New Jersey Division of Taxation Issues Technical Bulletins Related to Nexus
On August 13, 2015, the New Jersey Division of Taxation Regulatory Services Branch issued two technical bulletins, TB-78(R) and TB-79(R). These TBs deal with nexus for sales and use tax and nexus for corporation business tax respectively.
Starting with TB-78(R), nexus for sales and use tax, the state provides general guidelines for determining whether the activities of a person create nexus for NJ sales tax purposes. This technical bulletin reviews the definition of “nexus,” “person,” and “seller” as well as stating what it means to have sales tax nexus. It also provides a nonexclusive list of activities that create sales tax nexus which are:
- Selling, leasing, or renting of tangible personal property, specified digital products or services;
- Maintain an office or other place of business;
- Having employees, independent contractors, agents or other representatives;
- Selling, storing, delivering, or transporting energy to users or customers;
- Collecting initiation fees, membership fees, or dues for access to a health, fitness, athletic center, etc;
- Parking, storing, or garaging motor vehicles; and
- Delivering goods sold in seller’s own vehicle.
The TB also goes through what creates click-through nexus in which case. The state takes a rebuttable presumption that an out-of-state seller that enters into an agreement with a New Jersey independent contractor (or other representative) for compensation in exchange for referring customers through a link on their website to the out-of-state seller and has referrals to customers in New Jersey in excess of $10,000 for the prior four quarterly periods, has nexus with New Jersey. Click here for more information and a copy of the technical bulletin.
In TB-79(R), the Division of Taxation addresses nexus for corporation business tax purposes. It explains the annual franchise tax requirements for a domestic or nonresident corporation, and when a foreign corporation has a corporate franchise tax obligation with New Jersey which the foreign corporation is:
- Registered with the New Jersey Department of Revenue; and/or
- Holds a certificate, license, or other authorization issued by any other state deportment or agency authorizing the company to engage in corporate activity in New Jersey.
The TB continues to explain what factors are used to determine whether or not a company is considered “doing business” in New Jersey and provides explanation on the applicability of P.L. 86-272. In addition, it has removed language that was originally in TB-79 stating that mere delivery of goods in the company’s own trucks is not protected under P.L 86-272. Therefore, TB-79(R) states mere delivery in the company’s trucks is protected under P.L. 86-272. For more information and the TB-79(R), click here.