New Jersey Explains Marketplace Sales Law

New Jersey provides information on previously enacted legislation imposing sales tax registration, collection and remittance requirements on marketplace facilitators. The provisions are effective November 1, 2018. (TAXDAY, 2018/10/09, S.13) Specifically, a marketplace facilitator is required to collect tax on sales of tangible personal property, specified digital products, and services delivered into New Jersey, which are made by a marketplace seller through any physical or electronic marketplace owned, operated, or controlled by the marketplace facilitator.

Marketplace Sellers

A marketplace seller is a seller that makes retail sales through any physical or electronic marketplace owned, operated, or controlled by a marketplace facilitator. A marketplace seller may be a remote seller, or a seller with physical presence in New Jersey.

Marketplace sellers are not required to collect and remit sales tax on sales when a marketplace facilitator is required to collect and remit sales tax on the transaction.

Marketplace Facilitators

A marketplace facilitator is required to collect and remit sales tax on sales made through any physical or electronic marketplace owned, operated, or controlled by a marketplace facilitator. This is true even if the marketplace seller is registered with New Jersey for the collection and remittance of sales tax. However, a marketplace facilitator and marketplace seller are permitted to enter into an agreement with each other regarding the collection and remittance of sales tax.

Request For Delay Of Collection, Reporting Requirements

Upon written application and for good cause shown, the Division of Taxation may temporarily suspend or delay the registration, collection, and remittance obligations of a marketplace facilitator for a period not to exceed 180 days. Requests for a delay must include the following:

– Name and address of the taxpayer;

– The taxpayer’s New Jersey Taxpayer Identification Number (if registered with New Jersey) or Federal Employer Identification Number (FEIN) (if not registered with New Jersey);

– The date the taxpayer expects to be able to comply with the new collection and reporting requirements; and

– An explanation as to why they require additional time in order to meet the new collection and reporting requirements.

Requests for a delay must include Marketplace Facilitator – Request for Delay in the subject line.

Audit Issues

Following each retail sale made through the marketplace, the marketplace facilitator must provide to the purchaser a sales slip, invoice, receipt, or other statement or memorandum of the price paid or payable. The amount of tax due must be separately stated from the sales price of the item(s) purchased.

A marketplace facilitator is subject to audit with respect to all retail sales for which it is required to collect and remit sales tax. When the Division of Taxation audits a marketplace facilitator, it is prohibited from auditing the marketplace seller for the same retail sales unless the marketplace facilitator seeks relief from liability for sales tax imposed on the sale. Marketplace sellers should contact the marketplace facilitator to ensure that detailed information on their New Jersey marketplace sales is provided to them on a regular basis. The marketplace seller will be required to provide this information to the division in an audit situation.

Relief From Liability

A marketplace facilitator will be relieved of liability for the tax on a retail sale if it demonstrates that

– it made a reasonable effort to obtain accurate information from the marketplace seller about a retail sale, and

– the failure to collect and pay the correct amount of tax was due to incorrect information provided to the marketplace facilitator by the marketplace seller.

When the marketplace facilitator is relieved from tax liability for this reason, the marketplace seller is liable for the tax.

Technical Bulletin TB-83, New Jersey Division of Taxation, October 25, 2018, ¶402-221

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