Menu
Tax Notes logo

New Jersey Extends Return Filing Deadline for Corporate Filers 

Posted on Oct. 16, 2020

New Jersey Gov. Phil Murphy (D) has authorized an additional extension of the deadline for filing corporation business tax calendar-year returns.

Under an executive order signed by Murphy October 15, the new deadline for calendar-year returns is November 16. The original April 15 deadline was extended to October 15 under legislation enacted earlier this year to align with federal deadline extensions.

The additional extension is being provided because businesses and tax preparers are still having difficulty filing tax returns on time because of complications arising from the COVID-19 pandemic, which has been further complicated by the state's shift from separate reporting to mandatory unitary combined reporting, according to Murphy's order.

The extension will give businesses more time to comply with 2018 legislation overhauling the corporate business tax. Among other changes made under the bills (A. 4202 and A. 4495), combined reporting is required for privilege periods ending on or after July 31, 2019.

The executive order says, “The transition to combined reporting presents new challenges for tax preparers which are made more severe by the inability of tax preparers to meet with their clients in-person and engage in a line-by-line review and collaborative discussion about the intricacies of the new combined return due to the COVID-19 emergency.”

Under New Jersey law, the managerial member of a combined group can elect to have the group determined on a worldwide basis or an affiliated group basis. If no election is made, then the group is determined on a water’s-edge basis and takes into account the income and allocation factors of only the members with substantial business operations in the United States, with some inclusions and exceptions, according to the executive order. 

In the absence of an extension, combined groups that were unable to file returns on time would have been required to make a water’s-edge election, which would have been unfavorable for some businesses.

Norman Lobins of Deloitte Tax LLP told Tax Notes that taxpayers have also struggled to file their federal returns on time, adding that it’s difficult for businesses to decide which election is more beneficial to them until they have determined how much federal tax they owe. 

Another issue is that the returns have to be filed electronically — a process that isn’t going as smoothly as expected, Lobins said. 

“Hopefully the [New Jersey Division of Taxation] will use this time to streamline that as well,” Lobins added. 

Copy RID