New Jersey enacts corporate income tax changes

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November 2020

Overview

Signed on November 4, A. 4809 enacts several amendments to the New Jersey Corporation Business Tax Act, including: (1) addressing the dividends received exclusion for members with no New Jersey apportionment, (2) allowing NOL carryover utilization among members, (3) federal NOL conformity, (4) following federal consolidated return regulation treatment, (5) providing that minimum tax is imposed on taxable members of the combined group with New Jersey nexus, and (6) extending the corporate income tax return original due date by 30 days. A. 4809 also exempts transactions between combined group members from real property transfer taxes. Various effective dates, generally retroactive, apply, as stated below.

[A. 4809, signed November 4, 2020]

The takeaway

Although A. 4809 includes certain technical corrections that simplify and clarify aspects of New Jersey’s combined reporting regime, the legislation also substantively changes other areas of combined reporting, such as adopting Section 382 principles. Certain changes will require revisions to the Division of Taxation’s technical bulletins and proposed combined reporting regulations. In addition, certain provisions of the legislation appear subject to interpretation, such as whether CFCs includible in a New Jersey affiliated group are included only to the extent of ECI. Taxpayers should monitor further developments and evaluate how A. 4809 impacts their New Jersey filing posture.

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Peter Michalowski

State and Local Tax Leader, PwC US

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