New Jersey has enacted A.B. 3486, which among other things, adopts click-through nexus provisions that expand the number of sellers required to collect and remit New Jersey sales tax. The click-through nexus provisions apply to sales made on or after July 1, 2014.
Under the New Jersey click-through nexus provisions, a seller’s duty to collect and remit sales tax is presumptively triggered when a seller of tangible personal property, certain digital products, or certain taxable services enters into an agreement, for a commission or other consideration, with an independent contractor or other representative physically present in the State of New Jersey to refer potential customers, whether by a link on a website or otherwise, to the seller (a Click-Through Nexus Arrangement).
The above provision only applies if the cumulative gross receipts from sales to customers in New Jersey referred to the seller under these Click-Through Nexus Arrangements are in excess of $10,000 during the preceding four quarterly periods. In addition, this presumption of nexus can be rebutted by showing that the independent contractor or representative that is a party to the Click-Through Nexus Arrangement did not engage in any solicitation in New Jersey on behalf of the seller that would satisfy U.S. Constitutional nexus requirements during the four quarterly periods at issue.
The New Jersey Assembly Budget Committee reported favorably on the bill and stated that the New Jersey Department of the Treasury informally estimated that the click-through nexus provisions of the bill are expected to generate $25 million in revenue for fiscal year 2015.
The Multistate Tax Update will continue to follow this growing trend of states enacting click-through or affiliate nexus laws. Please refer to our other alerts dated June 12, 2014, May 16, 2013, and Dec. 5, 2014 regarding click-through or affiliate nexus topics.