New Jersey – Legislation Regarding Sellers and Affiliate Nexus Introduced

SALT Report 1359 – Legislation has been introduced in the New Jersey Senate that would identify certain sellers who would be deemed responsible for the collection of sales and use tax and clarifies the tax collection responsibilities of other sellers and agents.

Under the bill, each of the following persons are considered a seller and would be required to register as a seller and collect sales and use tax on taxable sales of goods and services:
  • A person who holds a substantial ownership interest in, or is owned in whole or part by, a person maintaining a place of business within New Jersey and who sells the same or similar line of products as the related person in the state using the same or a similar business name;
  • A person who holds a substantial ownership interest in, or is owned in whole or part by, a person maintaining a place of business within New Jersey, and who uses the in-state facilities or the in-state employees of a related person in the state to advertise, promote, or facilitate sales to customers;
  • A person who holds a substantial ownership interest in, or is owned in whole or part by, a business that maintains an office, distribution facility, sales or sample facility, warehouse or storage place or other similar place of business in the state that delivers property to the persons customers;
  • A person who collects receipts from the lease or rental of tangible personal property situated within New Jersey;
  • A person who is engaged in the business of selling tangible personal property, specified digital products, or services, and who uses a trademark, service mark, or trade name that is the same as the one used by an affiliated person in the state; and
  • A person who is engaged in the business of selling tangible personal property, specified digital products, or services, and benefits from the activities of an affiliated person in the state, to the extent that the activities of the affiliated person are sufficient to give New Jersey jurisdiction to impose tax collection responsibilities on that person.
In addition, the bill provides that a person who is part of a controlled group of corporations, and that corporation has a member that is a seller engaged in business in the state, will be presumed to be a seller. This presumption may be rebutted by certain evidence otherwise.
The bill provides that a person who makes sales, directly or through a subsidiary or other entity, to purchasers in New Jersey by mail, telephone, the Internet or any other media, and who has a contractual relationship with an entity to provide delivery, installation, assembly, or maintenance services for that person’s purchasers within the state would be deemed a seller.

The bill provides that, regardless of whether an agent is making sales on the agent’s behalf or on behalf of a dealer or distributor, the division may regard the agent’s dealer or distributor as a seller and may be held jointly responsible for the collection and payment of tax.

Finally, the bill provides that the processing of orders electronically, including those made by fax, telephone, Internet or any other electronic ordering process, would not relieve a person from collecting tax from a customer when they are also collecting the sales price, service charge, amusement charge, or rent.

For Further Information:

New Jersey Senate – S.B. 905