NJ

Online Selling and New Jersey: When to Collect Sales Tax

by Mark Faggiano

New Jersey Sales Tax

This blog post may now be out of date. For our most up-to-date info on New Jersey sales tax, check out our “New Jersey Sales Tax Guide for Businesses.”

Thanks to changing laws, more and more online sellers are having to collect and pay sales tax in states other than where their business is based. In this post I’ll cover the most common examples of when online sellers have to register as a business in New Jersey and collect sales tax from customers. If your business doesn’t fit into one of the following examples and you’re unsure how to comply, your best bet is to consult with a tax professional.

You’re an online seller but you don’t live in New Jersey

If your business is based in any state other than New Jersey and you don’t have an employee, contractor, goods in a warehouse or some other business tie to New Jersey (i.e. “sales tax nexus” in New Jersey) then that means you’re not required to register your business with the state and you don’t have to collect sales tax on items being shipped to customers in New Jersey.

You live and/or operate your business in New Jersey

If you’re like a lot of online sellers, where you live where you operate your business are one in the same. If you’re an online seller living in New Jersey shipping from home then you are required to register your business with the state. By registering you are obligated to collect sales tax on taxable items shipped to addresses in the state.  I’ll talk about how much to collect a little later in the post.

You’re an online seller living out-of-state using a fulfillment service

This is a really common example we see at TaxJar. This is when an online seller lives in one state but has inventory being stored or warehoused in another state. That’s considered inventory nexus – a presence in a state that means you’re required to register and collect sales tax in that state where your inventory is being stored and shipped to customers. The most common example is when online sellers use Fulfillment By Amazon (FBA).

As of this writing, there are two Amazon fulfillment centers in New Jersey: in Robbinsville (Mercer County) and Avenel (Middlesex County.) If you use FBA, or any other fulfillment service that stores and ships your items from New Jersey, then you have nexus in New Jersey and you have to collect sales tax on items shipped to addresses in New Jersey.

To find out if you have Amazon FBA items stored in New Jersey, you can pull this Amazon report or login to your TaxJar account and look for the brown Amazon badge next to the state of New Jersey.

Collecting sales tax from your customers

How much sales tax to collect is thankfully not as complicated in New Jersey as it is in other states like Washington or New York. That’s because New Jersey’s rules are simple: collect 7% on every transaction regardless of where it’s being shipped from or where it’s being delivered (in the state). So, for example, you live and operate your business in Trenton and are shipping an order to Morristown. The correct sales tax rate to charge on that transaction is 7%. Easy, right?

New Jersey does not impose a local tax on top of the 7%. That’s why the rate is the same on every transaction, regardless of origin or destination.

Filing sales tax in New Jersey

If you need to file a sales tax return in New Jersey, TaxJar has your back. You can now enroll in AutoFile for the state of New Jersey and we’ll automatically file your sales tax return for you! Find out more at TaxJar.com.

Summary: if you have nexus charge 7%

The two most common ways to have nexus in New Jersey is to either operate your business there or store/warehouse your inventory in the state. If you do have nexus, register your business with the state and collect 7% sales tax on every transaction that is delivered to an address within the state.

Have any questions about selling online and doing business in New Jersey? Let’s talk in the discussion section below.

Want to know more about TaxJar? Start your free 30 day trial today.

  • Lauren

    Hi Mark! I am a crafter, living in NJ and selling on Etsy. I haven’t made any sales yet and have not registered my business in NJ. However, I am doing a craft fair in NYC this winter. Do I need to register my business in NJ in addition to getting my Certificate of Authority from NY? Or can I just register in NY to collect sales tax?

    • Hi Lauren – The state of NJ will want you to register your business if you live and operate your business in NJ.

  • Ryan

    Hi Mark! I recently opened a dropshipping company registered in NJ and the Dropshipper is based out of PA. Do I only collect sales tax when NJ is involved in the sale? Such as a customer who purchases items from my store and they are shipped from my distributor in PA? I filed a Sales Tax ST-3 with the distributor in PA along with a Exhibit 3 Uniform Sales Tax Certificate? I am just confused as to when the store opens online and orders come in if I should charge tax or not?

