On September 27, 2018, the New Jersey Senate and General Assembly passed legislation amending certain provisions of the New Jersey Corporation Business Tax (“CBT”) reform bill that was enacted earlier this year (“Technical Amendments”). In July, Governor Phil Murphy and the New Jersey Legislature enacted a $37.4 billion budget package (the “Budget Bill”) that implements sweeping changes to the CBT. Among these changes are mandatory unitary combined reporting, market-based sourcing, and a new four-year surtax on corporations with over $1 million of allocated taxable net income. The Technical Amendments, which are awaiting Governor Murphy’s signature, make several changes to the Budget Bill. A summary of the most noteworthy provisions contained in the Budget Bill and Technical Amendments is below.Read more…
New York’s FY 19 Budget is “GILTI” of Undermining Federal Tax Policy Objectives
The New York Legislature passed a budget bill (“NY Budget Bill”) that takes aim at several key provisions in the federal tax reform bill known as the Tax Cuts and Jobs Act (“Federal Tax Reform”). It has been no secret that Governor Cuomo was displeased with Federal Tax Reform, and this year’s NY Budget Bill reflects that displeasure. Among other items, the NY Budget Bill contains two provisions designed to mitigate Federal Tax Reform’s limit on the deductibility of state personal income taxes—first, the NY Budget Bill creates state-operated charitable contribution funds and provides taxpayers with a credit against their New York State income tax liability equal to 85 percent of the amounts contributed for the immediately proceeding tax year, and second, the Budget Bill creates an optional payroll tax (the “Employer Compensation Expense Tax”) for which employees will receive a credit against their New York State income tax liability (effectively shifting the tax expense and corresponding deduction from the employees to the employer). The NY Budget Bill also addresses some of the corporate income tax changes adopted under Federal Tax Reform, including Internal Revenue Code (“IRC”) section 965 income and the deduction found in IRC § 250(a)(1)(A) (“FDII”). In this blog, we will focus on the provisions of the Budget Bill impacting corporate taxpayers under the New York State corporate franchise tax.Read more…
State Corporate Income Tax Considerations of Federal Tax Reform
On December 15, 2017, the conferees working on reconciling the differences between the House and Senate versions of the Tax Cuts and Jobs Act (“Tax Bill”) released legislative text and a Joint Explanatory Statement. It is expected that the Tax Bill will be passed and signed into law by President Trump. The Tax Bill contains numerous provisions impacting the personal income tax, the estate tax, the taxation of pass through entities, and the corporate income tax. This blog focuses on the U.S. state and local corporate income tax implications of the most significant aspects of the corporate income tax provisions of the Tax Bill.Read more…
New Jersey “Preserves” Ability to Tax Out-of-State Corporate Limited Partners
Nexus expansion continues to be a hot topic in state and location taxation. States have become increasingly aggressive in subjecting entities without a physical presence to taxation, often by asserting that the out-of-state company has “economic nexus” with the state. In a recent decision, the New Jersey Tax Court has reinvigorated a nexus ghost from tax years past, seemingly looking to the unitary business principle (or at least the hallmarks of a unitary business) to conclude that a corporate limited partner was subject to tax in New Jersey by virtue of its interest in a partnership that was doing business in the state. Preserve II, Inc. v. Director, Div. of Taxation, Docket No. 010920-2013 (N.J. Tax Ct. Oct. 4, 2017).Read more…
