SENATE, No. 577

STATE OF NEW JERSEY

INTRODUCED JANUARY 29, 1996

By Senators KYRILLOS and INVERSO

An Act allowing certain corporations to file consolidated 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 the 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 consolidated return, subject to the provisions of this section. A corporation conducting business entirely within this State may file a consolidated return with a corporation conducting business in more than one state. Two or more corporations conducting business in more than one state may file a consolidated return. The election to either file a consolidated return or to file 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 consolidated return, that election may not be revoked except by permission of the Director of the Division of Taxation to file separate returns.

     A consolidated return may be filed only by corporations subject to the Corporation Business Tax Act (1945), P.L.1945, c.162(C.54:10A-1 et seq.). All corporations included in a consolidated return shall use the same accounting year.

    b. For the purposes of this section:

    "Consolidated 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) Allocated net income or loss is computed, by using separate legal entity factors for each corporation; and

    (3) Allocated net income or loss as computed pursuant to paragraph (2) of this subsection is consolidated and reported on a single return for the controlled group.

    "Substantial control" means the ownership of at 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 consolidated corporation business tax returns. Currently, the corporation business tax does not permit corporations to file a consolidated 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 consolidated returns as an incentive to expand and develop further in New Jersey.

Allows certain corporations to file consolidated corporation business tax returns.