  • Vito

    Hello, I am a homeowner in NJ and Upstate NY. In 2007 formed a sole proprietorship in upstate NY. My business is furniture restoration. Recently several potential clients in NJ contacted me and would like me to do some work in NJ. If this were to happen am I required to collect NJ sales tax while working in NJ ? If so does this require me to register as a NJ business even though my physical address is Upsate NY ? I heard years ago NY and NJ did have a joint certificate..
    Thanks
    Vito

  • ardell gordon

    Hello I live in jc nj and I am starting my amazon business I wanted to know do I have to register before I start selling an do you know the cost of it? Also how much do it cost to register with the other states ?

    • Here’s an excerpt from the page we wrote about sales tax in NJ:
      http://www.taxjar.com/states/new-jersey-sales-tax-online/

      The state of New Jersey says that “any person or organization engaged in a business, trade, profession, or occupation in New Jersey must register with the State for tax purposes by filing a Business Registration Application at least fifteen (15) business days before starting business or opening an additional place of business in this State.”

      Here’s where you register: http://www.nj.gov/treasury/revenue/

  • ardell gordon

    Thank you so much for getting back to me. I have one more question the other states I am going to register for will u in the near future have a break down of like the addresses of where we can get the forms from and if they cost anything? Or do you have that?

  • ardell gordon

    Thank you Thank you so much I have already got started on them .You have been a big help an I will be contacting you when its time for taxes thanks.

  • ardell gordon

    Hi Mark its me again I got a couple of questions .First I am working on PA an they ask nu of establishments conducting business there. Do they mean the nu of amazon warehouses in PA? Also do we find the school district and municipality of where the establishments are located? Also AZ is asking to add locations. Are they talking about the other warehouses in they state?

  • Greg

    Hi Mark, if I puchesed an item say sun glasses in NJ from a store and paid the tax. Do I have to collect tax if they are sold in NJ?
    I am assuming if I sell them out of State the answer is no.

    • Hi Greg – It depends on if the item you’re selling is taxable in NJ. If it is taxable, then YES you would have to collect sales tax when you sell it (even if you paid sales tax when you bought it). If you sell it to a state that you DO NOT have nexus in then you would not be required to collect sales tax.

  • julie

    Hi Mark. I registered my business in NJ. I registered NJ and NY to collect sales tax since I sometimes do craft fairs in NY. My question is, for online sales, would I have to charge both NJ customers and NY customers sales tax or would I just have to charge NJ customers sales tax? PS- I do not have a brick and mortar store…just e-commerce. Occasionally I do craft fairs in both NJ and NY.

  • Hi Julie – by registering in both states you’ve essentially committed to collecting sales tax on items sold to both states. Otherwise the states will be looking for you to file returns wondering why you’re not collecting. The safest thing to do is to collect and pay what you’ve collected t the states.

  • Johanna

    I have a brick and morter store in NJ and I’m registered the collect NJ tax. We are launching a website soon and I want to know what tax I need to collect on purchases made to buyers outside of NJ. NJ sales tax?

    • Without knowing anything about the specifics of your business, I can tell you that the general rule is you’re not required to collect sales tax outside of NJ unless you have nexus in another state. Nexus is most commonly caused by inventory, employees, salespeople, or other physical presence.

  • Fela Johnson

    Hi Mark, thanks for the write up, i am still a bit unclear, i plan to launch an online boutique soon (selling clothes) which are tax free here in NJ, i will be operating from NJ and i live here too, i plan to ship all over the US and international, would i need to charge my customers tax? please let me know, looking forward to getting a reply from you, thanks again

    • In general, you wouldn’t be required to collect in any other states unless you have nexus (a presence significant enough that they state requires you to collect sales tax). Nexus is most commonly caused by inventory, employees, or salespeople. Also make note that states treat the taxability of clothing differently.

