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Governor Murphy Signs Law Requiring Marketplace Facilitators to Collect Sales Tax

NJ Quarterly Newsletter - Fall 2018
October 4, 2018

Eugene Ruvere, CPA, MST

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Governor Murphy Signs Law Requiring Marketplace Facilitators to Collect Sales Tax

Marketplace facilitator sales tax collection requirements are a top priority as states are making moves to expand their authority over online sales taxation — some states already had them, but many more are now implementing them, including New Jersey. Last week, New Jersey Governor, Phil Murphy, signed a law making sweeping changes to the State’s tax rules, including requiring marketplace facilitators to collect sales tax. (L. 2018, A4496, effective 11/01/18)

What is a marketplace facilitator?

The term "marketplace facilitator" refers to a person, including any affiliate of the person, who facilitates a retail sale of tangible personal property, specified digital products, or taxable services by satisfying any of the conditions listed below:

1.  Facilitates the sale of a marketplace seller’s product through a marketplace for payment.

2.  Engages, directly or indirectly, in any of the following with respect to the sale of tangible personal property, specified digital products, or taxable services between a marketplace seller and a purchaser:

  • Transmitting or otherwise communicating the offer or acceptance between a buyer and seller
  • Owning or operating the infrastructure, electronic or physical, or technology that brings buyers and sellers together
  • Providing a virtual currency that buyers can use to purchase products from the seller
  • Engaging in software development or research and development activities directly related to the physical or electronic marketplace provided by a marketplace facilitator.

3.  Does any of the following activities with respect to the seller's products::

  • Payment processing services
  • Fulfillment or storage services
  • Listing products for sale
  • Setting prices
  • Branding sales as those of the marketplace facilitator
  • Order taking
  • Advertising or promotion
  • Providing customer service or accepting or assisting with returns or exchanges

A marketplace facilitator facilitates sales of a seller’s products through a marketplace and engages in other specified activities as provided by the law and outlined above. Websites that merely advertise goods for sale and do not handle transactions do not meet the definition of a marketplace facilitator.

The term "marketplace seller" includes a seller that makes retail sales through any physical or electronic marketplace owned, operated, or controlled by a marketplace facilitator, even if such seller would not have been required to collect and pay the sales tax if the sale had not been made through such marketplace.

Related provisions

  • Audit provisions: If the marketplace facilitator demonstrates to the satisfaction of the Division that the marketplace facilitator has made a reasonable effort to obtain accurate information from the marketplace seller about a retail sale and that the failure to collect and pay the correct amount of tax was due to incorrect information provided to the marketplace facilitator by the marketplace seller, then the marketplace facilitator is relieved of liability of the tax for that retail sale. This does not apply with regard to a retail sale for which the marketplace facilitator is the seller or if the marketplace facilitator and seller are affiliates. Where the marketplace facilitator is relieved, the seller is liable for the sales tax. Where the Division audits the marketplace facilitator, the Division is prohibited from auditing the marketplace sellers for the same retail sales, unless the marketplace facilitator can point to an agreement for the marketplace seller to collect the sales tax.
  • Records: Following each retail sale, the marketplace facilitator would be required to provide to the purchaser a sales slip, invoice, receipt, or other statement or memorandum of the price paid (or payable), which shows the tax separately.
  • Remote sellers: Remote sellers who were previously not required to collect sales tax are now required to collect sales tax, if they have more than $100,000 in sales to New Jersey or have 200 or more transactions in New Jersey.  
  • Transient space marketplaces: The law provides that travel agencies and online travel agencies are not transient space marketplaces required to collect the sales tax. 

In order to comply with the new sales tax requirements, we recommend that you seek guidance from one of Citrin Cooperman's state and local tax (SALT) professionals. You can contact the author directly at