New Jersey Tax Court Upholds Portion of Internet Activities Tax Rule Addressing Interactive Technical Support

On October 1, 2026, the New Jersey Tax Court (court) upheld the state’s internet activities nexus regulation, which provides that certain interactive technical support functions will cause an out-of-state seller to lose immunity under P.L. 86-272.¹ However, based on a lack of a factual record, the court declined to consider whether the regulation’s provision that the placement of internet cookies on an in-state browser also negates the protection of the Public Law. Although this decision may be appealed, internet sellers that offer interactive, post-sale support should consider the implications of this decision. The court left open the possibility that portions of the regulation may still be found to violate P.L. 86-272, but such a determination is dependent on the existence of a factual record.  

In June 2025, the New Jersey Division of Taxation adopted regulations that addressed whether certain internet activities created nexus and whether such activities were beyond the scope of the state income tax immunity afforded by P.L. 86-272. This challenge to the regulation was brought by the American Catalog Mailers Association (ACMA)², an organization representing merchants who sell merchandise in interstate commerce through catalogs, by telephone, and/or over the internet. Specifically, ACMA asserts that P.L. 86-272 exempts two activities cited in the regulation that the state lists as nexus-creating activities for income tax purposes.  N.J.A.C. § 18:7-1.9A(a)(4) states that the provision of post-sales assistance through an electronic chat, email, or application that the taxpayer’s customers access (e.g., an internet help desk for technical support) creates nexus.  N.J.A.C. § 18:7-1.9A(a)(2) provides that the placement of internet cookies on computers of in-state customers to gather market and research data for sale also creates nexus. 

The court upheld that portion of the regulation that states that the provision of post-sales assistance via an internet help desk is an in-state activity, not protected by the Public Law. The court explained that this activity was akin to a “synchronous communication” by which a customer can talk to a service representative who, in turn, can make repairs through the internet. By doing this, “the seller is reaching into New Jersey and interacting with the buyer of the goods. Thus, the Director’s regulations correctly frame this type of interactive technical support as a business activity taking place in New Jersey.” 

Notably, the director contrasted this activity with asynchronous communications such as FAQs posted on a seller’s website. Under the regulation, this activity remains protected from income tax. Additionally, under  N.J.A.C. § 18:7-1.9A(a)(4), email communications are not protected activities under P.L. 86-272. The court noted that email communications have characteristics of both forms of communication (synchronous AND asynchronous). However, because ACMA declined to address this issue, the court said it would not preempt this part of the regulation without a factual record. 

For much the same reason, the court declined to preempt  N.J.A.C. § 18:7-1.9A(a)(2), governing the placement of internet cookies to gather market data for sale to data brokers or third parties. As noted, the regulation provides that these activities expose the seller to income tax. The court said that because neither party presented evidence of sellers actually assembling data for sale, it would not rule on a regulation based on fact patterns not actually tethered to industry practice. If this activity, as the division believes, somehow rises to the level of an in-state activity, the court directed that the regulation needs to be redrafted and “spell this out.” 

Ryan’s Take and Action Steps 

Coming on the heels of last spring’s New York court decision, this decision marks another defeat for internet sellers challenging various state attempts to whittle away P.L. 86-272 protections. However, this decision only definitively addressed one subsection of a large regulation―interactive internet help desks. The court, without a factual record to review, pointedly declined to address the validity of other subsections. Ryan is here to assist you in determining whether this decision creates a filing obligation for your company or whether your activities remain―or should remain―protected solicitation activities under the Public Law.  

¹ American Catalog Mailers Association v. Director, Division of Taxation, N.J. Tax Court, No. 010021-2025 (October 1, 2026). 

² Renamed American Commerce Marketing Association.

Authors

Argi O’Leary 
Principal

Greg Rottjakob 
Principal 

Adam Weinreb 
Director 

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