Bill
S 3604
NJ S3604 ends the 200-transaction nexus test, making only NJ gross receipts over $100,000 trigger sales tax and CBT, easing duties for remote sellers and small firms.
Note on source materials
- The bill header provided (authorizing the Town of Southold to accept a refund application) appears to be a mismatch with the legislative documents supplied. The documents (fiscal notes, committee statement, reprint) all describe New Jersey Senate Bill S3604, which would eliminate a “transaction nexus” test for state sales tax and corporation business tax. This summary reflects the actual bill text and analyses in those documents.
Summary — purpose and intent
- S3604 would change New Jersey tax nexus rules by removing the “200-transaction” threshold that currently can make an out‑of‑state (remote) seller or a corporation subject to New Jersey sales/use tax collection or the Corporation Business Tax (CBT). After enactment, the only statutory threshold that triggers nexus would be gross receipts (or gross revenue) from New Jersey sources exceeding $100,000 in the current or prior year.
Key provisions and changes
- Sales & Use Tax
- Deletes the statutory criterion that a remote seller making 200 or more separate taxable transactions into New Jersey in the current or prior calendar year is subject to the Sales and Use Tax Act.
- Retains the $100,000 gross‑revenue threshold (current or prior year) as the sole statutory trigger for remote seller collection obligations.
- Preserves purchaser use‑tax obligations where sellers do not collect sales tax.
- Prevents retroactive application of the tax obligation for sellers meeting the new criteria and contains a provision limiting refund claims based solely on lack of physical presence where a taxpayer voluntarily complied.
- Corporation Business Tax
- By committee amendment (1R), removes the analogous 200‑transaction nexus test for corporations; corporations would be subject to CBT only if receipts from New Jersey sources exceed $100,000 (with other constitutional nexus principles preserved).
- Effective date: the first day of the second month after enactment.
Who would be affected
- Remote sellers (out‑of‑state sellers without physical presence) that currently meet the 200‑transaction test but have less than $100,000 in New Jersey gross receipts would no longer be required by statute to collect and remit New Jersey sales tax.
- Corporations that currently meet only the 200‑transaction test but have under $100,000 in New Jersey receipts would no longer be subject to CBT on that basis.
- New Jersey purchasers remain responsible for use tax where sellers do not collect.
Fiscal and administrative impact
- Office of Legislative Services (OLS) estimate: annual State revenue loss is expected but indeterminate due to lack of data on how many sellers or corporations meet only the 200‑transaction threshold.
- OLS notes each affected remote seller could reduce annual State sales tax collections by no more than $6,625 (6.625% tax on $100,000). Illustrative scenarios (not predictions): if ~2,500 entities were affected, revenue loss could be roughly $1.3 million, but actual outcomes could vary widely.
- OLS indicates similar indeterminate reductions in CBT revenue from affected corporations; small‑receipts corporations could still face statutory minimum tax liabilities.
Procedural status and timeline
- Introduced: September 19, 2024.
- Reported out of Senate Budget & Appropriations Committee with amendments: December 9, 2024 (1R reprint adds CBT change).
- Fiscal notes dated Dec 5, 2024 and Mar 10, 2025 (first reprint) by OLS.
- As of the provided record: referred to Local Government on January 28, 2025.
- Effective date on enactment: first day of the second month following enactment.
Sponsors and related measures
- Primary sponsor: Sen. Anthony H. Palumbo.
- Companion: A5101 (Assembly).
- Prior-session related bill: S6588.
Key implementation/administrative notes
- The bill preserves nonstatutory bases for nexus consistent with the U.S. and New Jersey Constitutions (i.e., other sufficient contacts could still create nexus).
- Refund requests based only on lack of physical presence where a taxpayer voluntarily complied are restricted by statute language retained in the bill.
Compiled from official sources — confirm details with the bill’s official record.
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