N.J. Admin. Code § 18:7-1.6 - Subjectivity to tax; how created
(a) Every
corporation not expressly exempted is deemed to be subject to tax pursuant to
the Act and is required to file a return and pay a tax thereunder, provided it
falls within any one of the following:
1.
Existing under the laws of the State of New Jersey; or
2. If a foreign corporation:
i. Holding a general Certificate of Authority
to do business in this State issued by the Division of Revenue and Enterprise
Services;
ii. Holding a
certificate, license, or other authorization issued by any other State
department or agency, authorizing the company to engage in corporate activity
within this State;
iii. Doing
business in this State;
iv.
Employing or owning capital in this State;
v. Employing or owning property in this
State;
vi. Maintaining an office in
this State;
vii. Deriving receipts
from sources within this State, if the corporation has in excess of $ 100,000
in receipts or 200 or more transactions as described at (c) below; or
viii. Engaging in contacts within this
State.
(b) A
taxpayer's exercise of its franchise in this State is subject to taxation in
this State if the taxpayer's business activity in this State is sufficient to
give this State jurisdiction to impose the tax under the Constitution and
statutes of the United States.
Example 1: An entity regularly providing asset management services as defined at N.J.A.C. 18:7-8.10(a)5 from a location outside New Jersey to customers within New Jersey is subject to tax in New Jersey.
Example 2: A New York corporation delivers furniture into New Jersey by its company-owned truck. The driver collects the payment from the New Jersey customer. The New York corporation is subject to the tax imposed by the Corporation Business Tax Act in New Jersey.
(c) In addition to the other ways a taxpayer
can have nexus for corporation business tax purposes, for privilege periods
ending on and after July 31, 2023, notwithstanding the provisions of the
Corporation Business Tax Act, P.L. 1945, c. 162 (N.J.S.A.
54:10A-1 et seq.), or any other law, rule, or
regulation to the contrary, for the purpose of
N.J.S.A.
54:10A-2, a corporation deriving receipts
from sources within this State shall be deemed to have substantial nexus and is
subject to the taxes imposed pursuant to the Corporation Business Tax Act
(1945), P.L. 1945, c. 162 (N.J.S.A. 54:10A-1 et
seq.), if the corporation meets either (c)1 or 2 below.
1. The corporation derives receipts from
sources within this State, pursuant to
N.J.S.A.
54:10A-6 through
54:10A-10, in excess of $ 100,000
during the corporation's fiscal or calendar year.
2. The corporation has 200 or more separate
transactions delivered to customers in this State during the corporation's
fiscal or calendar year. For the purposes of this paragraph, if the transaction
is a service transaction, then "delivered to a customer" shall mean where the
benefit is received within the meaning at
N.J.S.A.
54:10A-6(B)(4).
3. This subsection shall not preclude a
corporation from having nexus with this State if the corporation's exercise of
its franchise in this State is otherwise sufficient to give this State
jurisdiction to impose taxes pursuant to the Corporation Business Tax Act
(1945), P.L. 1945, c. 162 (N.J.S.A. 54:10A-1 et
seq.), as consistent with the provisions of the United States Constitution, the
New Jersey Constitution, and the statutes of the United States and of the State
of New Jersey. This subsection shall not preclude a corporation from owing the
statutory minimum tax provided at
N.J.S.A.
54:10A-5(e) if a
corporation has nexus with this State and is otherwise protected from tax based
on income pursuant to 15
U.S.C. §§
381 through
384 (otherwise known as P.L.
86-272).
4. Receipts and the
transactions for determining whether a taxpayer has nexus shall be determined
according to
N.J.A.C.
18:7-7.1 through 10.1. Taxpayers must use the
same method of accounting for State tax purposes as used for Federal tax
purposes and include such income/receipts, unless such items are excluded from
income/receipts for Corporation Business Tax purposes pursuant to
N.J.S.A.
54:10A-4(k) or
54:10A-6 or
N.J.A.C.
18:7-5.1(b) or 5.4. Thus,
the receipts and transactions for determining whether a taxpayer has nexus for
New Jersey corporation business purposes pursuant to
N.J.S.A.
54:10A-4.16 are based on the tax base and
receipts included pursuant to the Corporation Business Tax Act.
5. In determining whether a member has nexus
for the purposes of
N.J.S.A.
54:10A-4.16 and pursuant to (c) above, a
member shall determine its receipts and transactions with customers'
pre-intercompany eliminations.
6.
The receipts and transactions of a disregarded entity owned by the taxpayer
must be included in the taxpayer's receipts and transactions for determining
nexus for New Jersey corporation business tax purposes.
7. A corporate partner's proportionate share
of receipts and transactions of a unitary partnership must be included in the
corporate partner's receipts and transactions for determining nexus for New
Jersey corporation business tax purposes as a result of the corporate partner
and unitary partnership utilizing the flow-through accounting method.
8. Unless the income from a non-unitary
partnership serves an operational purpose, the corporate partner's receipts and
transactions for determining nexus for New Jersey corporation business tax
purposes do not include the non-unitary partnership as a result of the
corporate partner and non-unitary partnership using the separate accounting
method. The receipts and transactions from the partnership attributable to the
corporate partner's distributive share of partnership income would be counted
for nexus purposes.
9. The receipts
and transactions of a New Jersey Qualified Subchapter S Subsidiary included as
part of its parent S corporation's tax attributes for Federal purposes must
also be included in the parent S corporation's receipts and transactions for
determining nexus for New Jersey corporation business tax purposes.
10. With regard to a taxpayer with short
periods during a 12-month calendar or fiscal period, the amounts set forth at
(c)1 and 2 above will be prorated.
Notes
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
(a) Every corporation not expressly exempted is deemed to be subject to tax under the Act and is required to file a return and pay a tax thereunder, provided it falls within any one of the following:
1. Existing under the laws of the State of New Jersey; or
2. If a foreign corporation:
i. Holding a general Certificate of Authority to do business in this State issued by the Division of Revenue and Enterprise Services;
ii. Holding a certificate, license, or other authorization issued by any other State department or agency, authorizing the company to engage in corporate activity within this State;
iii. Doing business in this State;
iv. Employing or owning capital in this State;
v. Employing or owning property in this State;
vi. Maintaining an office in this State;
vii. Deriving receipts from sources within this State; or
viii. Engaging in contacts within this State.
(b) A taxpayer's exercise of its franchise in this State is subject to taxation in this State if the taxpayer's business activity in this State is sufficient to give this State jurisdiction to impose the tax under the Constitution and statutes of the United States.
Example 1: An entity regularly providing asset management services as defined at N.J.A.C. 18:7-8.10(a)5 from a location outside New Jersey to customers within New Jersey is subject to tax in New Jersey.
Example 2: A New York corporation delivers furniture into New Jersey by its company-owned truck. The driver collects the payment from the New Jersey customer. The New York corporation is subject to the tax imposed by the Corporation Business Tax Act in New Jersey.