Economic Nexus in New Jersey

by | Dec 2, 2022 | Blog Posts

Economic Nexus in New Jersey

State laws on economic nexus vary which imposes a compliance burden on businesses operating in multiple states. Our research team has all the information you need as it relates to economic nexus in New Jersey.

With the South Dakota v. Wayfair Supreme Court ruling in favor of South Dakota, states are now able to collect sales tax from eCommerce businesses who have a “significant presence (or nexus)” in their state. Prior to this ruling, nexus was defined as having a physical presence (ex: brick and mortar store, employee, or inventory in a fulfillment center like FBA). But with this recent ruling, now this definition has been expanded to include economic activity in a state. This expanded concept of triggering sales tax responsibility because of a business’s economic activity is now referred to as economic nexus.

Bottomline, this now means that if you pass a state’s economic threshold for total revenue in that state and/or number of transactions in that state, you’re now legally required to register, collect and remit sales tax for that state.

With regard to New Jersey’s economic nexus provisions, here is a summary:

  • Effective Date: November 1, 2018.
  • Threshold – Sales of $100,000 or 200 separate transactions in the previous or current calendar year.
  • Grace Period – Sellers must register within 30 days after meeting the threshold and begin to collect tax 20 days thereafter
  • Summary: Sellers have a 30-day grace period to register.

If you have met the economic threshold requirement in New Jersey, here are suggested next steps:

  1. Register for a sales tax permit in New Jersey. Learn more about registering here.
  2. Ensure all your eCommerce channels are setup correctly to collect sales tax
  3. Start filing your monthly sales tax return to New Jersey. Learning more about filing here.

As always, sales tax varies by state and if you have questions about your sales tax obligations or would like to outsource the burden, please reach out to our team.