Burzichelli, Moriarty Bill to Require Certain Out-of-State Third-Party Sellers to Pay Sales Tax Clears Assembly

(TRENTON) – The Assembly approved legislation Saturday Assemblymen John Burzichelli and Paul Moriarty sponsored to require the collection of sales tax from certain remote sellers.

The bill requires marketplace facilitators, such as the third party sellers at Amazon.com, to collect sales and use tax. If the bill is enacted, it would be effective on October 1, 2018.

“Online marketplaces have made it easier for interstate and international commerce, allowing many businesses to circumvent state sales tax requirements,” said Burzichelli (D-Cumberland, Gloucester, and Salem). “New Jersey based businesses have to abide by the sales and use tax law, so should any company who does substantial business in the state.”

New Jersey could gain between $216 million and $351 million as a result of this legislation—about 2 to 4 percent of total 2016 state and local government general sales and gross receipts tax revenues— according to the United States Government Accountability Office (GAO) study in November 2017.

“The fact that they are not physically located in New Jersey should not exempt a business from sales tax and use requirements,” said Moriarty (D- Camden, Gloucester). “These businesses should play by the same rules as other NJ businesses who pay property taxes, local taxes and make an investment in the communities they’re in.”

Under the bill, a seller with no physical presence in New Jersey will be required to collect the sales tax on the purchase of tangible personal property if the seller meets any of the following criteria:

• The seller’s gross revenue from delivery of tangible personal property, any product transferred electronically, or services into the State in the calendar year in which a sale of tangible personal property occurred or the prior calendar year exceeds $100,000; or
• The seller sold tangible personal property, any product transferred electronically, or services for delivery into the State in 200 or more separate transactions during the calendar year in which a sale of tangible personal property occurred or the prior calendar year.

A recent decision of the United States Supreme Court in South Dakota v. Wayfair, Inc. (2018) determined that physical presence within a state was not a prerequisite for the collection of sales tax on purchases of tangible personal property.  The Court held that sellers who deliver more than $100,000 of goods or services into a state or engage in 200 or more separate transactions for the delivery of goods and services into a state has a nexus with the state which is “clearly sufficient” for the state to collect sales tax from the seller.

Forty-five states and the District of Columbia levy taxes on the sale of goods and certain services, including those sold remotely, such as over the Internet.

The bill was approved 45-26-1 and now heads to the Senate for further consideration.