NJ Composite Tax Return Policy Change

On July 16, 2013, the NJ Division of Taxation issued guidance for entities filing composite tax returns (Form NJ-1080C).  Taxpayers with NJ ‘sourced income’ of $250,000 or more will apply the highest tax rate.  The previous guidance stated that taxpayers with NJ ‘income’ of $250,000 or more will apply the highest tax rate.  Removing the word ‘sourced’ may have a significant impact on some taxpayers.

The Gross Income Tax Audit Branch will be issuing revised notices to any NJ-1080C filers that recently received a notice using income instead of NJ sourced income. Filers that paid an assessment will be issued refunds. 

If you have questions please contact the Gross Income Tax Audit Branch, Attn: Dan Nagle P.O. Box 288, Trenton, NJ 08695. The auditor that issued the assessment contact information is included with the notice so you can also reach out directly to the auditor for assistance.

If the entity paid the highest rate on income for taxpayers that did not have ‘sourced income’ of $250,000 or more, we recommend filing a refund claim for all open years under statute.  The NJ Gross Income Tax Statute is three years.

To read more about this policy change, please visit the State of New Jersey Division of Taxation website: Income Tax Rate For The NJ-1080C, Composite Return. 

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