The New Jersey Division of Taxation has updated its “Frequently Asked Questions” guidance pertaining to changes for determining nexus for sales and use tax purposes for remote sellers based outside the state. In response to the U.S. Supreme Court case of South Dakota v. Wayfair, New Jersey enacted P.L. 2018, c.132, which imposes sales tax collection and remittance requirements on remote sellers with sales that exceed the new nexus threshold. The new threshold is either: (1) the remote seller’s gross revenue from sales of tangible personal property, specified digital products or services delivered into New Jersey during the current or prior calendar year exceeds $100,000; or (2) the remote sellers sold tangible personal property, specified digital products, or services delivered into New Jersey in 200 or more separate transactions during the current or prior calendar year.
The Division’s guidance provides additional clarity on the following key points:
- The nexus changes took effect beginning on November 1, 2018 and are not applied retroactively to prior periods.
- In computing the $100,000 sales threshold for nexus, all sales delivered into the state are included—this includes nontaxable retail sales as well.
- Remote sellers that only make nontaxable retail sales are required to register with the state if they exceed the above thresholds for sales and transactions, but they may request to be placed on a non-reporting basis for sales tax purposes.
- Remote sellers that only make sales for resale or wholesale sales into the state are not required to register for sales tax purposes.
- Once nexus is achieved through exceeding one of the thresholds, the tax collection obligation continues for that year and the following year.
- The Division is providing a 30-day grace period after the nexus threshold is met for a remote seller to register and begin collecting sales tax.
- Remote sellers are not required to collect and remit sales tax on sales made through a marketplace facilitator, such as an online marketplace.
The guidance provides additional examples and responses to assist taxpayers. A copy of the Division’s guidance can be found here.