Reed Smith Client Alerts

New Jersey Governor Phil Murphy and legislative leaders avoided a government shutdown by reaching a compromise on various tax measures.  The new legislation makes a number of changes to New Jersey’s corporation business tax (“CBT”), including requiring taxpayers to file on a unitary-combined basis beginning in 2019 and applying market-based sourcing for services beginning in 2019.  In addition, the legislation provides for a new amnesty program for 2009–2017 tax liabilities.

Authors: David J. Gutowski Kyle O. Sollie Matthew L. Setzer

Background

Over the past several months, New Jersey Governor Phil Murphy and legislative leaders had expressed different views and proposals concerning the State budget.  The Legislature had passed what it saw as a balanced budget, including bills that amended various provisions of the CBT Act.  (See our prior coverage of one of those bills.)  But Governor Murphy decried the bills for not providing a “sustainable” revenue source and threatened to veto them.1 

With a government shutdown looming, Governor Murphy and the legislative leaders met for over six hours on Saturday.  The end result was a budget that includes sweeping changes to the CBT and other significant changes to incorporate recommendations from the Governor.