S3604

An Act eliminating the transaction nexus requirement for remote sellers under the Sales and Use Tax Act, amending P.L.2018, c.132.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 1 of P.L.2018, c.132 (C.54:32B-3.5) is amended to read as follows:

1. a. Notwithstanding the provisions of the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-l et seq.) or any other law, rule, or regulation to the contrary, a seller who makes a retail sale of tangible personal property, specified digital products, or taxable services for delivery into the State and who does not have a physical presence in the State shall be subject to the tax imposed under the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-1 et seq.), and shall collect the tax in accordance with the provisions of P.L.1966, c.30 (C.54:32B-1 et seq.) if [the seller meets either of the following criteria]:

(1) The seller's gross revenue from delivery of tangible personal property, specified digital products, or taxable services into the State in the calendar year or the prior calendar year exceeds $100,000[; or].

(2) [The seller sold tangible personal property, specified digital products, or taxable services for delivery into the State in 200 or more separate transactions during the calendar year or the prior calendar year.] (Deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill)

b. A taxpayer complying with the provisions of P.L.1966, c.30 (C.54:32B-l et seq.) and this section, voluntarily or otherwise, may seek a refund or credit of a tax, penalty, or interest by following the procedures set forth in section 20 of P.L.1966, c.30 (C.54:32B-20). However, the director shall not grant an application for a refund or credit submitted to the director pursuant to section 20 of P.L.1966, c.30 (C.54:32B-20) on the basis that a taxpayer lacked a physical presence in the State and complied with the provisions of P.L.1966, c.30 (C.54:32B-1 et seq.) and this section voluntarily. Nothing in this subsection shall limit the ability of a taxpayer to obtain a refund or credit on any other basis set forth in section 20 of P.L.1966, c.30 (C.54:32B-20).

c. A seller who remits the tax imposed under the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-l et seq.), voluntarily or otherwise, shall not be liable to a purchaser who claims that the sales tax has been over-collected because a provision of P.L.2018, c.132 (C.54:32B-3.5 et al.) is later deemed unlawful.

d. Nothing in P.L.2018, c.132 (C.54:32B-3.5 et al.) shall affect the obligation of any purchaser from this State to remit use tax as to any applicable transaction in which the seller does not collect and remit the sales tax or remit an offsetting sales tax.

e. The tax imposed under P.L.1966, c.30 (C.54:32B-l et seq.) upon sellers who meet the criteria set forth in this section and are not otherwise subject to the tax shall apply only to sales following the effective date of this section, and no obligation to collect and remit the tax imposed under P.L.1966, c.30 (C.54:32B-l et seq.) by sellers who meet the criteria set forth in this section may be applied retroactively.

(cf: P.L.2018, c.132, s.1)

2. This act shall take effect on the first day of the second month next following the date of enactment.

STATEMENT

This bill amends current law to modify the criteria for determining when a remote seller is subject to the Sales and Use Tax Act and required to collect and remit sales tax to the State.

Current law establishes that a seller who makes retail sales of tangible personal property, specified digital products, or taxable services for delivery into New Jersey, without having a physical presence in the state, is subject to the Sales and Use Tax if : (1) the seller’s gross revenue from taxable transactions delivered into New Jersey exceeds $100,000 in the current or prior calendar year; or (2) the seller made 200 or more separate taxable transactions for delivery into New Jersey during the current or prior calendar year.

Specifically, this bill removes the second criterion related to the number of transactions. By eliminating this transactional nexus requirement, the bill provides that remote sellers would only be required to collect and remit sales tax to the State when seller’s gross revenue from taxable transactions delivered into State exceeds $100,000 in the current or prior calendar year.