Recent New Jersey Tax UpdatesJuly 19, 2023

Businesses

Income Sourcing – Effective January 1, 2023, the sourcing rules for Gross Income Tax purposes will follow the Corporation Business Tax sourcing rules. A taxpayer that engages in a trade or business, a partner in a partnership or a shareholder of an S Corporation that conducts business operations inside and outside of New Jersey and the portion of the New Jersey income cannot readily or accurately be ascertained, the income must be sourced in a manner consistent with the provisions of NJ Rev.Stat. 54:10A-6 and  54:10A-10.

Nexus – Effective for tax years ending on or after July 31, 2023, a non-New Jersey corporation will be deemed to have substantial nexus if it derives New Jersey receipts in excess of $100,000 or has 200 or more separate transactions delivered to customers in New Jersey during the corporation’s tax year. This is in addition to other ways a corporation may have nexus.

Research and Development Expenses – For tax years ending on or after January 1, 2022, taxpayers that claim the Corporation Business Tax Research and Development Tax Credit for New Jersey qualified research expenditures can also deduct those New Jersey expenditures on their tax return in the same year as they claim the credit, rather than amortizing as required for federal tax purposes. Taxpayers that amortized their New Jersey qualified research expenditures on the 2022 Corporation Business Tax return can file an amended return to now deduct those expenses.

New Jersey Net Operating Losses – For tax years ending on and after July 31, 2023, the NOL deduction is subject to the federal tax limitation and cannot exceed 80% of taxable income computed without regard to the NOL deduction.

Due Dates of New Jersey Corporation Business Tax Returns – A technical change now makes the return due date and a return on extension are due the 15^th day of the month following the month in which the federal tax returns were due rather than providing that the due date is 30 days after the federal due date.

For more information visit the New Jersey website at:
https://www.nj.gov/treasury/taxation/whatsnew.shtml

NJ W-2 Reporting Guidelines – The New Jersey Department of Labor and Workforce Development and the New Jersey Division of Taxation have established official 2023 W-2 reporting guidelines for New Jersey.

A sample copy of the 2023 W-2 with directions and explanations regarding the figures and placement of the required New Jersey information can be found here: https://www.state.nj.us/treasury/taxation/prntempl.shtml.

Call (609) 633-6400 for more information related to the New Jersey Department of Labor and Workforce Development.

Individuals

Sales Tax Holiday – The New Jersey Sales Tax Holiday takes place from August 26, 2023- September 4, 2023. Sales tax will not be charged for certain retail sales of computers, school supplies, and sport or recreational equipment when sold to individual purchasers for non-business use. Sellers are not to charge sales tax on eligible items when purchased during the holiday period.

For more information visit:
https://www.nj.gov/treasury/taxation/businesses/salestax/salestaxholiday.shtml

Transcript Requests – The Division has updated Form DCC-1. This applies to taxpayers who are requesting a full transcript, as originally reported, of any New Jersey Individual Income Tax return (NJ-1040, 1040NR, 1041) or to request the gross income amount or filing status entered on a New Jersey Resident Return (NJ -1040).

Miscellaneous

Interest rate on balances – The Division has updated the new Interest rate assessed on outstanding tax balances. The new rate is 11.25%, effective July 1, 2023.

Please contact us should there be any questions.