Reed Smith Client Alerts

In a decision released today, the Tax Court of New Jersey once again ruled in National Auto Dealers Exchange, L.P. v. Director, Division of Taxation,1 that partnerships are not taxable entities for purposes of New Jersey’s corporate income tax (known as the corporation business tax or “CBT”).

Today’s decision—on a motion for reconsideration from the Division of Taxation (“Division”)—affirms the court’s previous ruling from February. A copy of the decision is available here.

Background and February Ruling

National Auto Dealers Exchange, L.P. (“NADE”) was a Delaware limited partnership that did business in New Jersey. Its limited partner—Manheim NJ Investments, Inc. (“Manheim”)—consented to nexus with New Jersey. Manheim effectuated its consent by executing Form NJ-1065E (Nonresident Partner’s Statement of Maintaining a Regular Place of Business in New Jersey), a copy of which it provided to NADE. Because it consented to nexus, Manheim directly paid New Jersey income tax on its distributive share of income from the partnership.