Bill Text: NJ A5101 | 2024-2025 | Regular Session | Introduced
Bill Title: Eliminates transaction nexus requirement under Sales and Use Tax and Corporation Business Tax.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced) 2024-12-12 - Introduced, Referred to Assembly State and Local Government Committee [A5101 Detail]
Download: New_Jersey-2024-A5101-Introduced.html
Sponsored by:
Assemblywoman HEATHER SIMMONS
District 3 (Cumberland, Gloucester and Salem)
Assemblywoman MITCHELLE DRULIS
District 16 (Hunterdon, Mercer, Middlesex and Somerset)
Assemblyman DAN HUTCHISON
District 4 (Atlantic, Camden and Gloucester)
SYNOPSIS
Eliminates transaction nexus requirement under Sales and Use Tax and Corporation Business Tax.
CURRENT VERSION OF TEXT
As introduced.
An Act eliminating the transaction nexus requirement under the Sales and Use Tax and Corporation Business Tax, amending P.L.2018, c.132 and P.L.2023, c.96.
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. Section 6 of P.L.2023, c.96 (C.54:10A-4.16) is amended to read as follows:
6. a. Notwithstanding the provisions of the Corporation Business Tax Act (1945), P.L.1945, c.162 (C.54:10A-1 et seq.) or any other law, rule, or regulation to the contrary, for the purposes of section 2 of P.L.1945, c.162 (C.54:10A-2), a corporation deriving receipts from sources within this State shall be deemed to have substantial nexus and is subject to the taxes imposed under the Corporation Business Tax Act (1945), P.L.1945, c.162 (C.54:10A-1 et seq.) if [the corporation meets either of the following criteria]:
(1) The corporation derives receipts from sources within this State, pursuant to sections 6 through 10 of P.L.1945, c.162 (C.54:10A-6 through [C.45:10A-10] C.54:10A-10), in excess of $100,000 during the corporation's fiscal or calendar year[; or].
(2) [The corporation has 200 or more separate transactions delivered to customers in this State during the corporation's fiscal or calendar year. For the purposes of this paragraph, for any transaction that is a service transaction, "delivered to a customer" shall mean where the benefit is received within the meaning of paragraph (4) of subsection (B) of section 6 of P.L.1945, c.162 (C.54:10A-6).] (Deleted by amendment, P.L. , c. .) (pending before the Legislature as this bill)
b. This section shall not preclude a corporation from having nexus with this State if the corporation's exercise of its franchise in this State is otherwise sufficient to give this State jurisdiction to impose taxes pursuant to the Corporation Business Tax Act (1945), P.L.1945, c.162 (C.54:10A-1 et seq.), as consistent with the provisions of the United States Constitution, the New Jersey Constitution, and the statutes of the United States and of the State of New Jersey. This section shall not preclude a corporation from owing the statutory minimum tax provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5) if a corporation has nexus with this State and is otherwise protected from tax based on income pursuant to 15 U.S.C. ss.381-384.
(cf: P.L.2023, c.96, s.6)
3. 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, and when a corporation is subject to taxes imposed under the Corporation Business Tax (CBT).
Under current law, the Sales and Use Tax Act provides 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 required to collect and remit 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.
Similarly, under current law, the Corporation Business Tax Act provides that a corporation that derives receipts from sources within the State is subject to the CBT if: (1) the corporation derives receipts from sources within the State in excess of $100,000 during the corporation's fiscal or calendar year; or (2) the corporation has 200 or more separate transactions delivered to customers in this State during the corporation's fiscal or calendar year.
Specifically, this bill removes the second criterion related to the number of transactions under both the Sales and Use Tax and the CBT. By eliminating these transactional nexus requirements, the bill provides that: (1) remote sellers would only be required to collect and remit sales tax to the State when the seller's gross revenue from taxable transactions delivered into State exceeds $100,000 in the current or prior calendar year; and (2) corporations would only be subject to CBT when the corporation's receipts from sources within this State exceed $100,000 in the corporation's fiscal or calendar year.
