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June 24, 2020
2020-1657

No filing extensions will be granted for New Jersey deferred tax deduction form due July 1, 2020

The New Jersey Form DT-1 Statement of Net Deferred Tax Liability Deduction (NJ Form DT-1) must be filed with the New Jersey Division of Taxation (Division) by July 1, 2020 (see Tax Alert 2020-0824). The Division will not grant any extensions to file this form. Accordingly, failure to timely file the NJ Form DT-1 will result in the taxpayer forfeiting all rights to secure this deduction (which is only available to publicly traded companies, including those companies that file a consolidated financial statement with public companies).

New Jersey taxpayers should also consider the potential tax accounting implications that may result from the failure to timely file an NJ Form DT-1.

Implications of new regulation

Emergency regulations issued by the Division on April 8, 2020, may impact preparing NJ Form DT-1. In these regulations, the Division specified that NJ CBT taxpayers filing combined returns (excluding their controlled foreign corporations (CFCs)) may have a future NJ CBT tax obligation from cash distributions from these uncombined CFCs. If, for example, the taxpayer received deemed distributions from these CFCs, the emergency regulations clarified that the taxpayer will only be credited with New Jersey previously-taxed income if the receiving company filed a New Jersey return in the year of the deemed distribution AND the taxpayer paid more NJ CBT tax than the fixed dollar minimum tax (which is either $500 or $2,000). Taxpayers in this situation (likely most taxpayers) may want to consider the impact of these emergency regulations in filing their NJ Form DT-1.

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Contact Information
For additional information concerning this Alert, please contact:
 
State and Local Taxation Group
   • Bill Korman (william.korman@ey.com)
   • Michael Puzyk (michael.puzyk@ey.com)
 

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