The Assembly Budget Committee and Senate Budget and Appropriations Committee considered and approved legislation yesterday that makes a number of changes to the tax structure in New Jersey. The bills are all currently scheduled in both houses for a vote on Thursday. I have included links to the bills, as well as a brief summary of each below.
Corporation Business Tax (CBT) Clean-Up Legislation
The bills (A-4495/S-2989) make a number of changes regarding the tax base, as well as date changes as they relate to the CBT and combined reporting. Additionally, the bills provide guidance on global intangible low-taxed income (GILTI) and clarify the treatment of NJ Economic Development Authority (EDA) tax credits.
NJBIA opposed the bill, as we are concerned about the increased costs it will mean to corporate taxpayers, specifically in regard to the treatment of global intangible low-taxed income (GILTI), net operating losses, repatriation and state minimum taxes related to combined reporting.
The original intent of the bill was focused on technical changes, and not a tax increase. As of this afternoon, final copies of the bill are still not available. I will pass along copies of the final legislation when it becomes available.
Remote Sellers and Marketplace Facilitators Sales Tax Legislation
The new bills (A-4496/S-2990) approved by their respective committees yesterday, impose the collection of sales tax requirements on marketplace facilitators and certain sellers who do not have a physical presence in the State.
The bills also set a threshold that if a seller does not have a physical presence in the State, they must collect sales tax if they have over $100,000 in revenue from sales into the state, or 200 or more separate transactions into the state, both of which are applicable to the calendar year, or prior year. The bills also clarify that travel agencies and online travel agencies are not transient space marketplaces.
As you will remember, after the U.S. Supreme Court ruling in South Dakota v. Wayfair, Inc., the Legislature introduced and passed legislation that provided for the collection of sales tax from certain remote sellers. This requires a seller with no physical presence in New Jersey to collect sales tax on the purchase. Governor Murphy issued a conditional veto of this legislation (A-4261/S-2794) in August, recommending a number of changes to assist the Division of Taxation in the administration of the new law’s requirements.