Tax Law Updates | New Statutes, Regulations, and Rulings
October 19, 2012
NJ Department of the Treasury Rolls Out Nexus Initiative to Encourage Voluntary Disclosure from Firms Deriving Income from Assets in the State
Intangible Asset Nexus Initiative
No. ______ , 9/18/2012
Recognizing that there are companies that have nexus with New Jersey as a result of having derived income from the use of intangible assets in this State that have not fulfilled their tax filing responsibilities the Division of Taxation will be offering a limited voluntary disclosure initiative.
Beginning on September 15, 2012, and running through January 15, 2013, companies that own intangible assets and derived income from the use of those assets in New Jersey will have the opportunity to come forward and voluntarily comply with their corporation business tax filing requirements.
In addition to the standard procedures and requirements for voluntary disclosure agreements (VDAs) for business taxes the following principles will apply:
- The look back period will be limited to the periods beginning after December 31, 2003, or the date business commenced, whichever is later. Returns for prior periods will not be required.
- The taxpayer must file all required returns and remit payment of the full tax liability reported within 90 (ninety) days of the execution of its VDA.
- The Division will waive all penalties except that a 5% amnesty penalty will be assessed for all returns due prior to February 1, 2009.
- The taxpayer will remit payment of interest and the amnesty penalty within 30 (thirty) days of assessment.
- The Division will consider discretionary throwout relief by averaging a throwout receipts fraction with a non-throwout receipts fraction.
- Operating companies or those companies that have paid royalties and added same back to their New Jersey entire net income may submit amended returns for any period for which the statute of limitations remains open in order to claim an exception to the add back.
- All returns will be subject to routine audit with respect to issues not specifically covered in the VDA.
- Any settlement with respect to the throwout issue will be binding on the taxpayer and the Division. The taxpayer may not file a claim for refund in the event that the application of any future Court decisions would suggest a different result.
- If the disclosure candidate does not wish to settle the throwout issue the Division will hold the issue for a future determination. The Division would conduct an audit on the returns filed under the disclosure agreement to make the required throwout determination.
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