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New Jersey Enacts Voluntary Disclosure Initiatives for Partnerships and Taxpayers Having “Intangible Asset Nexus” with New Jersey


2/26/14

Synopsis

The New Jersey Division of Taxation (“Division”) announced that, beginning on March 15, 2014 and continuing through May, 15, 2014, certain taxpayers who come forward voluntarily to satisfy their state tax reporting and payment obligations will receive favorable tax treatment. 

Issue

Partnerships deriving income from New Jersey sources are generally required to pay a $150 filing fee per partner and are also generally required to withhold income tax on behalf of non-resident partners. Similarly, corporations deriving income from the use of intangible assets in New Jersey are required to file New Jersey Corporate Business Tax Returns and pay the appropriate tax due. 

In announcing the “Partnership Tax & Partner Fees” and “Intangible Asset Nexus” Initiatives, the Division noted that it continues to find noncompliance with both of the filing requirements described above. In order to participate in the Initiatives, taxpayers must submit a written request to the Division. 

In addition to the standard procedures for entering into a voluntary disclosure agreement (VDA) for taxpayers seeking to participate in the Initiatives, the following principles will apply:

  • The look-back period is limited to periods beginning on or after January 1, 2010.
  • The taxpayer must file all required tax returns and remit payment for taxes due within 45 days of the execution of the VDA.
  • The Division will waive all penalties.
  • The taxpayer will remit payment of interest within 30 days of assessment.
  • All returns that are filed remain subject to audit examination with respect to issues not specifically covered under the terms of the VDA.
     

What Does CohnReznick Think?
Participating in a voluntary disclosure program provides taxpayers with an opportunity to limit exposure to tax liabilities and penalties that may be otherwise due. Taxpayers should review New Jersey activities and filings to determine whether participating in the 2014 voluntary disclosure initiative is beneficial to them.

Contact

For more information, please contact Harry Tuul, Senior Manager, State and Local Tax Practice, at 703-744-6720, or Patrick Duffany, Partner and State and Local Tax Practice Leader, at 860-368-3607.


Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing, or recommending to another party any tax related matters.

This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

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