NJ – General guidelines issued for nexus-creating activities
The New Jersey Division of Taxation has issued a bulletin that provides general guidelines for determining whether the activities of a person or business entity create nexus with New Jersey for the purpose of imposing sales and use tax. Specifically, activities occurring in New Jersey that create nexus for sales tax purposes include, but are not limited to:
- selling, leasing, or renting tangible personal property or specified digital products or services;
- maintaining an office, distribution house, showroom, warehouse, service enterprise (like a restaurant, entertainment center, business center, etc.), or other place of business;
- having employees, independent contractors, agents, or other representatives (including salespersons, consultants, customer representatives, service or repair technicians, instructors, delivery persons, and independent representatives or solicitors acting as agents of the business) working in the state;
- selling, storing, delivering, or transporting energy to users or customers;
- collecting initiation fees, membership fees, or dues for access to or use of health, fitness, athletic, sporting or shopping club property or facilities; and
- parking, storing, or garaging motor vehicles.
New Jersey has 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 meets the following conditions: (1) the seller enters into an agreement with a New Jersey independent contractor or other representative for compensation in exchange for referring customers via a link on its website, or otherwise, to that out-of-state seller; and (2) the seller 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.
An out-of-state seller that meets both of these conditions is presumed to be soliciting business and has nexus with New Jersey. The out-of-state seller must register for sales tax purposes and collect and remit sales tax on all sales delivered to New Jersey. Since this is a rebuttable presumption, the out-of-state seller may provide proof that the independent contractor or representative did not engage in any solicitation on its behalf in New Jersey. The burden is on the seller to prove that it is not required to collect and remit sales tax.
Technical Bulletin TB-78, New Jersey Division of Taxation, July 30, 2015