On August 27, 2018, New Jersey Governor Phil Murphy conditionally vetoed a sales tax nexus expansion bill, Assembly Bill 4261 (the Bill), which was introduced and approved by the New Jersey legislature (Legislature) in response to the US Supreme Court's ruling in South Dakota v. Wayfair. The Bill, if ultimately approved, would impose a sales tax collection requirement on remote sellers with no physical presence in New Jersey, but with at least $100,000 in sales, or 200 transactions, to state destinations. It would also impose a sales tax collection requirement on marketplace facilitators (i.e., entities which provide a platform for third parties to sell products). The Governor stated that he supported the purpose of the Bill, but conditionally vetoed it for the Legislature to consider his changes expanding the Bill to all sellers of any combination of sales of tangible personal property, digital products and services that meet the thresholds. He further recommended that the Bill give expanded authority to the Division of Taxation to audit marketplace facilitators. The Bill has been sent back to the Legislature for consideration.

Also on August 27, 2018, the Governor outright vetoed Assembly Bill 3267, which would have imposed a five cent tax on plastic bags. The Governor suggested that he would only support a more stringent bill, perhaps one imposing a much higher tax, or even banning plastic bags altogether.

Implications

It is anticipated that the Bill requiring sales tax collection for remote sellers and marketplace facilitators will ultimately be enacted. If enacted with the Governor's recommendations, it would expand the original scope of the bill to impose sales tax collection requirements on remote sellers even if they only have sales into the state of digital products or services. The Bill's terms still provide for it to be effective on October 1, 2018, and it is likely to go into effect on that date if the Legislature timely returns the modified bill to the Governor and he signs it. Otherwise, the effective date may be pushed back. It remains to be seen whether the Legislature will attempt to override the Governor's veto of the bag tax or send to the Governor a new bill outlawing plastic bags altogether.

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