Official Site of The State of New Jersey

Transfer Pricing Initiative - Frequently Asked Questions

1. If a taxpayer has only received notice of an impending audit, who handles the case?
   An auditor will be assigned to the case. Taxpayers who have only received a notice and are not yet under audit may submit their participation form and attachments to TaxationTPInitiative@treas.nj.gov.


2. If a taxpayer is currently under audit and decides to participate in the initiative, who handles the case?
   If an auditor has contacted the taxpayer and engaged in work on the audit, that auditor will facilitate the case.


3. If a taxpayer currently has a case with the Conference and Appeals Branch (CAB), can they participate in the initiative?
   Yes, taxpayers in the CAB process may participate. Taxpayers should request that the case be remanded to the Audit Branch for reconsideration under the initiative.


4. If a taxpayer has a case with the Conference and Appeals Branch (CAB), participates in the initiative, and the taxpayer and the Division do not come to an agreement for this initiative, what happens next?
   If no agreement is reached with the Audit Branch, the matter can still be considered by CAB. If no agreement is reached with CAB, existing statutory procedures (e.g., issuance of a Notice of Final Determination) will apply.


5. If a taxpayer is currently under audit and elects to participate in the initiative, but the Division and the taxpayer do not come to an agreement, does the case just return to audit without further opportunity to settle or waive penalties?
   If the taxpayer elects to participate while in audit, and no agreement is reached, the audit process will resume under normal audit procedures.


6. Can a taxpayer currently under audit, who does not participate in the initiative, be allowed to request a waiver of penalties?
   Taxpayers that elect not to participate in the initiative may still request a waiver of penalties. However, we do not intend to grant abatement of penalties.


7. Are rights to appeal being impacted by this initiative?
   Any closing agreement we reach with a taxpayer through the initiative process will require the taxpayer to waive its right to appeal. If we do not reach an agreement, the taxpayer's statutory rights to appeal will not be affected in any way by the initiative. Issues beyond those contemplated in the initiative will still be permitted to be protested under normal statutory provisions.


8. Does a taxpayer have to participate in all open years?
   No. A taxpayer may participate in as many years as they choose.


9. How will non-filing affiliates to the intercompany transaction be looked at or handled?
   The rules of voluntary disclosure will apply to non-filing affiliates that qualify under the voluntary disclosure program.


10. Will an administrative look-back period be applied?
    For cases under audit, the years will be limited to those under review, including any future years subject to a closing agreement.


11. After the Division makes its proposal, will back and forth negotiations be allowed within the 30-day window?
    Yes, to the extent time allows.


12. What is the extent of the review of the intercompany transactions?
    For participants in the program, we intend to review intercompany transactions per the standard procedure, including any relevant reciprocal adjustments. Non-transfer pricing items will be reviewed according to normal audit or request for review procedures.


13. How long does each side have to pay a refund/remit additional tax due at the end of a resolution?
    The closing agreement will determine timing of payment. However, appropriate interest will apply to any underpayment or overpayment in accordance with N.J.S.A. 54:49-3, N.J.S.A. 49-15.1 and N.J.A.C. 18:2-2.4 and N.J.A.C. 18:2-5.9.


14. Does the Division intend on using third-party consultants?
    Yes. In addition to using its transfer pricing software, we have engaged transfer pricing expert, Dr. Ednaldo Silva, of RoyaltyStat, to consult to the extent necessary in reaching fair resolutions.


15. If resolution cannot be reached by March 2, 2023 will extension of time be allowed?
    Yes. We will continue to negotiate toward a resolution while the taxpayer is engaged in good faith.


16. Will taxpayers be allowed to present facts anonymously?
    No. Taxpayers will need to disclose their identity and sign an agreement to participate by September 15, 2022. Voluntary redetermination procedures will still apply.


17. It appears that it is the Division's desire to close out all open years through this process with respect to all issues, except federal RAR adjustments. If there is agreement between the Division and the taxpayer with respect to transfer pricing, but disagreement on one or two other issues or areas, will the agreement close out the year except for those other issues or areas where there is disagreement, as well as federal RAR adjustments?
    Our objective is to settle all issues, except those related to a subsequent federal determination that affects New Jersey tax payable, but we can agree to settle the transfer pricing issue and allow for the process to continue for any other issues per statute and according to the terms of the settlement agreement.