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New Jersey Tax Handbook

Standing Order with Automatic Update Service

Jeffrey D. Gordon, Robert F. Connolly, Stacy S. Cohen, Margaret Wilson, Alan Rubin, Susan K. Dromsky-Reed


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Your Guide to State and Local Tax Laws

Written by a highly regarded team of authors, the New Jersey Tax Handbook contains the highest level of detail and a concise structure. This publication is the preferred tax handbook for many accountants, tax attorneys, and business professionals. This revised edition includes information on numerous new topics such as civil union partnerships, digital property, and parking services. Citations on significant court decisions and statutes are also provided, summarizing the many nuances for various taxes.

Table of Contents

Chapter 1: General Administrative Provisions for New Jersey State Taxes

Chapter 2: Gross Income Tax

Chapter 3: New Jersey Sales and Use Tax

Chapter 4: New Jersey Property Taxation

Chapter 5: New Jersey Corporation Business Tax



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  • Availability: Available
  • Brand: New Jersey Law Journal
  • Product Type: Books
  • Edition: 0
  • ISBN: 978-1-62881-235-0
  • Pub#/SKU#: JTAX17
  • Pub Date: 12/29/2016



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  • Jeffrey D. Gordon

Jeffrey D. Gordon is a shareholder in the law firm of Archer & Greiner, P.C. He is a state and local tax practitioner and is Chairman of the firm's Real Estate Tax Appeal Group.

Mr. Gordon is a former New Jersey Tax Court law clerk to Presiding Judge Michael A. Andrew, Jr., retired. Since completing his Tax Court clerkship, his practice has involved the handling of complex commercial and industrial tax appeals in New Jersey, Pennsylvania, New York and other East Coast states. He also advises clients about potential property tax liability for property being considered for purchase and/or development. In addition, Mr. Gordon prepares articles regarding tax appeal procedures and valuation theory, and has lectured at seminars for the Institute for Professionals in Taxation, the International Association of Assessing Officers, the New Jersey County Tax Board Administrators Annual Conference, the Appraisal Institute, the New Jersey League of Municipalities, taxpayer groups, accountants, and the bar.

Mr. Gordon is a Certified Tax Assessor, a member of the New Jersey Supreme Court Committee on the Tax Court, an Affiliate Member of the Appraisal Institute and a member of the Executive Committee of the Tax Section of the New Jersey State Bar Association.

Mr. Gordon graduated with a B.S. from Duquesne University in Pittsburgh, Pennsylvania, and received his

J.D. from the University of Cincinnati College of Law.



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  • Robert F. Connolly

Compliance Group, LLC

During 2005, Rob Connolly formed BC Compliance Group, LLC (BCC) by merging his expertise with that of his partners former firm, Progressive Economic Concepts, LLC. Their combined knowledge, expertise and integrity provide an average of 17 plus years of experience and dedication to their clients. Mr. Connolly and his team are centrally located in Matawan, NJ and are focused on providing expense recovery, reduction and management services in the areas of contract compliance, real estate accounting, unclaimed property and taxation utilizing a risk-free benefit sharing model. In addition to their in-house services, over the years BCC has developed relationships with high quality professionals that provide similar services in the areas of accounts payable and telecommunication auditing.

Over the past 15 plus years, Mr. Connolly himself has specialized in the field of state and local taxation, contract compliance, unclaimed property and problem resolution, serving clients, both for-profit and not-forprofit, in a variety of industries including Technology, Manufacturing, Transportation, Retail, Financial and Health Care. He and the professionals that he has aligned himself with have been highly successful, both domestically and internationally, in working with clients to help them realize millions of dollars in recoveries and savings while also guiding them to continue to realize these savings into the future.

Prior to starting BCC, Mr. Connolly had founded and served as the Managing Director of Contract Compliance and Taxation for an international earnings enhancement firm. Mr. Connollys prior experience includes serving as a Tax Manager for various regional and Big 5 accounting firms, as well as working within industry for a Dutch multi-national manufacturing corporation.

Mr. Connolly has a diverse background, providing expertise to clients in areas such as audit/problem negotiation and resolution, reverse audits (sales and use taxes), voluntary disclosures, credit studies, unclaimed property (i.e., escheat and abandoned property), tax planning and special projects. In addition, he is highly skilled in professional staff instruction and conducting educational training seminars for clients and staff. Mr. Connolly is also an accomplished author on tax and contract audit related matters.

