Now Law: Burzichelli & Moriarty Bill to Require Marketplace Facilitators & Certain Remote Sellers to Pay NJ Sales Tax
(TRENTON) – Legislation sponsored by Assemblymen John Burzichelli and Paul Moriarty to ensure a level playing field between brick-and-mortar businesses and online marketplace providers like Amazon, and bring in needed revenue to the state has been signed into law.
The new law (A-4496) will require certain remote sellers and online marketplace facilitators to collect and remit sales tax. It was signed today by Gov. Murphy.
“This will help provide parity among brick-and-mortar businesses and online marketplaces and provide the state with needed revenue,” said Burzichelli (D Cumberland/Gloucester/Salem). “Online marketplaces have made it easier for interstate and international commerce, allowing many businesses to circumvent state sales tax requirements. New Jersey based businesses have to abide by the sales and use tax law, and 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.
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.
Under the law, if a seller does not have a physical presence in the state but has revenue from sales into the state in the calendar year, or prior year, in excess of $100,000, the seller must collect taxes. The same rule will apply to a seller with 200 or more separate transactions into the state in a calendar year or in the prior year.
These provisions of the law reflect the recent decision of the United States Supreme Court in South Dakota v. Wayfair, Inc., in which the court determined that physical presence within a state was not a prerequisite for the collection of sales tax on purchases of tangible personal property. In that case, the court held that imposing sales tax on a seller that delivers more than $100,000 worth of sales into a state or delivers 200 or more separate transactions into a state has a sufficient nexus with the state for the state to impose tax on the seller.
“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.”
The law will also require marketplace facilitators like Amazon to collect tax on sales they facilitate for marketplace sellers. In order to ensure the accurate and timely collection of taxes due, the Director of Taxation will have the discretion to temporarily suspend or delay the collection of a marketplace facilitator for a period not exceed 180 days. The director will have to report any suspension or delay to the governor and the Legislature.
Lastly, the law will clarify that travel agencies and online travel agencies are not transient space marketplaces, and therefore will not be required to collect and pay sales tax or various hotel taxes for sales on their platforms.
The bill was approved 43-35 by the Assembly and 23-14 by the Senate on Sept. 27.