N.J. Admin. Code § 18:7-1.9 - Doing business in New Jersey; definition and rules of construction

(a) The term "doing business" is used in a comprehensive sense and includes all activities that occupy the time or labor of men or women for profit. Such activities include, but are not limited to, mechanized means, computerized activities, and activities effected through the Internet.

1. Regardless of the nature of its activities, every corporation organized for profit and carrying out any of the purposes of its organization within the State shall be deemed to be "doing business" for the purposes of the Corporation Business Tax Act.

2. In determining whether a corporation is "doing business", it is immaterial whether its activities result in a profit or a loss.

(b) Whether a foreign corporation is doing business in New Jersey pursuant to N.J.A.C. 18:7-1.6(a)2 iii is determined by the facts in each case. Consideration is given to such factors as:

1. The nature and extent of the activities of the corporation in New Jersey;

2. The location of its offices and other places of business;

3. The continuity, frequency, and regularity of the activities of the corporation in New Jersey;

4. The employment in New Jersey of agents, officers, and employees; and

5. The location of the actual seat of management or control of the corporation.

Example

Foreign corporation R holds trademarks that were assigned to it by its parent corporation. R receives fees as a result of licensing those trademarks to certain New Jersey companies for use in New Jersey. R is subject to the corporation business tax on its apportioned income as a result of its trademark licensing activities.

(c) A foreign corporation shall not be deemed to be doing business or employing, or owning capital or property in this State for the purposes of the Act by reason of the following:

1. The maintenance of cash balances with banks or trust companies in New Jersey;

2. The ownership of shares of stock or securities kept in New Jersey in a safe deposit box, safe, vault, or other receptacle rented for the purpose, or pledged as collateral security, or deposited with one or more banks or trust companies, or brokers who are members of a recognized security exchange, in safekeeping or custody accounts;

3. The taking of any action by any such bank or trust company or broker, which is incidental to the rendering of safekeeping or custodian service to such corporation; and

4. Any combination of the foregoing activities.

(d) If the only business activity of a foreign corporation within New Jersey consists of the solicitation of orders for sales of its tangible personal property, which orders are to be sent outside the State for acceptance or rejection and, if accepted, are to be filled by shipment or delivery from a point outside the State, then such corporation is doing business in New Jersey and is subject to the tax. Unless it has additional contacts with New Jersey; however, it will not be liable for any tax measured by the income of the corporation. (See P.L. 86-272, 15 U.S.C. § 381). The corporation will be liable for filing a return and payment of the minimum tax.

1. For the in-State activities of the foreign corporation to immunize the corporation from taxation measured by income, such activities must be limited solely to:

i. Speech or conduct that explicitly or implicitly invites an order; and

ii. Activities that neither explicitly nor implicitly invite an order but that are entirely ancillary to requests for an order.

2. Examples of additional activities or contacts with New Jersey that will subject a corporation to the tax based on or measured by income are:

i. Repairs, maintenance, and installations;

ii. Collection or repossession activities;

iii. Credit investigations;

iv. Conducting training courses, seminars, or lectures for personnel, other than for personnel involved only in solicitation;

v. Providing technical assistance;

vi. Customer complaint resolution if the sole purpose is not to ingratiate sales personnel with the customer;

vii. Approving or accepting orders or securing deposits on sales;

viii. Acquiring personnel for other than solicitation activities;

ix. Maintaining a display at a single location in excess of two weeks during the tax year;

x. Carrying samples for sale, exchange, or distribution in any manner for consideration or other value;

xi. Owning, leasing, or maintaining in-State facilities, such as a warehouse or answering service;

xii. Consigning stock of goods or other tangible personal property to any person, including an independent contractor, for sale;

xiii. Offering, selling, providing maintenance, or performing such duties under a warranty or extended warranty service contract for the performance of services under the contract through any means, whether in-person or through the internet; and

xiv. For a list of activities conducted in part or in whole through the internet that will subject a corporation to corporation business tax in this State based on or measured by income, see N.J.A.C. 18:7-1.9A(a).

3. Examples of additional activities that, together with the solicitation activities described at (d)1 above will not subject a corporation to tax based on or measured by income are:

i. Soliciting through advertising;

ii. Carrying samples and promotional materials for display or distribution without charge;

iii. Providing automobiles, owned or leased, registered or not registered in New Jersey, to sales personnel for their use in conducting protected activities.

iv. Checking customer inventories without charge;

v. Maintaining a display at a single location for less than two weeks during the tax year;

vi. Recruiting, training, or evaluating of sales personnel;

vii. Soliciting of orders at an in-State sales employee's in-home workspace that is not paid for by the company;

viii. Mediating customer complaints if just to ingratiate sales personnel with the customer; and

ix. For a list of activities conducted in part or in whole through the internet that will not subject a corporation to corporation business tax in this State based on or measured by income, see N.J.A.C. 18:7-1.9A(b).

(e) Independent contractors may solicit or make sales or maintain an office without subjecting a company to liability for corporation business tax based on or measured by income. Sales representatives who represent a single principal would not be considered independent contractors. A corporation would be subject to income-based tax if the independent contractor maintained a stock of goods in the State under consignment or for purposes other than for display and solicitation.

(f) A corporation, which contracts with a marketplace facilitator to facilitate the sale of the business's products on the facilitator's online marketplace where the marketplace facilitator maintains the corporation's products at fulfillment centers in this State will not have P.L. 86-272 immunity, and the corporation will be subject to the corporation business tax in this State based on or measured by income.

Notes

N.J. Admin. Code § 18:7-1.9

Amended by 49 N.J.R. 1694(a), effective 6/19/2017 Amended by 57 N.J.R. 1303(b), effective 6/16/2025