United States

New Jersey offers limited click-through nexus voluntary disclosure

Program to run between Aug. 21, 2017 and Nov. 21, 2017


Recently, the New Jersey Division of Taxation announced a three-month Voluntary Disclosure Program targeted to remote sellers with agreements with businesses located in New Jersey for referrals of New Jersey customers. The program will run from Aug. 21, 2017 through Nov. 21, 2017 and offer a number of benefits over the traditional voluntary disclosure program, including a closure of periods prior to Aug. 21, 2017 and a complete waiver of penalties.

Accordingly, New Jersey remote sellers who do not have a physical presence in the state, but have entered into referral agreements must enter into an agreement with the division as follows:

  • The taxpayer must file any required returns for the two quarters between Jan. 1, 2017, and June 30, 2017
  • The state will assess statutory interest (prime rate plus 3 percent as applicable to each period at issue)
  • Within 45 days of the execution of an agreement with the division, taxpayers will register with the Division of Revenue and Enterprise Services using New Jersey Business Code “O/S SELLER 5000.” The taxpayer will electronically file quarterly sales and use tax returns (ST-50), report all sales subject to New Jersey Sales Tax, and remit payment of the tax due
  • The taxpayer will pay statutory interest within 30 days of filing the sales and use tax returns
  • Participants in the initiative must not have been contacted by the division regarding sales and use tax compliance
  • All periods prior to Jan. 1, 2017 will be considered closed
  • The division will waive all penalties

What are referral agreements?

Referral agreements, or otherwise popularly known as “click-through agreements,” first became known in 2008 when New York enacted the first “click-through” nexus provision. The law targeted internet remote sellers by creating a presumption that a remote seller with at least $10,000 in sales to New York customers established physical presence in New York and required collection and remittance of sales tax on its taxable sales to New York customers if the remote seller entered into a commission agreement with a New York resident for referring customers to the seller via a link on the New York resident’s website. The law was subsequently challenged, but ultimately upheld by the New York Court of Appeals. Approximately 20 other states enacted similar provisions, including New Jersey.

The New Jersey law became effective July 1, 2014, and included nearly identical language to the New York provision. Noteworthy, according to New Jersey Division of Taxation Technical Bulletin TB-76, if an agreement between a remote seller and an in-state party does not provide for the seller to compensate the in-state party based on completed sales, the agreement is merely for advertising and not considered a referral agreement.


Remote sellers with agreements with New Jersey parties to refer customers, and are not currently collecting sales tax, should consider the limited voluntary disclosure. Remote sellers unsure if they qualify under a “click-through” or referral arrangement should speak to their tax advisors for guidance.

Also note that the New Jersey referral agreement disclosure program is in addition to, and separate from, the MTC Online Marketplace Seller Voluntary Disclosure Initiative of which New Jersey is a participating state. Remote sellers that use marketplace providers, such as Amazon, Ebay, Wayfair, and Etsy, among others, should consider the MTC initiative. For more information on the MTC program, please read our article, MTC nexus program offers limited-time amnesty for Amazon retailers.


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