Doctorate from the University of Pittsburgh School of Law, where she also completed a Tax Law Certification. She graduated from both schools with high honors and spent a semester studying abroad in London, England, as well.

Ms. Baubie has experience in tax law research. Prior to joining HBK, she worked for, a global legal news organization, and was a member of the University of Pittsburgh Tax Law Review Journal. Ms. Baubie also worked for the University of Pittsburgh School of Law’s Low Income Tax Clinic where she performed IRS litigation and Tax Court work, and provided compliance work for low income individuals and businesses. She was an avid volunteer with the Olmsted Center for Sight in Buffalo.
Hill, Barth & King LLC has prepared this material for informational purposes only. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.