P.L. 2018, c. 48, and P.L. 2018, c. 131, collectively mandate combined reporting for tax years ending on and after July 31, 2019 (beginning on and after August 1, 2018, if the managerial member has a 12-month tax year that ends July 31, 2019). Commonly owned companies engaged in a unitary business are required to calculate their Corporation Business Tax on a combined basis.
A combined group is a group of companies that have a common ownership (N.J.S.A. 54:10A-4(aa)) and are engaged in a unitary business (N.J.S.A. 54:10A-4(gg)), if at least one company is subject to New Jersey Corporation Business Tax (N.J.S.A. 54:10A-4(z)). For information on what business entities must be included in a combined group and what business entities are not included in a combined group, see Technical Bulletin TB-86.
As an initial step in implementing combined reporting, the managerial member (N.J.S.A. 54:10A-4(cc)) of each combined group must register with the New Jersey Division of Revenue and Enterprise Services (DORES).
What are the managerial member’s responsibilities?
The managerial member acts as the 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 is also responsible for responding to notices and assessments for its combined group. (N.J.S.A. 54:10A-4.10)
How is the managerial member determined?
If the combined group has a common parent corporation and that common parent corporation is a taxable group member, the common parent corporation must register as the managerial member. If the common parent member is not a taxable member, the combined group must designate a taxable member as its managerial member. The election is for ten tax years.
Registering the managerial member to file and pay for New Jersey combined reporting:
Registration will generate a New Jersey identification number specific to combined reporting. This unique identification number will serve as the combined group’s tax identification number. The managerial member will use it to file the combined return on behalf of the group. The identification number will also serve as the number to which payments will be applied. Overpayments credited to the combined group by a taxpayer on a 2018 CBT-100 or 2018 BFC-1 will be applied to the combined group after the registration process is complete. In addition, once registration is complete, all estimated payments must be made using the combined group’s identification number. The managerial member cannot continue to make the payments under their preexisting tax identification number. Additional information on the estimated tax payments and overpayment credits from 2018 tax returns is forthcoming.
What if your company already has a New Jersey tax identification number and it is currently filing Corporation Business Tax returns?
The managerial member must register in New Jersey to obtain a new identification number that is specific to combined reporting. The managerial member’s preexisting tax identification number cannot be used as the primary identification number for the combined group filing. Also, a company’s Federal Employer Identification Number cannot be used to file any return or payment for the combined group.
Which member of the combined group should make estimated payments?
The managerial member is responsible for making payments on behalf of the group. Even though the managerial member is responsible for paying on behalf of the combined group, each taxable member is jointly and severally liable for the tax due.
For More Information
The Division’s website will continue to be updated as additional information becomes available.