NJBIA has been hearing for months about how important this bill is to get done, especially on the ending of the COVID tax timing extensions that became unfair after they lingered too long, and we appreciate your posting and hopefully quick passage of it to get it to the Governor’s desk for signature.
The bill’s 3 tax changes, all of which NJBIA supports, are all win-win making both taxpayer compliance and Treasury tax administration easier.
- Eliminates the requirement that a taxpayer that qualifies as an S corporation for federal tax purposes must affirmatively elect New Jersey S corporation status for purposes of the NJ Corporate Business Tax and the NJ Gross Income Tax. A stand-alone bill was introduced on this in the past, A-2706 (Dancer), and NJBIA would have supported that bill or supports it as part of this more comprehensive bill.
- NJBIA and the New Jersey Society of CPAs successfully requested an Assembly amendment to allow for an opt-out if taxpayers do not want this done automatically as it could be better for them in some cases to file differently. Thank you for including that amendment today.
- Adapts the NJ gross income tax to the new federal partnership audit regime that focuses on auditing the partnership rather than individual partners for greater efficiency, including new section N.J.S.A. 54A:2-2(A) and amending N.J.S.A. 54A:2-2, N.J.S.A. 54A-5-4, N.J.S.A. 54A:8-7, N.J.S.A. 54A:9-4, and N.J.S.A. 54A:9-8 of Chapter 2, 5, 8, and 9 of Title 54A of the New Jersey Statutes, and section N.J.S.A. 54:10A-15.11 and Chapter 10A of Title 54 of the New Jersey Statutes.
- We did ask that this part of the bill be identical to what the Multi-State Tax Commission (MTC) recommended, especially regarding more advantageous timelines for taxpayers, and it is my understanding that the Senate and Treasury has agreed to those amendments for today.
- The bill aligns with the COST policy statement on federal audit changes. New Jersey has scored poorly in the past on the Council on State Taxation (COST) tax administration scorecard at https://www.cost.org/globalassets/cost/state-tax-resources-pdf-pages/cost-studies-articles-reports/admin-scorecard-final-may-2020.pdf, and this bill addresses best practices in reporting of federal changes, where NJ scored poorly.
- Ends the extension of the statute of limitations for the assessment of tax and the extension of the period for the payment of interest on overpayments enacted during the COVID-19 pandemic. This was a stand-alone bill by Senator Bramnick – S-214 that we would have supported on its own, andNJBIA is now happy to support it as part of this larger bill.
- The COVID tax extensions ended by this bill have become a burden to many taxpayers. This has become one of the top questions and concerns I have been hearing from the business tax community these days and corrects a fundamental unfairness/inequity that does not allow businesses to close out their books. It was needed during the pandemic and is no longer.
NJBIA thanks you all for the consideration of our perspective and urges the Senate to vote “yes” on this important and necessary tax bill