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Legislative committees approve tax on out-of-state businesses

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The state Legislature is moving ahead with plans to impose a sales tax on vendors who don't maintain a physical presence in New Jersey, months after a 2018 U.S. Supreme Court decision gave states authority to tax transactions into the state from beyond its borders.

Under Assembly Bill 4496, New Jersey’s 6.625 percent sales tax will be levied against out-of-state vendors who have made more than $100,000 worth of sales or more than 200 separate transactions in New Jersey.

The measure also applies the tax to marketplace facilitators — companies such as Amazon and eBay that serve as vectors for online transactions, meaning they have to collect the tax on sales.

A4496 passed the Assembly Budget Committee by a 9-4 vote Monday; its upper-house counterpart, Senate Bill 2990, passed 10-2 with one lawmaker absent.

The Office of Legislative Services has pegged the online sales tax revenue at $212 million a year.

Supporters of the measure argue that levying a sales tax for out-of-state vendors creates a fairer market by leveling the playing field for New Jersey businesses.

“The new revenue stream that will be generated from taxing out-of-state businesses will ease the onerous burden New Jersey-based businesses face every day,” said Anthony Russo, president of the Commerce and Industry Association of New Jersey, in a statement.

The Division of Taxation would have the option to delay the implementation for vendors or marketplace facilitators for up to 180 days.

Carol Katz, a principal at Trenton-based lobbying firm Katz Government Affairs who testified on behalf of eBay, said the company plans to utilize the 180-day waiver because it has a “varied and complex” transaction system.

For example, a vendor looking to sell on eBay and use an Amazon fulfillment center, both of which are out of state, could run into complications over which business would collect the tax, Katz said.

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Daniel J. Munoz

Daniel J. Munoz


Daniel Munoz covers politics and state government for NJBIZ. You can contact him at dmunoz@njbiz.com.

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Angry retailer September 24, 2018 4:16 pm

“The new revenue stream that will be generated from taxing out-of-state businesses will ease the onerous burden New Jersey-based businesses face every day,” said Anthony Russo, president of the Commerce and Industry Association of New Jersey, in a statement"

However, any of those NJ businesses that dare sell online will now be at the mercy of the other 10,000 taxing districts and their separate laws, audits and deadlines, so they indeed will potentially be facing whole new worlds of pain every day.

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