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This law requires partnerships to report any IRS audit adjustments to the Division of Taxation. Partnerships will not be collectively subject to the tax imposed by the Gross Income Tax Act based on the federal audit adjustments. Individual partners or members will be taxed on their portion of partnership income or gain.
The partnership can elect to pay the Gross Income Tax on behalf of the individual partners or members. During a pending IRS audit report, all required estimated tax payments must be reported to the Division prior to the due date of the Federal Adjustments Report.
Partnership members are still subject to additional taxes and interest due if the partnership fails to report the IRS audit adjustments. The Division will use available resources to access unreported IRS audit adjustments, and the taxpayer must claim all State refunds, credits, or extensions as a result of the IRS audit within one year of the date of the adjustment report.
Expiration of COVID-Related Extension
The law ends COVID-19 related extensions for the Division to pay interest on refunds, and the statute of limitations to assess taxes.
Elimination of the New Jersey S Corporation Elections
The law eliminates the requirement for recognized federal S corporations to make a separate S corporation election with New Jersey. Federal S corporations will be automatically recognized as an S corporation by New Jersey unless the corporation opts out. To opt out, 100 percent of the shareholders must consent. The entity may opt out at any time during the tax year or at any time on or before the due date or extended due date of the S corporation return.
Any S corporation doing business, having or exercising its franchise, deriving receipts, engaging in contracts, or employing or owning capital or property, or registered to do business in New Jersey that does not elect to opt out will be taxed as a New Jersey S corporation.
Effective: New requirements for partnerships are effective immediately and apply to any adjustments on or after January 1, 2020. Expiration of COVID-related extension effective as of December 22, 2022. Elimination of the New Jersey S corporation election for privilege periods beginning on and after January 1, 2023.
This law excludes from New Jersey Gross Income Tax the cancellation of a disabled veteran's student loan debt. Cancellation of debt income already is not subject to New Jersey Gross Income Tax. This legislation codifies this treatment as it applies specifically to certain federal student loan debt held by disabled veterans.
This law amends a statute (N.J.S.A. 17:11D-1 et seq.) regarding tax refund anticipation checks and loan practices. The amendment prohibits tax preparers from requiring clients to enter into a refund anticipation check agreement in order to complete a tax return. It also forbids preparers from using language that would lead the taxpayer to believe that the refund anticipation loan or check is provided at no cost. Additionally, tax preparers must provide a statement itemizing all service charges or fees for issuing a refund anticipation check, including any estimated interest to be paid in the event a refund is delayed.
Effective: Applies to tax preparation services beginning in 2023
This law eliminates the Sales and Use Tax exemption for sign installations that result in a capital improvement. Sign fabricators and installation contractors can purchase signs or materials used to fabricate or install signs without paying Sales Tax if they issue a fully completed resale certificate to the seller. However, they must charge their customers Sales Tax on the sales price of the sign.
Effective: Applies to sign fabrication and installation services on or after October 1, 2022.
The law creates a refundable child tax credit for resident taxpayers with taxable incomes of $80,000 or less. This credit is available for all filing statuses except married filing separate. The taxable income ranges and credit amounts are the same, regardless of filing status. For each dependent child who was age 5 or younger at the end of the tax year, the credit is determined as follows:
Effective: As enacted, is effective for tax years beginning January 1, 2023. (However, the Governor and members of the legislature have stated that they plan to enact an amendment to make this program effective retroactively to January 1, 2022.)
This law allows economic incentives for certain cannabis businesses. It amends the definition of state or local economic incentives and outlines what is not considered a state or local financial incentive. Under previous law, cannabis businesses were excluded from receiving those incentives. In addition, the law defines 'small business.'
The law exempts compensation for services performed by a member of a district board of elections from Gross Income Tax, including any compensation paid to an election officer during an early voting period (pursuant to N.J.S.A. 19:15A-1(d)).
The law revises certain provisions of the Food Desert Relief Program administered by the New Jersey Economic Development Authority (NJEDA). Credits issued under the program now may be applied against Insurance Premium Tax liabilities, in addition to Corporation Business Tax liabilities. The law also adds a seven-year carryforward provision for credits sold by the NJEDA to eligible businesses.
Additionally, taxpayers can apply to the Division of Taxation and the NJEDA for a tax credit transfer certificate. This allows the taxpayer to sell the credit for no less than $25,000 during the privilege period in which they receive the certificate. A taxpayer may not sell the certificate, or use it as collateral, for less than 85% of the credit amount. Credits purchased may be carried forward for 10 privilege periods and cannot reduce tax liability below the statutory minimum tax.
The law establishes the New Jersey Easy Enrollment Health Insurance Program within the Department of Banking and Insurance (DOBI). The law creates a State-based reporting system to provide a taxpayer's insurance status using tax return information and unemployment records maintained by the Department of Labor and Workforce Development.
The law allows individuals who indicate they do not have minimum essential health insurance coverage to choose the option of having DOBI determine if the individual and others in the household are eligible for insurance affordability assistance.
Effective: Taxable years beginning January 1, 2023, although the State Treasurer has the authority to delay implementation if the law is not administratively feasible for the 2023 Tax Year.
The law expands an allowance for developers to carry forward unused tax credits for up to seven privilege periods under the New Jersey Aspire Program. The law also removes a requirement that the New Jersey Economic Development Authority must approve the credit.
The law authorizes a Sales and Use Tax exemption for certain purchases made by certain supermarkets and grocery stores located within Urban Enterprise Zones. The law clarifies that the $100,000 exempt purchase limitation imposed on UZ-4/UZ-5 holders is an annual limitation. In addition, the law allows unlimited exempt purchases by supermarkets or grocery stores within Urban Enterprise Zones if they receive an annual certification from the State Department of Community Affairs.
Effective: Immediately upon enactment and applies only to purchases made between 12:01 a.m. on the ninth day preceding the first Monday in September of each year and 11:59 p.m. on the first Monday in September of each year. For 2022, the dates are August 27 through September 5.
Business activities with Russia or Belarus are to be suspended immediately. The Department of the Treasury is now required by law to create a list identifying all businesses and individuals engaged in "prohibited activities in Russia or Belarus". Any person identified on the list is ineligible to apply for or receive a tax clearance, among other incentives.
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