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New Jersey enacts remote-seller sales tax collection rules

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On Oct. 4, 2018, New Jersey enacted legislation imposing sales tax collection requirements on certain remote sellers and marketplace facilitators.1 This legislation was enacted in response to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc.2 that held physical presence no longer is required in order for a state to impose sales tax. For sales made on or after Nov. 1, 2018, remote sellers are required to collect sales tax if they have more than $100,000 of sales or at least 200 separate transactions in the state. Marketplace facilitators are required to collect and remit sales tax on all marketplace transactions. The New Jersey Division of Taxation recently issued guidance to explain implementation of these new requirements. Finally, the definition of “transient space marketplace” is amended to exclude travel agencies and online travel agencies.

Remote seller collection requirement Beginning Nov. 1, 2018, a seller that makes a retail sale of tangible personal property, specified digital products or taxable services for delivery in New Jersey and does not have a physical presence in the state must collect sales tax if the seller meets either of the following criteria:

  • The seller’s gross revenue from delivery of tangible personal property, specified digital products or taxable services for delivery in the state in the calendar year or the prior calendar year exceeds $100,000; or
  • The seller sold tangible personal property, specified digital products or taxable services for delivery in the state in 200 or more separate transactions during the calendar year or prior calendar year. 3

The Division of Taxation has issued guidance explaining implementation of the remote seller sales tax collection requirements.4 Beginning Nov. 1, 2018, a remote seller that satisfies one or both thresholds should register on the Division of Revenue and Enterprise Services website. In the alternative, because the state is a full member of the Streamlined Sales and Use Tax Governing Board, a remote seller may register through the Streamlined Sales Tax Registration System. Remote sellers that satisfy the economic nexus threshold must register, but they can request to be placed on a non-reporting basis for sales tax if: (i) they sell solely through a marketplace; or (ii) they only make sales that are for resale or otherwise nontaxable.5 Remote sellers are not required to collect and remit sales tax on marketplace sales because marketplace facilitators have this responsibility.

Marketplace facilitators and sellers Beginning Nov. 1, 2018, the legislation imposes sales tax registration, collection and remittance requirements on marketplace facilitators.6 A marketplace facilitator is any person (including an affiliate) who facilitates a retail sale of tangible personal property, specified digital products or taxable services by directly or indirectly performing at least one of nine operational activities and at least one of five collection or payment activities.7 The marketplace facilitator is required to collect sales tax on sales of tangible personal property, specified digital products and taxable services delivered into New Jersey, which are made by a marketplace seller8 through any physical or electronic marketplace owned, operated or controlled by the marketplace facilitator. A marketplace facilitator is required to collect tax even if the marketplace seller is registered with New Jersey to collect and remit tax.9 However, a marketplace facilitator and marketplace seller may enter into an agreement regarding the collection and remittance of the tax.10 Note that a marketplace seller may be a remote seller or a seller with a physical presence in New Jersey.11 The marketplace must collect and remit tax regardless of whether the marketplace seller satisfies either of the remote seller economic nexus thresholds.

Following each retail sale made through the marketplace, the marketplace facilitator must provide the purchaser with a sales slip, invoice, receipt or other statement or memorandum of the price paid or payable.12 The amount of tax due must be separately stated.

Possible leniency for marketplace facilitators


If the marketplace facilitator demonstrates that it has made a reasonable effort to obtain accurate information from the marketplace seller about a retail sale and that the failure to collect and pay the correct amount of sales tax was due to incorrect information from the marketplace seller, the marketplace facilitator is relieved of sales tax liability for the retail sale.13 If the marketplace facilitator is relieved of liability, the seller is liable for the sales tax. Upon written application and for good cause shown, the Division may temporarily suspend or delay the registration, collection and remittance obligations of a marketplace facilitator for up to 180 days. 14

Audits and registration

A marketplace facilitator is subject to audit by the Division for all retail sales for which it is required to collect and remit tax. 15 If the Division audits the marketplace facilitator, the Division may not audit the marketplace seller for the same retail sales unless the marketplace facilitator seeks the liability relief discussed above. The Division advises marketplace sellers to contact the marketplace facilitator to ensure that the information on their marketplace sales in New Jersey is provided on a regular basis.

