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Division of Taxation

Revision to Division Policy on Combined Groups and P.L. 86-272

After discussions with stakeholders and interested parties, the Division has decided to revise its policy on the treatment of members of a combined group that are claiming P.L. 86-272.

The Division had stated in the instructions for the 2019, 2020, and 2021 CBT-100U returns and in multiple technical bulletins that: “If one member in the combined group has nexus and sufficient activities in New Jersey to be taxed based on income, no member that has nexus with New Jersey may claim P.L. 86-272 protection.”

Based on concerns raised, the Division has decided to change this policy. Although a combined group is a taxpayer and taxed as one taxpayer pursuant to N.J.S.A. 54:10A-4(h) and N.J.S.A. 54:10A-4(z); for the purposes of N.J.S.A. 54:10A-4.7(a), P.L. 86-272 protection for a member will be determined on an entity-by-entity basis.

If a combined group filed their 2019, 2020, or 2021 CBT-100U following the return instructions and/or the guidance of the Technical Bulletins, the managerial member may amend the group's 2019, 2020, and 2021 CBT-100U returns reflecting the change in policy as described above.

NOTE: The Division has revised the Technical Bulletins accordingly.

Last Updated: Wednesday, 04/20/22