(TRENTON) – In order to ensure a level playing field between brick-and-mortar businesses and online marketplaces and bring needed revenue to the state, the Assembly on Thursday approved legislation Assemblyman John Burzichelli sponsored to require certain remote sellers and marketplace facilitators like Amazon to collect sales tax.
“Online marketplaces have made it easier for interstate and international commerce, allowing many businesses to circumvent state sales tax requirements,” said Burzichelli (D-Cumberland/Gloucester/Salem). “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 bill (A-4496), 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 would 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 bill 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 bill would 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 would have the discretion to temporarily suspend or delay the collection of a marketplace facilitator for a period not exceed 180 days. The director would have to report any suspension or delay to the governor and the Legislature.
Lastly, the bill would clarify that travel agencies and online travel agencies are not transient space marketplaces, and therefore would 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 now awaits further consideration by the Senate.