  • Oluwakemi Iheukwumere

    HI MARK,I WILL LIKE YOU TO HELP ME,AM A NJ MOM,AND AM TRYING TO SALE LADIES WEAR ONLINE,AM I GOING TO REGISTER FIRST,WHERE CAN I REGISTER MY CLOTHING LINE.DID YOU KNOW THE FEE.I WILL BE SHIPPING ALL THE STATES AND OUTSIDE THE STATE.WHAT CAN I DO?AND AM TRYING TO BUILD A WEBSITE SOON.PLEASE CAN I TAX MY CUSTOMERS.HOW KIND HUMAN BEING YOU ARE.PLS RREPLY

  • Heather Werth

    Mark…I just sent my first shipment into Amazon’s New Jersey warehouse. Will you be updating the information above to explain what I will need to do now that I have inventory nexus. I am a California resident and this is where my business is registered.

  • Hi Heather, Thanks for pointing out that this post needs updating. Now that you have inventory nexus in New Jersey, the state requires you to register for a sales tax permit there and set up Amazon to collect sales tax from NJ residents.

  • David

    Hi Mark,
    I live and have registered my business in NJ, but I use Amazon FBA for fullfilment. They store and ship my products from multiple warehouses in different states ((PA, CA, TX, AZ etc.), would I need to set up to collect sales tax in each of those states to buyers from those states?
    Thanks so much for your help!

  • Hi David,

    I highly recommend you check out our “Amazon Sales Tax Guide” over at FBASalesTax.com. This will help you get started with everything you need to know about sales tax with FBA. Good luck!

  • Jay

    Hi Mark,
    I have a small retail business in NJ. We receive items purchased by customers from out of state, online etc., for their personal use in NJ as NJ residents. Do we need to collect the sales tax on the purchase price or are the customers suppose to pay it as use tax on their 1040?

  • Robert D.

    What happens if you are a Canadian business selling on Amazon? When we ship to FBA in NJ we can collect taxes on these goods but what about other goods stored in other states? Amazon don’t have such a functionality to allow taxation rules at a item / location level… I hope my question is clear. Regars.

  • Hi Robert,

    You can set up through Amazon to collect in various states. You can find out how to set up your SC settings here: http://www.fbasalestax.com

    I hope this helps!

  • jaclyn depinho

    Hi mark
    I own an online tea company with our inventory and main business being held in nj. We will be accepting orders from all over the US. How do we charge sales tax? Does it need to be calculated per state? Or is the general 7% on all orders apply?
    Thanks!

  • Hi Jaclyn, You only need to charge sales tax on taxable items and to customers who are in states where you have sales tax nexus. Here’s more about determining where you have nexus: http://taxjar.wpengine.com/sales-tax-nexus-definition/

    If you only have sales tax in New Jersey, you would only need to charge sales tax to buyers in New Jersey. I hope this helps!

  • chris

    Hi Mark, I’m starting an online jewelry business through ebay. I live in NJ…am I obligated to charge sales tax?

  • Hi there,

    You should charge sales tax in states where you have sales tax nexus (i.e. a significant presence.) Here’s more:

    http://taxjar.wpengine.com/sales-tax-nexus-definition/

    You always have nexus in the state where you operate your business (sounds like NJ in your case) and that means you would charge sales tax to NJ buyers. And if you have nexus in other states for some reason, you’d charge sales tax to buyers in those states, too. I hope this helps!

    You can read all about sales tax in our Sales Tax 101 Guide, too! http://www.taxjar.com/guides/intro-to-sales-tax/

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  • Mike Skvarenina

    Hi Mark. I’m an amateur photographer and would like to sell some photos online from a photo selling website to NJ customers. I’m not really a business per’se, just a regular guy. Do I actually have to create/register a “business” and collect sales tax from anyone who buys from me?

    • Hi Mike,

      It depends on a couple of factors:

      If photographs are taxable in New Jersey
      If New Jersey allows for “occasional sales.” – If you’re just a regular person who sells something a handful of times per year you might not be required to register for a sales tax permit.

      Your best bet is to call the NJ Department of Revenue and explain your situation. Also, while this isn’t sales tax related, the IRS will also get interested if you’re making over $400/year in income from a business without reporting it.

      I hope this helps!

