United States

New Jersey: New VDA Program for Click-Through Sellers

Aug 28, 2017
From KPMG TaxWatch

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The New Jersey Division of Taxation recently announced that from August 21, 2017 through November 21, 2017, out-of-state businesses that have “click-through” nexus with the state will be offered a chance to participate in a special voluntary disclosure program.  Under New Jersey’s “click-through” law that became effective July 1, 2014, a person making sales of taxable goods and services is presumed to be soliciting business in the state if the person making sales enters into an agreement with an independent contractor or other representative physically present in New Jersey, under which the independent contractor or representative directly or indirectly refers potential customers to the person for a commission or other consideration (whether by a link on an internet website or otherwise). The presumption does not apply unless the cumulative gross receipts from sales to New Jersey customers who were referred by all independent contractors or representatives are in excess of $10,000 during the preceding four quarterly periods. The presumption can be rebutted by establishing that the independent contractor or representative is not engaging in any solicitation on behalf of the retailer in New Jersey that would satisfy the nexus requirements of the U.S. Constitution.

The special voluntary disclosure program is for taxpayers that are considered to be soliciting business in New Jersey under the “click-through” statute, but are not in compliance with the law. Under the terms of the program, the taxpayer cannot have previously been contacted by the Division about sales and use tax compliance. If the taxpayer is accepted into the program, it must file any required returns for the two quarters between January 1, 2017, and June 30, 2017; all prior periods will be considered closed. The Division will waive all penalties, but statutory interest (prime rate plus 3 percent as applicable to each period at issue) will be applied. Within 45 days of executing an agreement with the Division, taxpayers will be required to register with the Division of Revenue and Enterprise Services using New Jersey Business Code “O/S SELLER 5000.” Participating sellers will then electronically file quarterly sales and use tax returns, report all sales subject to New Jersey sales tax, and remit payment of the tax due for the required periods. The statutory interest owed must be paid within 30 days of filing the sales and use tax returns. The Division has identified a specific contact person to respond to questions and assist taxpayers wishing to participate. Please contact Mike Kenny at 212-872-3414 with questions.

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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.