(a) In order
for a nonresident corporate partner to establish that the partnership is not
required to pay tax on its behalf, the partner must file annually with the
partnership a statement making its claim for exemption. The claim shall be on a
form specified by the Director. It must be filed annually and must be received
by the partnership on or before the 15th day of the fourth month succeeding the
close of the privilege period, or on or before the filing date of the return,
if that occurs earlier.
(b) If a
partnership erroneously makes a tax payment to the Division of Taxation on
behalf of an entity that is exempt, the exempt entity must establish that the
money has actually been paid to the State by the partnership, and the entity is
actually exempt, in order to qualify for a refund.
(c) If a New Jersey S corporation, that does
not have a place of business (for example, an office or an employee routinely
teleworking from home) in New Jersey is a partner in a partnership, a tax
payment is made on its behalf at the nine percent rate, since the corporation
does not have a place of business in New Jersey.
(d) For purposes of this subchapter, each
place of business of a partnership that is unitary with a corporate partner is
to be treated as a place of business of the corporate partner. See
N.J.A.C.
18:7-7.6(g) and
(h)1.
(e) If a partner in a partnership is a
qualified I.R.C. § 501(c)(3) charity or any retirement plan approved by
the Internal Revenue Service, the partner may file Form 1065E with the
partnership to relieve the partnership from making a payment measured by the
partner's share. At present, New Jersey does not impose a tax on unrelated
business income.
Example: A New Jersey general partnership has a unitary
relationship under the criteria set forth at
N.J.A.C.
18:7-7.6(g)3 with a
corporate partner located in Illinois. As a result of this relationship the
corporate partner is considered to have a regular place of business in the
State and is not a "nonresident corporate partner." This partner may file a
Form 1065E with the partnership so that no tax payments will be made by the
partnership on the partner's behalf.
(f) For privilege periods ending on and after
July 31, 2023, if a member of a combined group receives income from the unitary
business from a partnership, then the combined group's entire net income shall
include the member's direct and indirect distributive share of the
partnership's unitary business income, and the unitary partnership shall not be
liable for the portion of the payment imposed pursuant to
N.J.S.A.
54:10A-15.11 that is directly, or indirectly
in the case of a tiered partnership, attributable to that member.
