ASSEMBLY, No. 941

STATE OF NEW JERSEY

Introduced Pending Technical Review by Legislative Counsel

PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION

By Assemblymen KRAMER and RUSSO

An Act allowing certain corporations to file combined tax returns under the corporation business tax, supplementing P.L.1945, c.162 (C.54:10A-1 et seq.).

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. a. A parent corporation and its subsidiary or subsidiaries over which the parent corporation has substantial control or two or more corporations over which the same interest has substantial control may elect to file a combined return, subject to the qualifications of this section. A corporation doing business entirely within this State may file a combined return with a corporation doing a multistate business. Two or more corporations doing a multistate business may file a combined return. The election to file a combined return or separate returns shall be made on an original and timely return, and may not be changed for the filing period after the return is filed. Once an election is made to file a combined return, that election shall be adhered to until permission is granted by the Director of the Division of Taxation to file separate returns.

    All corporations included in a combined return shall be subject to the Corporation Business Tax Act (1945), P.L.1945, c.162. All corporations included in a combined return shall use the same accounting year.

    b. For the purposes of this section:

    "Combined return" means a single return for two or more corporations in which:

    (1) New Jersey taxable income or loss is computed separately for each corporation;

    (2) Allocable income is allocated separately for each corporation;

    (3) Apportionable income or loss is computed, utilizing separate factors for each corporation; and

    (4) Income or loss as computed pursuant to this subsection is combined and reported on a single return for the controlled group.

    "Substantial control" means the ownership of a least 80% of the total combined voting power of all classes of stock.

    2. This act shall take effect immediately and section 1 shall apply to elections made through returns timely filed on and after its enactment.

STATEMENT

    This bill allows certain corporations to file combined corporation business tax returns. Currently, the corporation business tax does not permit corporations to file a combined return. A taxpayer filing a consolidated federal return must complete its New Jersey corporation business tax return as if it had filed its federal return on a separate basis. This bill allows corporations that are related to each other through common ownership to elect to file combined returns as an incentive to expand and develop further in New Jersey.

Allows certain corporations to file combined corporation business tax returns.