In the News

Budget Now in Tow, Here Cometh Taxman

NJBIZ

July 09, 2018

New tax rules were written into New Jersey’s fiscal 2019 budget. “Newly instituted combined reporting requirements for corporations and new taxes on C-corporations and individuals earnings more than $5 million are matters in New Jersey’s fiscal 2019 budget that beg close heed, tax attorneys caution.

“Combined reporting, which looks at a company’s overall profits instead of just its New Jersey-based entities, represents a fundamental shift in the way the state taxes corporations. Historically, if a corporation was owned by another entity, New Jersey taxed each separately.

“That meant each corporate unit determined whether it was subject its own New Jersey tax liability. The new tax will result in all business units operating in the state being taxed as one business.

“‘There’s a lot of ambiguity in the law. What are the limits [of a unitary business]? How many companies, and which companies?’ asked Jaime Reichardt, chair of the state and local tax practice at Sills Cummis & Gross. ‘It’s a very fact-sensitive inquiry. It’s also a constitutional inquiry that’s been subject of case law from the United States Supreme Court going back decades. This may lead to further controversies, uncertainty and litigation.’”