2023 Marcum Year-End Tax Guide

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THE MARCUM YEAR-END TAX GUIDE 2023

NOTABLE NEW JERSEY UPDATES New Economic Nexus Threshold For NJ Corporate Business Tax (“CBT”) purposes, the state has adopted economic nexus provisions like those applicable to the state’s sales and use tax regime. A corporation is subject to the CBT if it derives receipts in excess of $100,000 or has more than 200 separate transactions delivered to New Jersey customers. New CBT Return Filing Deadline Establishes the due date of the New Jersey return as the 15th day of the month immediately following the month of the original or extended federal corporate tax return filing due date. For example, the federal corporation tax return (Form 1120) is generally due on the 15th day of the fourth month following the end of the tax year, which for calendar year taxpayers is April 15th of the succeeding year. Under the new rules, the New Jersey CBT return will be due by May 15th.

New Partnership Sales Factor Sourcing Rules Partnerships must now use single sales factor sourcing, consistent with the apportionment rules under the CBT applicable to corporations. The Division of Taxation is working on and will soon release updated tax forms and instructions to reflect this change in apportionment methodology. Furthermore, sales of services must now be sourced to New Jersey using market-based sourcing, which sources receipts to the location where the benefit of the service was received. Note that given the retroactive application of this new provision to January 1, 2023, taxpayers will be relieved from the estimated tax penalty and interest relief. No penalties or interest will accrue for an underpayment of tax due for any provision that creates additional tax liability, provided that for tax periods “ending on and after July 31, 2023, the additional estimated payments shall be made no later than the second next estimated payment due following the enactment…or the second estimated payment due after January 1, 2024, whichever due date is later.”

KEY TAKEAWAYS AND RECOMMENDATIONS 2023 has set the tone for the next year. States have showcased their adaptability by revising tax regulations, understanding the business ecosystem, and crafting policies to foster economic growth. The year has been transformative for SALT, from revamped sourcing rules to emerging economic nexus thresholds. Businesses, investors, and stakeholders must incorporate these changes, strategize accordingly, and anticipate forthcoming shifts. As the curtain falls on this year’s SALT developments, one thing is evident: Staying informed and agile will be the cornerstone of tax compliance and business success in the year to come.