In a 5-4 ruling the Supreme Court issued their decision opening the door for states and localities to collect sales tax on interstate purchases made on the internet. This decision overturns the long-standing decision in Quill, issued by the Supreme Court in 1992, requiring a physical presence test be met by sellers in the jurisdiction imposing the tax. While no longer requiring a physical presence test for the requirement to collect a state’s sales tax, the decision leaves open many questions for the individual state courts to address. In this case (South Dakota v. Wayfair, Inc)., the court remanded the case back to the state courts, but it implies that the South Dakota statue would meet the constitutional muster required, even though the Supreme Court did not rule that the law passes the Commerce Claus in its entirety. The South Dakota legislation contains a de minimus threshold of $100,000 of goods sold or 200 transactions during the current or prior calendar year in that state. Other states have recently imposed similar (but not necessarily identical) thresholds in their state.
Effective October 1, 2018, New Jersey will follow the South Dakota threshold. Businesses that sell on the internet will need to focus on transaction details, in determining Sales Tax Nexus, as opposed to having physical facilities and other indicators of physical presence in New Jersey.
As state sales tax rules in New Jersey and in other states constantly change, you will need expert professional advice to keep up with these changes. If you have any questions, please contact us.
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