e-News Article February, 2006

NJ Tax Developments

NJ Corporate Filers: Change in Annual Report Fee

The New Jersey Division of Revenue has discontinued the use of the Form CAR-100 for reporting and payment of New Jersey Corporation Annual reports.

In the past, taxpayers submitted the form on an annual basis with the corporate tax return. New Jersey will now require a separate electronic filing and payment. The filing will be based upon the anniversary date of the creation of the corporation.

Failure to comply will cause the revocation of the corporate charter.

For LLCs, online filing of State Annual Reports is also required.

New Jersey Adoption of Streamlined Sales & Use Tax

Effective October 1, 2005, New Jersey has formally joined a national coalition of states in conforming the New Jersey Sales & Use Tax Act to the provisions of the Streamlined Sales and Use Tax Agreement.

In addition to providing uniform definitions of taxable goods and services, the agreement provides certain administrative relief provisions for determining nexus among member states, and provides a limited amnesty program as outlined below.

Amnesty is available in all states participating as full members or associate members of the Streamlined Sales and Use Tax Agreement.

Full and associate member states will provide amnesty for uncollected or unpaid sales or use taxes to a seller who registers to pay or collect and remit applicable sales or use taxes on sales made to purchasers in the state.

The amnesty will preclude assessment for uncollected or unpaid sales or use taxes together with interest or penalty for sales made during the period the seller was not registered in the state, provided registration occurs within 12 months of the effective date of the state's participation in the Agreement. The amnesty will be granted regardless of "nexus" of the seller if all other requirements are met.

Amnesty is not available for sales and use taxes already paid or remitted to a state or to taxes collected by a seller. Amnesty is applicable only to sales or uses taxes due from a seller in its capacity as a seller and not to sales or use taxes due from a seller in its capacity as a purchaser. No amnesty is available under the Streamlined Sales and Use Tax Agreement for taxes other than sales or use taxes.

A member state may allow amnesty on terms and conditions more favorable to a seller than is required by the Streamlined Sales and Use Tax Agreement.

To obtain amnesty, the seller must agree to register in all full member states of the Streamlined Sales and Use Tax Agreement, if not currently registered. This includes registration in full member states joining the Agreement after the seller's registration. The seller may elect to register in associate member states. The seller is not eligible for amnesty in a member state if the seller:

• Was registered in the member state for the 12 month period preceding the effective date of the state's participation in the Streamlined Sales and Use Tax Agreement; or
• Has received notice of an audit by the member state and the audit is not yet fully resolved, including any related administrative and judicial processes.

Presently, New York, Connecticut and Pennsylvania have NOT yet adopted the streamlined sales and use tax agreement.