The Division clarifies the registration and collection requirements for marketplace facilitators.16 Beginning Nov. 1, 2018, new business registrants should register on the Division of Revenue and Enterprise Services website. Marketplace facilitators that are already registered to collect sales tax in New Jersey must establish a sub-account to report and remit the tax collected for marketplace sellers.

The Division clarifies the registration and collection requirements for marketplace facilitators. Beginning Nov. 1, 2018, new business registrants should register on the Division of Revenue and Enterprise Services website. Marketplace facilitators that are already registered to collect sales tax in New Jersey must establish a sub-account to report and remit the tax collected for marketplace sellers.

Transient space marketplace Transient space marketplaces are required to collect sales tax.17 The definition of “transient space marketplace” is amended to exclude a travel agency or an online travel agency.18

Commentary New Jersey is the latest state to enact legislation in response to the U.S. Supreme Court’s Wayfair decision released on June 21, 2018. For remote sellers, the sales and transaction thresholds are identical to the thresholds in the South Dakota law that was approved by the Supreme Court. However, New Jersey followed a somewhat complicated path to enacting the remote seller and marketplace facilitator collection requirements. On July 1, 2018, New Jersey was the first state to pass legislation in direct response to Wayfair.19 However, New Jersey Gov. Philip Murphy conditionally vetoed this legislation on Aug. 27, 2018, and proposed revisions to assist the Division in administering the new collection requirements.20 Prior to this conditional veto, the Division issued administrative guidance on Aug. 14, 2018 to impose the economic nexus standards for remote sellers effective Oct. 1, 2018.21 However, this administrative guidance was superseded by the recently enacted legislation with the Nov. 1, 2018, effective date.

The complexity of the marketplace facilitator rules is likely to pose problems to these businesses from a compliance perspective. While some businesses will easily qualify under the broad marketplace facilitator definition and will be subject to the new requirements, others that follow more non-traditional models that provide de minimis support to purchasers and sellers through very limited activities may be surprised that they could qualify as well. Further, the rules appear to go well beyond the economic nexus provisions endorsed in Wayfair, in that no specific in-state transactional or sales thresholds are set for marketplace facilitators. The legislation and the Division’s guidance envision the difficulties that are likely to arise when marketplace facilitators are audited by the Division, as sales tax agreements between marketplace facilitators and sellers under the electronic platforms will mean that sales tax payments could be made from more than one entity, and thus more difficult to track. 

Many states have adopted sales tax economic nexus standards through a variety of methods including legislation, regulations and administrative pronouncements. New Jersey joins a group of states, including Alabama, Connecticut, Iowa, Minnesota, Oklahoma, Pennsylvania, Rhode Island, South Dakota and Washington, in enacting marketplace provisions. Because the marketplace provisions vary among states, taxpayers should carefully consider the effective dates, definitions, and collection requirements for each state. Additional states are likely to adopt their own marketplace provisions in the near future.


