New Jersey: Sales Tax Handbook
What constitutes sales tax nexus in New Jersey?
One of the more complicated aspects of New Jersey sales tax law is sales tax nexus, the determination of whether a particular sale took place within the taxation jurisdiction of New Jersey, and is thus subject to state (and possibly local) sales taxes.
If a vendor's transactions are determined to have nexus in New Jersey, the vendor must register for a New Jersey sales tax license and collect appropriate sales taxes from the buyer for all transactions with nexus in the state. On this page, we have compiled some of the most commonly needed facts about what constitutes sales tax nexus in New Jersey.
Sales Tax Nexus in New Jersey
According to the New Jersey law, all "sellers" who have tax nexus can be defined in several different ways.
If your business has an office or any other type of place of business in New Jersey, an employee, sales representative, agent, contractor, or any other representative present within the state's boundaries, any maintenance program provided in the state of New Jersey, the delivery of goods within the state, the ownership of any real or personal property, or the storage of goods stored in a warehouse in New Jersey, you have sales tax nexus in the state.
A person making sales of taxable tangible personal property, specified digital products, or services is presumed to be soliciting business through an independent contractor or other representative if the person making sales enters into an agreement with an independent contractor having physical presence in New Jersey or other representative having physical presence in New Jersey, for a commission or other consideration, under which the independent contractor or representative directly or indirectly refers potential customers, whether by a link on an Internet website or otherwise, and the cumulative gross receipts from sales to customers in New Jersey who were referred by all independent contractors or representatives that have this type of an agreement with the person making sales are in excess of $10,000 during the preceding four quarterly periods ending on the last day of March, June, September, and December (click-through nexus)
For additional details on sales tax nexus law in New Jersey, see the nexus information page from the Department of the Treasury at http://www.state.nj.us/treasury/taxation/pdf/other_forms/misc/nexus_survey.pdf
Taxation of Internet-Based Sales in New Jersey
NOTE: 2018 Supreme Court Ruling Regarding Online Sales Taxes
In the 2018 Supreme Court case South Dakota vs. Wayfair Inc, Et Al., the court overturned a previous ruling that required a merchant to have physical nexus in order for a state to collect sales tax. This means that any state is now free to enforce collection of sales taxes on out-of-state online merchants. The information provided here may be subject to change, and many states are expected to begin collecting online sales taxes following this ruling.
Depending on the situation, New Jersey may or may not charge sales tax on Internet-based transactions. New Jersey has a "click-through" nexus. The presumption of a click through nexus in New Jersey presumption may be rebutted when proof is presented that the seller has an agreement did not engage in any sort of solicitation in the state on behalf of any individual, who's specifications would certainly satisfy the requirements for sales nexus during the four quarters of the year
The nexus status and taxability of Internet-based sales, by vendors and/or consumers within New Jersey, have been the subject of hot debate in recent years. You can learn more on our introduction to Internet-based sales taxes.
Does my business have tax nexus in New Jersey?
The folks at the sales tax compliance company Avalara are an approved New Jersey sales tax partner, and you can use their free New Jersey nexus wizard tool to determine whether or not your business has nexus, and is therefore required to pay New Jersey sales taxes. If you're interested in automating your sales tax collection and filing process, click here to get more information.
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