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.
In ComCon Prod. Servs. I, Inc. v. Cal. Franchise Tax Bd., Cal. Ct. App., No. B259619 (December 14, 2016), the California Court of Appeals, Second Appellate District, affirmed the lower court’s judgment, holding that Comcast Corporation and its then majority-owned subsidiary, QVC, Inc., were not unitary, but that a $1.5 billion termination fee that Comcast received in its failed merger with MediaOne Group, Inc. was apportionable business income. The Appellate Court also addressed two issues not discussed by the lower court concluding that (1) the taxation of the termination fee was proper under the Due Process Clause, finding a “definite link” between the termination payment and California (as the MediaOne merger failure impacted the value of every aspect of Comcast’s business); and (2) Comcast forfeited its right to argue, as it failed to raise the issue in its refund claim, that the termination fee should have been included in its sales factor denominator.