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  • margepiatak

    My friend has a jewelry business registered in NYS. She does online and in-person sales and charges the appropriate sales tax for any purchases sent to or delivered within NYS. She will be doing a craft fair in NJ. She has no nexus in NJ. Does she collect no sales tax for sales made at the fair?

  • Hi there, All states are different but most states require that you charge sales tax on all purchases made within the state. (I.e. if she’s there, she has nexus.) Some, though, allow for a temporary sales tax permit if she’ll only be there for a short while.

    Here’s some info I found from New Jersey: http://www.state.nj.us/treasury/taxation/pdf/pubs/sales/anj15.pdf

    I recommend she just give them a call, explain the situation, and find out what they advise. Here’s the number to New Jersey taxation:
    609-292-6400
    Press 5 for Sales Tax and Other Business Tax Questions.

    And here are some more NJ resources: http://www.taxjar.com/states/new-jersey-sales-tax-online/

    • margepiatak

      Thanks so much, Mark. It’s really challenging to find this information even with Google!

  • Robert B

    What if I am a drop shipper that sells out of NJ but has no physical products, fulfillment or practically anything within the NJ state aside from my home address? Do I have to collect AND file sales tax? Is the Streamlined Sales and Use Tax Agreement (SSUTA) still in effect ?

    • Normally this is called “home state” nexus, since you do live and operate your business in NJ. If you feel like you shouldn’t have nexus there, call the NJ Department of Revenue and describe your situation and they can issue you a letter ruling. Here’s their number: 609-826-4400 or 1-800-323-4400

  • Mindi Heckendorn

    Do I still charge sales tax if my customer has their base in
    New Jersey, but they are asking me to ship directly to a location in Florida?

    • Hi Mindi,

      Sales tax is based on the ship-to address, so yes, you would charge sales tax if you have sales tax nexus in Florida.

  • Terry Keith Veitenheimer

    Hello there !!
    I sell on Ebay in New Jersey. I read someplace that you don’t have to collect and / or report taxes if the amount made is below a certain dollar. Ex; I make maybe $7.00 in a 2 week period. Do I have to report taxes on that small amount ??
    Thanks for your time !!!
    Terry Veitenheimer

    • Hi Terry,

      Here’s more about when to collect sales tax in New Jersey: http://www.taxjar.com/states/new-jersey-sales-tax-online/

      New Jersey isn’t one of the states with a threshold, so if you’re selling taxable tangible personal property in the state then you are most likely on the hook to register for a sales tax permit and collect. That said, it’s ultimately your business decision. If you think you aren’t selling enough that the NJ Department of Revenue will go after you for an audit then you can choose not to comply.

  • Chris
  • alter

    Dear Mark
    I am planning to open a wholesale business of spices and herbs in NJ for our customers, however i may need to satisfy my customers in CA as well. My question is how much should I charge if I sell my products in CA, i will store my goods in a 3PL in Los Angeles.

    • Hi there,

      If you’re selling retail (i.e. your customers don’t supply you with a reseller’s certificate) and have nexus in CA, then you’d need to charge sales tax at the California rate. You can find out more about California sales tax here: http://www.taxjar.com/states/california-sales-tax-online/ I hope this helps!

      • alter

        Hi
        Let me make it simple for you. If someone from Los Angeles buys products from me through telephone (not online), will I have to collect NJ & CA taxes? I will pack and ship it to the buyer through truck. ( it will be bulk order like 500 lbs).

        • Got it now. It doesn’t matter how they order the items – phone, online, carrier pigeon – if you have sales tax nexus in a state, you need to charge sales tax to buyer’s in that state. You wouldn’t ever charge both states’ sales tax, though. If they’re in CA and you have nexus in CA, then charge them the California state rate. I hope this helps.

          • alter

            Thanks for your info Mark.

  • Follow the Cycles

    Hey Mark,
    Just started to file for New Jersey. I think you should modify your blog posting to let others know that you first have to file to get a New Jersey Business entity ID – and it costs $125.00. Is there a way to get around this like in California?