Mr. Connolly was recently appointed to the Monmouth County Workforce Development Board. He will be working with the Board and the Monmouth County Board of Chosen Freeholders to plan for and establish policy that will allow the Monmouth County Workforce Development System to continue to develop and sustain a unified, labor market driven workforce that will serve job seekers and employers in a cost efficient, results oriented manner.

Mr. Connolly is a graduate of the PACE University, Lubin School of Business, where he received a Master of Science in Taxation. He also holds a Bachelor of Science in Accounting from William Patterson University. Mr. Connolly, his wife Gina and their two children, Matthew and Olivia, reside in Marlboro, New Jersey.

Mr. Connolly can be reached at (732) 441-0653 or via e-mail at rconnolly@bccompgroup.com.



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  • Stacy S. Cohen

Stacy S. Cohen is Counsel at Dilworth Paxson LLP in Cherry Hill, New Jersey. Ms. Cohen specializes in Environmental Law, having represented a full spectrum of clients ranging from individuals to Fortune 100 companies and state and national trade associations on environmental regulatory compliance and litigation matters, as well as state environmental legislative initiatives. Ms. Cohen also has an active insurance coverage practice, representing policy holders seeking coverage on environmental claims and providing environmental risk management counseling.

Ms. Cohen is a graduate of Cornell University School of Hotel Administration, and Seton Hall University School of Law. She is a member of the Bars of New Jersey, the United States District Court for the District of New Jersey and the United States Court of Appeals for the Third Circuit. Prior to entering private practice, Ms. Cohen clerked for the Honorable Edwin Stern, Presiding Judge of the Appellate Division of the Superior Court of New Jersey.



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  • Margaret Wilson

Margaret C. Wilson is state and local tax counsel for Verizon in Basking Ridge, New Jersey.

She is a member of the editorial board of the Journal of Multistate Taxation and Incentives and frequently speaks and writes on taxation topics. Ms. Wilson is presently the Chair of the Taxation Section of the New Jersey State Bar Association.

Ms. Wilson earned her bachelors degree from the University of Michigan, cum laude, and her J.D. from the University of Michigan Law School, cum laude. She earned her LL.M. from New York University Law School and is admitted to practice in New Jersey and New York.

Ms. Wilson may be reached at Margaret.C.Wilson@ verizon.com.

 



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  • Alan Rubin

Alan Rubin is a shareholder in the Tax and Corporate Departments of the law firm of Cole, Schotz, Meisel, Forman & Leonard, P.A. His practice concentrates on transactional and tax matters with particular emphasis on mergers and acquisitions, secured and revolving credit facilities, joint ventures and reorganizations. He also has extensive experience in implementing tax, business and estate planning strategies for closely held businesses and venture capital.

Mr. Rubin has addressed symposia sponsored by the New Jersey Bar Association, New Jersey Society of Certified Public Accountants and local business groups. He has lectured to the Master of Business Administration programs at the Wharton School of the University of Pennsylvania and the Graduate School of Business of Columbia University. He has served on several committees of the New Jersey Bar Association and New Jersey Society of Certified Public Accountants. In addition, Mr. Rubin was appointed to the Citizens Financial Advisory Committee of Millburn Township, New Jersey and is a Member of the Board of Trustees of the Greater North Jersey Chapter of the National Multiple Sclerosis Society.

Mr. Rubin is a certified public accountant and is admitted to the bars of New Jersey, New York, Pennsylvania, the District of Columbia and the United States Tax Court. Mr. Rubin earned both bachelor's, magna cum laude, and master's degrees from the Wharton School of the University of Pennsylvania. He earned his juris doctorate, magna cum laude, from the University of Pittsburgh School of Law and an advanced LL.M (in Taxation) degree from the New York University School of Law. Mr. Rubin has been awarded the highest rating (AV) for his professionalism and the quality of his legal work from Martindale Hubbell, the premier directory of legal professionals.  Mr. Rubin has been selected to be included in the Best Lawyer's In America directory and as a New Jersey Super Lawyer for the current and prior years.

Mr. Rubin may be reached at (201) 525-6325 or arubin@coleschotz.com.



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  • Susan K. Dromsky-Reed

Schorr & Solis-Cohen

Susan K. Dromsky-Reed is a Partner in the Private Client Services Group of Wolf, Block, Schorr & Solis-Cohen. She concentrates her practice in estate planning, tax, charitable giving techniques, and business succession planning for closely held businesses.

