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June 2, 2022

New Jersey publishes proposed combined reporting regulations for public comment

On May 16, 2022, the New Jersey Division of Taxation (NJ DOT) published proposed combined reporting regulations (the "Proposed Regulations") in the New Jersey Register.1 Interested parties may submit comments until July 15, 2022.

The Proposed Regulations would incorporate changes that the New Jersey Legislature made to the Corporation Business Tax Act (CBTA) in 2018 and 2020.2 Changes affecting combined reporting groups involve the following issues:

  • Tax computation (including tax rates, minimum taxes and surtaxes)
  • Determination of research and development credits
  • Computing combined group entire net income (ENI) (including the interplay of the federal Internal Revenue Code and Treasury Regulations with the CBTA)
  • Alternative apportionment claims
  • Discretionary income and combined group adjustments
  • Return filing requirements and due dates
  • Banking corporation transition returns
  • Short period filing requirements
  • Dividend received exclusion and tiered subsidiary dividends
  • Net operating loss (NOL) and prior net operating loss (PNOL) deductions
  • Credit sharing among combined group members
  • Combined filing definitions and entities includable in a combined filing
  • Unitary business standards
  • Combined filing method elections
  • Managerial member requirements
  • Discretionary adjustments to the combined filing group by the Director of the NJ DOT
  • Computing the net deferred tax liability deduction for transitioning from separate to combined reporting

While the Proposed Regulations would likely affect certain taxpayers significantly, the following provisions could have far-reaching effects:

  • Whether a taxpayer or group of taxpayers is subject to the CBTA would be determined on an entity-by-entity basis, rather than a group basis (including limits on state taxation of entities engaged in the mere solicitation of the sale of tangible personal property to New Jersey customers under the provisions of P.L. 86-272).
  • Foreign affiliates included in combined reporting groups (regardless of the filing method used by the group) would not have to include their treaty-protected income in the group's ENI.
  • As foreign affiliates would not have to include treaty-protected income in ENI, further eliminations, exemptions or deductions related to that treaty-protected income would be disallowed. Specifically, any global intangible low-taxed income (GILTI) associated with treaty-protected income would be includable in the combined ENI base on a gross basis without the benefit of the IRC Section 250 deduction.
  • Unity of a newly acquired entity would occur in the year of acquisition.
  • A taxpayer's PNOLs and NOLs would continue to be available even if the taxpayer changed from one legal form to another (e.g., corporation to LLC), as long as the taxpayer continued to be treated as a corporation for federal income tax and CBTA purposes.
  • Companies that move from one combined reporting group to another would have to pro rate their taxable income among each respective combined group (or to the company's separate company report, if applicable).

It is unclear whether the Proposed Regulations will apply prospectively (that is, only on and after the date when they become final) or retroactively, and if so, to what extent.


On a first reading, the Proposed Regulations appear to be consistent with much of the guidance in the numerous notices and technical bulletins that the NJ DOT has published since New Jersey's combined reporting statutes were enacted in 2018, including several of its more controversial administrative interpretations. There are still gaps in the Proposed Regulations and previous guidance; however, that may result in some uncertainty as to how to apply the CBTA in some combined reporting situations.

Taxpayers are encouraged to carefully review the Proposed Regulations and consider submitting comments to the NJ DOT before the comment period ends on July 15, 2022.


Contact Information
For additional information concerning this Alert, please contact:
State and Local Taxation Group
   • Bill Korman (
   • Mike Puzyk (


1 The New Jersey Register (N.J.R.) is the official journal of New Jersey state agency rulemaking. LexisNexis provides free public access to the N.J.R. at The Proposed Regulations are published in the May 16, 2022 edition under "Rule Proposals" at 54 N.J.R. 865(a).

2 See Tax Alerts 2020-2648, 2018-1977 and 2018-1342.