The New Jersey Tax Court upheld the New Jersey Division of Taxation’s use of the 25/50/25 sourcing rule for “certain services” against a provider of mass messaging services by fax, email and voice. Specifically, the court upheld the Division’s determination of a 76% receipts factor, which consisted of 25% for all transactions originating in New Jersey, 50% for all transactions performed in New Jersey, and 1% for the percentage of transactions that terminated in New Jersey. Because the court determined that the taxpayer performed its service entirely in New Jersey, it stated that a 100% receipts factor could also have been appropriate under a cost-of-performance sourcing method.


 

Full cite: Xpedite Sys., Inc. v. Division of Taxation, No. 018847-2010