Ms. Dromsky-Reed received her J.D., with honors, from George Washington University in 1992, her LL.M in Taxation from New York University in 1999 and her B.A., magna cum laude, with honors in Mathematics from Hamilton College in 1986. She served as a law clerk for the Honorable Robert J. Passero, Superior Court of New Jersey, Passaic County.

She is a member of the New Jersey State Bar Association and the Essex County Estate Planning Council. She is admitted to practice in New Jersey and the U.S. District Court, District of New Jersey.


Tax Handbook

TABLE OF CONTENTS

CHAPTER 1: GENERAL ADMINISTRATIVE

PROVISIONS FOR NEW JERSEY STATE TAXES

DIRECTOR, DIVISION OF TAXATION . . . . . . . . . . . . . . . . . . . . 2

CLOSING AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  2

COMPROMISES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   2

EXAMINATION OF TAXPAYER'S RECORDS . . . . . . . . . . . . . . . .           3

HEARINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     4

DIRECTORS RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                4

PERSONAL LIABILITY OF TAXPAYER TAX LIENS WARRANT.5

AGREEMENTS WITH OTHER STATES . . . . . . . . . . . . . . . . . . . . . 5

COLLECTION OF OTHER STATES TAXES IN

NEW JERSEY COURTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    8

DELINQUENT CORPORATIONS . . . . . . . . . . . . . . . . . . . . . . . . .              9

ASSESSMENTS BY THE DIRECTOR OF THE

DIVISION OF TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   9

LIMITATIONS ON ASSESSMENT . . . . . . . . . . . . . . . . . . . . . . . .              10

PROTESTS; HEARING BY THE DIRECTOR . . . . . . . . . . . . . . . . . 11

PAYMENT OF TAX REGULAR ASSESSMENTS . . . . . . . . . . . .            12

PAYMENT OF TAX IN REGARD TO ARBITRARY OR

JEOPARDY ASSESSMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .                    12

APPEALS TO THE TAX COURT . . . . . . . . . . . . . . . . . . . . . . . . .                12

REFUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      14

TAX CLEARANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    15

INTEREST ON DELINQUENT TAXES . . . . . . . . . . . . . . . . . . . . .  16

WAIVER OF PENALTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  17

PENALTIES ON DELINQUENT TAXES . . . . . . . . . . . . . . . . . . . .  17

CRIMINAL PENALTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 19

WAIVER OF PENALTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 20

CERTIFICATE OF DEBT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  20

DAMAGE ACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    20

TABLE OF CONTENTS

CHAPTER 2: GROSS INCOME TAX

IMPOSITION OF GROSS INCOME TAX ACT . . . . . . . . . . . . . .               24

COMPUTING YOUR NEW JERSEY GROSS

INCOME TAX BASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         26

CATEGORIES OF NEW JERSEY GROSS INCOME . . . . . . . . . . . 26

INCOME EXCLUDED FROM GIT . . . . . . . . . . . . . . . . . . . . . . .                 33

DEDUCTIONS AND EXEMPTIONS. . . . . . . . . . . . . . . . . . . . . .                 36

DEFINING THOSE SUBJECT TO GIT. . . . . . . . . . . . . . . . . . . . .                38

TAX RATES/CHARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     43

EXEMPTIONS AND TAX CREDITS . . . . . . . . . . . . . . . . . . . . . .                44

EARNED INCOME CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . .                   48

PROPERTY TAX DEDUCTION VS. PROPERTY TAX CREDIT . . . .         50

HEALTH ENTERPRISE ZONES . . . . . . . . . . . . . . . . . . . . . . . . .                  51

CALCULATING THE HEZ BENEFIT . . . . . . . . . . . . . . . . . . . . . .   53

FILM & TELEVISION PRODUCTION CREDIT . . . . . . . . . . . . . . .            59

TAXPAYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . .                 60

