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Division of Taxation

Notice – Sales and Use Tax
Requirement for Out-of-State Sellers to Collect Sales Tax if Soliciting Business in New Jersey (P.L. 2014, c. 13)

Amendment to the Sales and Use Tax Act, enacted June 30, 2014

Section 4 of P.L. 2014, c. 13 amends N.J.S.A. 54:32B-2(i)(1) to modify the definition of “seller” under the Sales and Use Tax Act for sales occurring on or after July 1, 2014. 

The new law creates a rebuttable presumption that an out-of-State seller who makes taxable sales of tangible personal property, specified digital products, or services, is soliciting business and has nexus in New Jersey if that seller:

  1. Enters into an agreement with a New Jersey independent contractor or other representative for compensation in exchange for referring customers via a link on their website, or otherwise, to that out-of-State seller; and
  2. Has sales from these referrals to customers in New Jersey in excess of $10,000 for the prior four quarterly periods ending on the last day of March, June, September, and December.

Out-of-State sellers that meet both conditions must register for sales tax purposes and collect and remit sales tax on all sales delivered to New Jersey.

Because the law creates a rebuttable presumption, the out-of-State seller may provide proof that the independent contractor or representative did not engage in any solicitation on their behalf in New Jersey. The burden is on the seller to prove that they are not required to collect and remit sales tax.

For example, a Florida retailer (FLR) that sells office supplies wants to sell supplies to New Jersey customers via the Internet. FLR enters into agreements with several New Jersey sellers to place ads on their websites that link to FLR’s website. When a customer reaches the FLR’s website by clicking the link on those websites, a “click-thru” is logged. Under these agreements, if FLR makes a sale as a result of a click-thru, the New Jersey seller is paid a commission. If FLR’s cumulative sales from these referrals to customers in New Jersey exceed $10,000 in the previous year, FLR is presumed to be soliciting business and is required to register with New Jersey and collect and remit sales tax on sales of taxable items delivered into this State. 

An out-of-State seller that is soliciting business in New Jersey is required to register with New Jersey and collect and remit sales tax on charges for taxable items delivered to a New Jersey location. To register, a Business Registration Application (Form NJ-REG) must be filed. Form NJ‑REG may be filed online through the Division of Revenue and Enterprise Services’ NJ Business Gateway Services website. A Public Records Filing may also be required depending on the type of business ownership.

More information on Public Records Filing is available in the New Jersey Complete Business Registration Package or by calling 609-292-9292.

Last Updated: Friday, 03/06/20