Recall that on Oct. 4, 2018, the New Jersey Division of Taxation enacted legislation addressing the reporting of section 965 deemed repatriation dividends, effective for tax years beginning on and after Jan. 1, 2017. Among the changes to the New Jersey Corporation Business Tax code are a reduction in the state’s dividend exclusion from 100 percent to 95 percent of dividends included in federal taxable income, as well as the decoupling from the deduction and exemptions permitted under section 965.
Given the timing of the division’s amended guidance, Form CBT-DIV was issued allowing taxpayers to report the difference in tax resulting from the new guidance without having to amend their CBT-100 or BFC-1 returns. An accompanying Q&A was also posted to the division’s website with further instruction as well as answers to commonly asked questions. However, in cases where taxpayers either failed to report or incorrectly reported the section 965 amount on their original CBT-100 or BFC-1 returns, an amended return was required to be filed in conjunction with the CBT-DIV. The amended return would reflect the law prior to the state’s changes, with the accompanying CBT-DIV reporting the updated law. The due date to report these changes is the later of Jan. 31, 2019, or 30 days from the extended due date of the taxpayer’s original filing.
On Dec. 31, 2018, the division updated its reporting procedure for the aforementioned changes, and released “Form CBT-DIV 2017 Supplemental” in effort to streamline this process. The form simplifies the schedules used to compute the difference in tax, and provides additional schedules to compute the taxpayer’s revised New Jersey net income, dividend exclusion, and NOL deduction, if applicable. The change also relieves taxpayers of the requirement to amend their original CBT-100 or BFC-100 if they had not originally reported or incorrectly reported their section 965 amount. The due date to file this form remains the same as the original CBT-DIV.
Taxpayers with section 965 reporting obligations are encouraged to contact their state and local advisers with questions to ensure proper compliance in New Jersey and other applicable jurisdictions.