ENTITIES NOT SUBJECT TO GIT . . . . . . . . . . . . . . . . . . . . . . .                 61

ESTIMATED TAX PAYMENTS AND ANNUAL RETURNS . . . . . .          62

ALTERNATIVE FILING METHODS . . . . . . . . . . . . . . . . . . . . . .                65

NONRESIDENT COMPOSITE RETURNS . . . . . . . . . . . . . . . . . .               69

PARTNERSHIPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      71

UNREGISTERED / UNINCORPORATED CONSTRUCTION

CONTRACTOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          72

TRANSPORTATION FRINGE BENEFIT . . . . . . . . . . . . . . . . . . . .             73

QUALIFIED INVESTMENT FUNDS . . . . . . . . . . . . . . . . . . . . . .                73

DEFICIENCIES, PENALTIES, REFUNDS, AUDITS, APPEALS . . . .         73

FOIL AND SOIL PROGRAMS. . . . . . . . . . . . . . . . . . . . . . . . . .                   74

CHAPTER 3: NEW JERSEY SALES

AND USE TAX

ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    76

HISTORY OF TAX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     76

TRANSACTIONS SUBJECT TO TAX . . . . . . . . . . . . . . . . . . . . .                76

TABLE OF CONTENTS

RETAIL SALES OF TANGIBLE PERSONAL PROPERTY AND

DIGITAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        76

TAXABLE SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   78

MEALS SUBJECT TO TAX. . . . . . . . . . . . . . . . . . . . . . . . . . . .                    84

HOTEL ROOM OCCUPANCY . . . . . . . . . . . . . . . . . . . . . . . . .                   85

ADMISSION CHARGES AND MEMBERSHIP FEES . . . . . . . . . . 85

ALCOHOLIC BEVERAGES. . . . . . . . . . . . . . . . . . . . . . . . . . . .                   86

USE TAX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        86

EXEMPT TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .                   88

BASIS OF SALES TAX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   92

BASIS OF USE TAX ON PROPERTY USED OUTSIDE THE STATE         93

BASIS OF TAX INSTALLMENT AND CREDIT SALES AND

BAD DEBTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           93

RATE OF TAX AND BRACKET COLLECTION SCHEDULE . . . . .          94

LEASING AND RENTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    95

EXEMPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      98

EXEMPT ORGANIZATIONS. . . . . . . . . . . . . . . . . . . . . . . . . .                     111

URBAN ENTERPRISE ZONES . . . . . . . . . . . . . . . . . . . . . . . . .                   113

TAXPAYER REGISTRATION REQUIREMENTS . . . . . . . . . . . . . 115

RETURNS AND PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . .                     118

DIRECT PAY PERMITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      120

BORDER STATE AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . .                   120

ASSESSMENT OF TAX . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      121

PENALTIES AND INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . .                   122

STREAMLINED SALES AND USE TAX AGREEMENT

AND AMNESTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            122

PERSONAL LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    123

ADVERTISING ABSORPTION OF TAX . . . . . . . . . . . . . . . . . .                  123

BULK SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         124

EXEMPTION CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . .                    125

RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          126

REFUND CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       126

INTERNET SALES OF MERCHANDISE . . . . . . . . . . . . . . . . . .                 127

ADMINISTRATIVE REMEDIES . . . . . . . . . . . . . . . . . . . . . . . .                   128

SOURCES OF ASSISTANCE TO BUSINESS TAXPAYERS . . . . .            132

TABLE OF CONTENTS

CHAPTER 4: NEW JERSEY PROPERTY TAXATION

QUICK REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      133

PROPERTY SUBJECT TO TAX . . . . . . . . . . . . . . . . . . . . . . . .                    135

ASSESSMENT OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . .                    138

EXEMPTIONS, REBATES AND FARMLAND ASSESSMENTS. . .           145

PAYMENT AND COLLECTION . . . . . . . . . . . . . . . . . . . . . . .                    162

PROPERTY TAX APPEALS. . . . . . . . . . . . . . . . . . . . . . . . . . .                     164

CHAPTER 5: NEW JERSEY CORPORATION

BUSINESS TAX

OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              176

NEW JERSEY TAXATION OF CORPORATE ENTITIES. . . . . . . .            176

IMPOSITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         178

EXEMPT CORPORATIONS . . . . . . . . . . . . . . . . . . . . . . . . . .                     186

WHAT CONSTITUTES DOING BUSINESS IN NEW JERSEY?.             187

BASE AND RATES OF TAX . . . . . . . . . . . . . . . . . . . . . . . . . .                     193

RATE OF TAX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         193

S CORPORATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      195

SMALL BUSINESS CORPORATIONS . . . . . . . . . . . . . . . . . . .                  196

GROSS RECEIPTS TAX ON AMBULATORY CARE FACILITIES .          197

ALTERNATIVE MINIMUM ASSESSMENT COMPONENT . . . . .            197

ENTIRE NET INCOME COMPONENT . . . . . . . . . . . . . . . . . . .                 200

INTANGIBLES/RELATED MEMBER. . . .