Gov. Phil Murphy has signed legislation, supported by NJBIA, that simplifies corporate business tax reporting and compliance by making technical corrections to the Corporation Business Tax.
As part of the FY 2021 budget negotiations, the Governor and Legislature, unfortunately, raised the CBT to 11.5%, adding even greater urgency to the need to simplify the process for both taxpayers and the state, said Chris Emigholz, NJBIA vice president of Government Affairs.
“While it is of course concerning for our competitiveness that New Jersey’s corporate business tax rate is set to become the highest in the nation on Jan. 1, the technical adjustments made with this law will provide some important benefits – including a potentially great reduction in CBT paperwork for larger corporations,” Emigholz said.
The new law permanently extends the state CBT deadline to a month after the federal due date. And since some CBT calculations are based on federal tax liability, making that month delay permanent helps both the taxpayer and the Division of Taxation, Emigholz said.
The law also answers outstanding questions in terms of complying with New Jersey’s combined reporting/unitary changes from 2018, including clarifying that the alternative minimum assessment (AMA) tax is only on the combined/unitary taxable member, not each individual part of that group.
“Further, the law clarifies the treatment of net operating losses (NOLs), which is important for struggling companies and the innovation economy we want to spur in New Jersey,” Emigholz said.
The legislation, A-4809/S-3007, was sponsored by Assemblywoman Eliana Pintor Marin (D-29) in the Assembly and Senator Paul Sarlo (D-36) in the Senate.