Tax Alert

New Jersey Adopts Broad Nexus Standard

(Aug. 30, 2011)

New Jersey recently modified its nexus regulation to adopt a broad economic nexus standard. The regulation now provides a presumption of nexus if a taxpayer derives receipts from sources or engages in contacts within New Jersey. The regulation also provides that a bank or similar business is subject to New Jersey taxation if it obtains or solicits business or receives gross receipts from New Jersey sources.

The modification to the regulation is consistent with the Division of Taxation’s position articulated in its technical advisory memorandum (TAM-6). TAM-6 states that the broad economic nexus standard would be applied retroactively to tax years beginning on or after Jan. 1, 2002. New Jersey likely will not deviate from the retroactive application of the economic nexus standard set forth in the modified regulation.

Out-of-state businesses, especially financial institutions, should review all of their New Jersey-related activities to identify potential exposure under the new provisions.

Read Crowe’s tax alert regarding TAM-6 here.

For more information on how this might affect you, please contact Chris Hopkins at 212.572.5592 or, Howard Wagner at 502.420.4567 or, or any Crowe Horwath LLP tax professional.

Under U.S. Treasury rules issued in 2005, we must inform you that any advice in this communication to you was not intended or written to be used, and cannot be used, to avoid any government penalties that may be imposed on a taxpayer.

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Chris J. Hopkins