New Jersey has announced that it will be running two voluntary disclosure initiatives to increase compliance with intangible holding companies and partnership reporting.
Both initiatives will run from March 15, 2014 through May 15, 2014. Details of each initiative are as follows:
- Intangible holding companies or operating companies with embedded intangible assets that have nexus with the State of New Jersey and have derived income from the use of its intangible assets located in the State are eligible to come forward and comply with their Corporation Business Tax filing requirements by participating in the VDA. There is a limited lookback period, penalties will be waived and, to the extent that the operating companies filed a return in NJ and added back the intangible expenses, refunds are available for any open periods.
- Partnerships with NJ sourced income that have not filed the required returns and paid the partnership tax due under the Corporation Business Tax or the partner fee due under the Gross Income Tax are eligible to participate in the initiative. There is a limited look back period and penalties all be waived.
New Jersey has historically been a very aggressive state in its discovery activities and believes that there are a significant number of companies that are not in compliance with the Corporation Business Tax and Gross Income Tax filing requirements. Depending on the outcome of the initiatives and the amount of revenue raised, it is likely that it will directly influence the level of the Department of Revenue's discovery activity subsequent to the closing date of each initiative.
Companies that have taken a filing position contrary to the state's filing requirements should consider their eligibility under either limited voluntary disclosure initiative and take advantage of the limited lookback period and penalty abatement to resolve past exposure for New Jersey Corporation Business or Gross Income Taxes.
If you believe you could benefit from either of these initiatives, please contact Thomas Frascella at 215.734.0092 or Email or any other member of Kreischer Miller's state and local tax consulting practice.
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