On April 5, 2019, the New Jersey Division of Taxation (NJ DOT) released rules regarding mandatory registration of a combined group by a managing member. These rules are meant to provide guidance for the combined reporting mandate under New Jersey's corporation business tax (CBT), contained in P.L. 2018, chs. 48 and 131, which applies for reporting tax years ending on or after July 31, 2019. Commonly owned corporations must report on a combined basis for CBT purposes if (i) they are engaged in a unitary business as defined by N.J.S.A. 54:10A-4(gg) and supplemented by TB-86 or (ii) they have elected to file on an affiliated group basis and are includable per the state's affiliated group requirements.

To report as a combined group, CBT taxpayers must register a managerial member with the New Jersey Division of Revenue and Enterprise Services (DORES). The registration site on the internet is now in service and registration can begin.

Background

In July 2018, New Jersey enacted mandatory combined reporting for taxpayers with multiple entities engaging in a unitary business as long as at least one of the group members has taxable nexus within the state. See New Jersey DOT TB-86 Included and Excluded Business Entities in a Combined Group and the Minimum Tax of a Taxpayer That is a Member of a Combined Group.

A managerial member will be required to address all CBT matters for the combined group including: filing or amending tax returns, filing extensions, responding to notices or assessments, and making estimated tax payments, as well as payments for any tax liability incurred by any member of the combined group.

To register, a group of taxpayers must first determine which corporate entity (or deemed corporate entity) of their combined group is the appropriate entity to be the managerial member. The April 5, 2019 guidance states that, if a combined group has a common parent corporation that is itself taxable in New Jersey, then that parent must be the managerial member. When the common parent is not itself taxable in New Jersey (i.e., does not on its own have nexus with New Jersey and is not simply a nontaxable member being included in a New Jersey combined group), another member of the group that is taxable in New Jersey must be designated as the managerial member.

To complete the registration, the managerial member must register here. Once on the website, the managerial member should select "Register as the Managerial Member of a Unitary Combined Group." After that selection has been made, the managerial member will be assigned a new taxpayer identification number that must be used for all purposes related to reporting for the New Jersey combined group and each of its members. According to the NJ DOT, this registration is intended to last for 10 years.

All payments for the combined group must be completed using this newly generated taxpayer identification number. The NJ DOT continues to work and intends to issue additional guidance on prior payments made separately by individual members of a combined reporting group that were not submitted under the new combined-reporting taxpayer identification number.

Implications

Taxpayers that must join in the filing of a combined report under the new CBT rules should designate and register their managerial member on the website as soon as possible. Once registered, all estimated payments for the members of the combined reporting group must be made using the managerial member's new taxpayer identification number issued through the website. Payments from any of the members, including the managerial member itself, cannot be made under any preexisting New Jersey taxpayer identification number.

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