Gov. Chris Christie signed A-3486 on Monday — a supplemental piece of legislation in the 2015 state budget that contains a component regarding sales tax and certain independent contractors, also called a "Click-Through Nexus."
Sponsored by Assemblyman Gordon M. Johnson (D-Bergen) and Senate President Steve Sweeney (D-West Deptford), the bill states that "sellers using commissioned physically present independent contractors to market in-state sales, online or otherwise, invoke the duty to collect sales tax if cumulative sales through those contractors exceed $10,000 for the prior four calendar quarters."
Currently, purchases made online are subject to sales tax just as any purchases made at brick-and-mortar retailers in New Jersey are; however, when an online-only retailer fails to collect the tax, the consumer then acquires the responsibility of reporting the purchase on his personal state income tax return.
"This is a confusing and unnecessary burden for a consumer," said John R. Holub, president of the New Jersey Retail Merchants Association.
"Far too often, the majority of people don't realize that the tax is still owed and needs to be declared."
While not a new tax or tax increase, A-3486 will implement fairness regarding e-commerce and sales tax between online-only and brick-and-mortar retailers.
A similar bill was passed in New York several years ago and withstood legal challenges from Amazon.
"A sale is a sale, regardless of whether it happens online or in a store," Holub said.
"If there is going to be a sales tax levied on purchases, it should be applied equally and fairly between the two. This new law begins to address our outdated tax laws, and modernizes it to reflect the 21st century marketplace. Many online-only retailers will no longer be able to exploit this loophole."
Holub said that online-only retailers such as eBay and Overstock.com maintain a competitive advantage because even if brick-and-mortar retailers are willing to compete in price, the 7 percent sales tax advantage makes it more difficult to do so.
"While it doesn't solve the problem entirely — federal legislation that is being considered in D.C. will be necessary for that — it is a step in the right direction to level the playing field," Holub said.
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