State & Local Tax Impacts of COVID-19 for New Jersey – 2020

Thoughtware Alert Published: Dec 11, 2020 | Updated: May 05, 2021
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Information current as of December 31, 2020.

COVID-19 has changed life across the globe. Many taxing jurisdictions are taking mitigating actions to create social distance and aid taxpayers. The following is a running list of actions by jurisdiction, which generally result in additional time to file and/or pay. Further, many jurisdictions have closed their offices to in-person use by taxpayers and suspended their audit and administrative functions. This alert doesn’t cover similar waivers from local-level taxing authorities. These developments continue to quickly evolve; check with your BKD Trusted Advisor or visit our COVID-19 Resource Center for current information as needed.

Information Specific to New Jersey

  • New Jersey announced the state corporate income, individual income, and corporation business tax filing deadline will be extended to July 15 from April 15.
    • Governor’s Press Release, April 1, 2020.
  • New Jersey’s legislative COVID-19 mitigation extends the gross income tax (GIT) and corporation business tax (CBT) filing and payment deadlines to July 15, 2020, without interest or penalties. The extension applies to GIT and CBT returns and payments with original due dates of April 15, 2020, including corporate, individual, and partnership returns and quarterly payments with this due date. The extension doesn’t apply to fiscal-year taxpayers. The bill also extends the statute of limitations for the DOR to assess GIT and CBT to 90 days after the conclusion of the New Jersey COVID-19 state of emergency, but no corresponding change is made to the statute of limitations for refunds. Further, the DOR isn’t required to pay interest on overpayments for six months after the conclusion of the COVID-19 state of emergency. Finally, the bill extends the end of the state’s fiscal year by three months from June 30, 2020, to September 30, 2020.
    • S.B. 2338, effective April 14, 2020.
    • New Jersey DOR Notice, April 17, 2020.
  • New Jersey announced the automatic extension to April 15, 2020, for 2019 corporation business tax returns for fiscal-year corporate tax filers with accounting periods ending between July 31, 2019, and November 30, 2019. The DOT provided that: 1) if taxpayers submit an application for further extension of time to file, the due dates would be May 15, June 15, July 15, August 15, and September 15; 2) estimated payments with an original due date of April 15 are extended to July 15 to maintain consistency with the federal tax extensions; and 3) the extension applies only to the return filings and doesn’t extend the time to make all required payments except for estimated tax payments.
    • New Jersey Division of Taxation Notice, April 14, 2020.
  • New Jersey is providing property tax relief by allowing municipalities to extend the grace period until June 1 for second-quarter calendar-year and fourth-quarter fiscal-year tax payments that are due May 1 and restricting municipalities to conduct an accelerated tax sale with respect to the installment for payment of fourth-quarter fiscal-year taxes if the grace period is instituted.
    • Governor’s Executive Order No. 130, April 28, 2020.
  • New Jersey clarified that sales tax nexus won’t be created by telecommuters temporarily working within New Jersey during the COVID-19 pandemic as long as sales in New Jersey remain below the thresholds for nexus provided by N.J. Rev. Stat. §54:32B-3.5(a). For withholding and individual income tax purposes, New Jersey sourcing rules dictate that income is sourced based on where the service or employment is performed based on a day’s method of allocation. However, during the temporary period of the COVID-19 pandemic, wage income will continue to be sourced as determined by the employer in accordance with the employer’s jurisdiction.
    • New Jersey DOR FAQs, May 6, 2020.
  • New Jersey legislation authorizes the Director of the Division of Local Government Services to extend any deadlines applicable to local government units with respect to the issuance of any tax bill, except for quarterly tax installment dates, during an emergency period. It also permits municipalities to institute an extended grace period for the first $10,000 due and payable for the tax quarter and extend payment dates by a municipality due to a county, school district, or any other taxing district, equal to the number of days of the statutory extended grace period.
    • New Jersey A.B. 3969, effective May 15, 2020.
  • New Jersey clarified that for sales tax purposes, a surcharge for COVID-19 precaution and/or prevention costs included on customers’ invoices is subject to sales tax depending on the taxability of the service provided or the product sold in the transaction. Thus, if a service or product a business is offering is subject to sales tax, the COVID-19-related surcharge also is subject to tax, and vice versa.
    • New Jersey DOR Notice, July 24, 2020.
  • New Jersey announced the extension of deadlines to file individual income, corporate income, trust income, and sales and use tax refund or credit claim until 90 days after the last day of the COVID-19 public health emergency and that the extension is available if the statutory deadline for filing the claim is on or after March 9 and within 90 days of the end of the public health emergency. 
    • New Jersey DOR Notice, August 17, 2020.
  • New Jersey extended the filing deadline for the 2019 corporate business tax to November 16 (from October 15). 
    • Governor’s Executive Order No. 189, October 15, 2020.

For more information, reach out to your BKD Trusted Advisor or use the Contact Us form below.

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