    • A lot of times you can call the state and – as long as you aren’t based there – just tell them your situation and they’ll waive that requirement. Did you try that? Let us know (or try that and keep us posted!)

      • Follow the Cycles

        Hi Mark,
        I’m back! It took several calls to New Jersey to get an answer that I’m comfortable with. New Jersey does not have a plain-Jane sales and use tax certificate form. If you are an out of state online retailer you can bypass the need to spend the $125 to obtain a NJ entity ID by printing out form: NJ-REG and sending that in via mail. I’m doing that this morning – and hopefully – all will go well!

        P.S. Taxjar is a life-saver. Much thanks!

        • I’m very glad to hear that! Thanks so much for the follow up. We’ll pass that on to other customers.

          So glad TaxJar is helping you put a lid on sales tax!

  • Ben Freeman

    Hi – how would attending a trade show affect nexus? What if we only took online orders at said show?

  • Ben Freeman

    Hi – how would attending a trade show affect nexus? What if we only took online orders at said show?

  • KC

    We are starting an on line clothing store, our home base is New Jersey and we will ship out of NJ. My question to you since NJ there is no tax on clothing do we charge tax to our customers that live outside of the state of NJ and their state has sales tax!! Since we are a small start up, collecting tax and filing tax for every state seems an enormous and expensive proposition! Looking forward to hearing your thoughts

    • Hi KC,

      Keep in mind that you only have to charge sales tax to customers in states where you have sales tax nexus. So if you only have nexus in NJ, you’d only have to charge NJ customers. Here’s more about nexus:

      But if you do have nexus in other states, then yes, you’d need to charge them sales tax based on that state’s rates. Here’s more about how much to charge: http://taxjar.wpengine.com/charging-sales-tax-rates/

      You didn’t say if you were selling on a platform like Shopify or Amazon or if you’re building your own shopping cart. If you’re building your own shopping cart, you should definitely check out the SmartCalcs sales tax API from TaxJar. http://www.taxjar.com/smartcalcs. Our API takes care of all that for you. I hope this helps shed some light!

    • Hi KC,

      Keep in mind that you only have to charge sales tax to customers in states where you have sales tax nexus. So if you only have nexus in NJ, you’d only have to charge NJ customers. Here’s more about nexus:

      But if you do have nexus in other states, then yes, you’d need to charge them sales tax based on that state’s rates. Here’s more about how much to charge: http://taxjar.wpengine.com/charging-sales-tax-rates/

      You didn’t say if you were selling on a platform like Shopify or Amazon or if you’re building your own shopping cart. If you’re building your own shopping cart, you should definitely check out the SmartCalcs sales tax API from TaxJar. http://www.taxjar.com/smartcalcs. Our API takes care of all that for you. I hope this helps shed some light!

  • KC

    We are starting an on line clothing store, our home base is New Jersey and we will ship out of NJ. My question to you since NJ there is no tax on clothing do we charge tax to our customers that live outside of the state of NJ and their state has sales tax!! Since we are a small start up, collecting tax and filing tax for every state seems an enormous and expensive proposition! Looking forward to hearing your thoughts

  • mehamood

    dear Mark,
    we have a online store registered in new jersey. we sell used auto parts across USA. Does this business
    need to pay sales tax?

    • Hi Mehamood,

      You need to collect sale tax from buyers in any state where you have sale tax nexus. It sounds like you have sales tax nexus in New Jersey. I recommend checking out our sales tax 101 guide for more info: http://www.taxjar.com/guides/intro-to-sales-tax/

  • greg new

    Hi Mark,
    I’m having a problem finding out the following info- If I’m based in New Jersey, but sell items online into other states, then what sales tax do i need to charge. Do you perhaps have any site where i could read up on this… would really appreciate any help on this.
    Best regards
    Greg

    • Hi Greg,

      You can read all about it in our Sales Tax 101 Guide: http://www.taxjar.com/guides/intro-to-sales-tax/
      Keep in mind that you only have to charge sales tax in states where you have sales tax nexus. If you only have nexus in NJ, then you only need to charge NJ customers sales tax. I hope this helps!

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