1 Ch. 132 (A.B. 4496), Laws 2018.
2 138 S. Ct. 2080 (2018). For a discussion of this case, see GT SALT Alert: U.S. Supreme Court Decides South Dakota v. Wayfair, Overruling Quill Physical Presence Requirement.
3 N.J. REV. STAT. § 54:32B-3.5(a). The legislation clarifies that the sales tax collection requirement only applies to sales following the effective date of the legislation and no obligation to collect the tax may be applied retroactively. N.J. REV. STAT. § 54:32B-3.5(e). Also, N.J. REV. STAT. § 54:32B-2(i)(1)(J) is amended to expand the definition of “seller” to include remote sellers that satisfy at least one of the sales tax nexus requirements.
4 Sales Tax Information for Remote Sellers, New Jersey Division of Taxation, Nov. 2, 2018.
5 A remote seller may request to be placed on a non-reporting basis for sales tax purposes by filing Form C-6205-ST.
6 N.J. REV. STAT. § 54:32B-3.6; Technical Bulletin TB-83, New Jersey Division of Taxation, Oct. 25, 2018. Also, N.J. REV. STAT. § 54:32B-2(i)(1)(K) is amended to expand the definition of “seller” to include marketplace facilitators. N.J. REV. STAT. § 54:32B-2(w) is amended to expand the definition of “persons required to collect tax” to include marketplace facilitators.
7 N.J. REV. STAT. § 54:32B-3.6(a). The operational activities include: (a) listing, making available, or advertising a product or service for sale by a marketplace seller in a forum owned, operated or controlled by the marketplace facilitator; (b) facilitating the sales of a marketplace seller’s product or service through a marketplace by communicating an offer or acceptance of a retail sale between a marketplace seller and a purchaser in a forum; (c) owning, renting, licensing, making available or operating any electronic or physical infrastructure or any process that connects marketplace sellers to purchasers to make retail sales; (d) providing a marketplace for making retail sales or otherwise facilitating retail sales regardless of ownership or control of the product or service sold; (e) providing software development or research and development activities directly related to the marketplace; (f) providing or offering fulfillment or storage services for a marketplace seller; (g) setting prices for the marketplace seller; (h) providing or offering customer service to a marketplace seller or its customers, or accepting or assisting with taking orders, returns or exchanges; or (i) branding or otherwise identifying sales as those of the marketplace facilitator. The collection and payment activities include: (a) collecting the sales price of a retail sale; (b) providing payment processing services; (c) charging, collecting or otherwise receiving selling fees, listing fees, referral fees, closing fees, fees for inserting or making available the product or service, or other consideration from the facilitation of the sale, regardless of ownership or control of the product or service sold; (d) through arrangements with a third party, collecting payment for a retail sale from a purchaser and transmitting that payment to the marketplace seller, whether or not receiving compensation for the service; or (e) providing a virtual currency that purchasers are allowed or required to use to make the purchase.
8 Id. A “marketplace seller” is a seller that makes retail sales through any physical or electronic marketplace owned, operated or controlled by a marketplace facilitator, even if the seller would not have been required to collect and pay the tax if the sale had not been made through the marketplace.
9 N.J. REV. STAT. § 54:32B-3.6(b).
10 N.J. REV. STAT. § 54:32B-3.6(c).
11 Technical Bulletin TB-83, New Jersey Division of Taxation, Oct. 25, 2018.
12 N.J. REV. STAT. § 54:32B-3.6(e).
13 N.J. REV. STAT. § 54:32B-3.6(d).
14 N.J. REV. STAT. § 54:32B-3.6(g). The taxpayer must include the following information in a request for delay: (i) name and address; (ii) the taxpayer’s New Jersey Taxpayer Identification Number (if registered with the state) or Federal Employer Identification Number (FEIN) (if not registered with the state); (iii) the date the taxpayer expects to be able to comply with the new collection and reporting requirements; and (iv) an explanation of why the taxpayer requires additional time to meet the new collection and reporting requirements. Technical Bulletin TB-83, New Jersey Division of Taxation, Oct. 25, 2018.
15 N.J. REV. STAT. § 54:32B-3.6(f).
16 Technical Bulletin TB-83, New Jersey Division of Taxation, Oct. 25, 2018.
17 N.J. REV. STAT. § 54:32B-2(w).
18 N.J. REV. STAT. §§ 5:10A-84; 34:1B-192; 40:48-8.16; 40:48-8.45; 40:48E-2; 40:54D-3; 54:32B-2(ggg). A “transient space marketplace” is an online marketplace through which a person may offer transient accommodations or hotel rooms to individuals. This marketplace allows transient accommodations or hotel rooms to be advertised or listed through an online marketplace in exchange for consideration or provides a means for a customer to arrange for the occupancy of the transient accommodation or hotel room in exchange for consideration. The term does not include an online marketplace operated by or on behalf of a hotel or hotel corporation that facilitates customer occupancy solely for the hotel or hotel corporation’s owned or managed hotels and franchisees, and does not include a travel agency or an online travel agency. According to the legislature, this amendment is intended to clarify that these businesses are not required to collect and pay sales or hotel taxes for sales on their platforms.
19 A.B. 4261, conditionally vetoed on Aug. 27, 2018.
20 Conditional Veto Statement for A.B. 4261, Aug. 27, 2018. Governor Murphy suggested that the legislation be amended to clarify that the law includes tangible property as well as digital products and services. Also, he recommended that the legislation be amended to allow the Division to audit marketplace facilitators.
21 Notice, New Jersey Division of Taxation, Aug. 14, 2018 (replaced by new guidance for remote sellers that reflects A.B. 4496).




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