New Jersey and Utah are considering changes to their economic nexus rules in a move that could impact out-of-state sellers and marketplace facilitators. Currently, both states require these entities to collect and remit state sales taxes if they conduct $100,000 in sales or 200 or more transactions into the state.

The proposed reform would remove the transaction threshold, which has been criticized for disproportionately affecting small and medium-sized sellers. As it stands, a seller conducting 200 transactions at low dollar amounts would still be required to comply with tax collection obligations despite potentially minimal revenue.

"In the search for additional revenue, lawmakers have looked to unsound policies," notes the press release regarding New Jersey's fiscal challenges. The Garden State ranks low on the State Tax Competitiveness Index and faces potential fiscal shortfalls.

Utah fares better in terms of competitiveness but shares New Jersey's aim to adjust economic nexus rules this legislative session. "Tax competition remains important, and this reform would provide relief to small and medium-sized remote sellers without squeezing state coffers," according to the release.

Other states like Indiana and Wyoming have already eliminated transaction thresholds from their economic nexus criteria. This approach helps alleviate compliance burdens on smaller businesses while maintaining tax obligations for larger entities.

New Jersey's adjustment might not be comprehensive enough given its financial situation but is considered a positive step towards broader reforms. Meanwhile, Utah’s move reinforces its competitive position among states.