Sweeney-Singleton Legislation Would Restore Competitive Balance for NJ Retailers & Online Sellers – Produce Substantial Increase In State Revenue
TRENTON – The Senate today approved legislation sponsored by Senate President Steve Sweeney and Senator Troy Singleton that helps restore tax fairness for New Jersey businesses which have been operating at a competitive disadvantage as out-of-state online sellers have effectively avoided collecting sales taxes.
The bill, S-2794, approved 22-15, will follow through on the decision by the U.S. Supreme Court that will close a loophole that has allowed online competitors to ignore required sales taxes in states where they don’t have a physical presence.
“This will help restore competitive balance for the retail stores in New Jersey and for the online businesses located here,” said Senator Sweeney (D-Gloucester). “It will also produce more ongoing and sustained revenue for the state at a time when it is needed. We can reasonably expect an annual increase of more than $100 million a year.”
The General Accounting Office – the independent, non-partisan federal financial accounting agency – estimates that New Jersey will generate $216 million to $351 million in annual tax collections.
Senator Singleton said the change will be good for the brick-and-mortar businesses, local retailers and online sales by New Jersey companies.
“This will provide a boost to the local stores in hometown communities and businesses throughout the state,” said Senator Singleton (D-Burlington). “It’s a matter of tax fairness that will level the playing field for in-state businesses that have been playing by the rules. The imbalance has grown as the amount of internet business has increased as Americans have done more of their shopping online.”
Last year, remote sellers racked up sales exceeding half a trillion dollars, Justice Anthony Kennedy noted in the ruling. Amazon alone had $119 billion in revenue from product sales last year.
In its ruling in South Dakota v. Wayfair, Inc., the Court held that sellers who deliver more than $100,000 of goods or services into a state or engage in 200 or more separate transactions for the delivery of goods and services into a state has a nexus with the state which is “clearly sufficient” for the state to require the collection and payment of sales tax from the remote seller.
The Sweeney-Singleton bill would close the loophole and require “remote sellers” with no physical presence in the state to collect required sales taxes if they pass the thresholds of 200 transactions or $100,000 in sales.
The so-called “marketplace providers” – the large operators such as eBay and Amazon that facilitate online sales by smaller, third-party vendors through their Internet platform – would be responsible for collecting the taxes, under the bill.
The bill would take effect October 1, 2018.