On April 4, 2019, the New Jersey Division of Taxation communicated that its website for the mandatory registration of a combined group by its managerial member is now available.
Background
For tax years ending on and after July 31, 2019 (beginning on and after Aug. 1, 2018, if the managerial member has a 12-month tax year that ends July 31, 2019), New Jersey has imposed mandatory combined reporting. As such, commonly owned companies engaged in a unitary business are required to calculate their New Jersey Corporation Business Tax on a combined basis.
As part of the newly enacted combined reporting, each combined group must elect a managerial member who will act as an agent on behalf of the combined group. The managerial member is required to address all tax matters including, but not limited to: filing/amending tax returns, filing extensions, and making estimated tax payments and/or any tax liability payment on behalf of its taxable members. The managerial member should be the common parent corporation if that corporation is taxable in New Jersey, however if the parent corporation is not taxable in the state than the combined group must designate any of the taxpayer members in New Jersey as the managerial member.
Online registration of a combined group by managerial member
In order to elect a managerial member, taxpayers are required to register with the New Jersey Division of Revenue and Enterprises Services (DORES). The registration will generate a unique identification number that will serve as the combined group's tax identification number. Once the registration process is complete, all payments will be required to be made using the group’s identification number. Taxpayers will no longer be able to make payments under their preexisting tax identification number.
Takeaways
In order to avoid delay in the processing of payments, registration should be completed as soon as possible. For information on what business entities must be included in a combined group and what business entities are not included in a combined group, taxpayers should review Technical Bulletin TB-86, and speak with their New Jersey tax advisers about complying with these new requirements.
