N.J. Stat. § 54:50-49

Current through L. 2024, c. 87.

Section 54:50-49 - Adjustment reports, partnership-level audit, administrative adjustment request

Reporting Federal Adjustments - Partnership-Level Audit and Administrative Adjustment Request

a. Except for adjustments required to be reported for federal purposes in the partnership return for the adjustment year, and the distributive share of adjustments that have been reported as required under section 7 of P.L.2022, c.133 (C.54:50-48), partnerships and partners shall report final federal adjustments arising from a partnership-level audit or an administrative adjustment request and make payments as required under this section.

b. State Partnership Representative.

(1) With respect to an action required or permitted to be taken by a partnership under this section and a proceeding under R.S. 54:49-18 with respect to that action, the State partnership representative for the reviewed year shall have the sole authority to act on behalf of the partnership, and the partnership's direct partners and indirect partners shall be bound by those actions.

(2) The State partnership representative for the reviewed year is the partnership's federal partnership representative unless the partnership designates in writing another person as its State partnership representative.

(3) The division may establish reasonable qualifications for and procedures for designating a person, other than the federal partnership representative, to be the State partnership representative.

c. Reporting and Payment Requirements for Partnerships Subject to a Final Federal Adjustment and their Direct Partners. Final federal adjustments subject to the requirements of this section, except for those subject to a properly made election under subsection d. of this section shall be reported as follows:

(1) No later than 90 days after the final determination date, the partnership shall:

(a) file a completed federal adjustments report, including information as required by the director, with the division;

(b) notify each of its direct partners of their distributive share of the final federal adjustments including information as required by the director;

(c) file an amended New Jersey Form 1065 as required under N.J.S. 54A:8-7 and pay the amount required; and

(d) file an amended composite return for direct partners and pay the additional amount that would have been due had the final federal adjustments been reported properly as required.

(2) No later than 180 days after the final determination date, each direct partner that is taxed under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., or Corporation Business Tax Act (1945), P.L. 1945, c.162 (C.54:10A-1 et seq.), shall:

(a) file a Federal Adjustments Report reporting their distributive share of the adjustments reported to them under subparagraph (b) of paragraph (1) of subsection c. of this section as required under this section or N.J.S. 54A:8-7; and

(b) Pay any additional amount of tax due as if final federal adjustments had been properly reported, plus any penalty and interest due under N.J.S. 54A:9-5, N.J.S. 54A:9-6, R.S. 54:49-3, or R.S. 54:49-4.

d. Election - Partnership Pays. Subject to the limitations in paragraph (3) of this subsection, an audited partnership making an election under this section shall:

(1) no later than 90 days after the final determination date, file a completed Federal Adjustments Report, including information as required by the director, and notify the division that it is making the election under this section;

(2) no later than 180 days after the final determination date, pay an amount, determined as follows, in lieu of taxes owed by its direct and indirect partners:

(a) exclude from final federal adjustments the distributive share of these adjustments reported to a direct exempt partner not subject to tax under section 3 of P.L. 1945, c.162 (C.54:10A-3).

(b) for the total distributive shares of the remaining final federal adjustments reported to direct corporate partners subject to tax under section 2 of P.L. 1945, c.162 (C.54:10A-2), apportion and allocate such adjustments as provided under sections 6 through 10 of P.L. 1945, c.162 (C.54:10A-6 through C.54:10A-10), section 19 of P.L.2018, c.48 (C.54:10A-4.7) and subsection a of sections 3 through 4 of P.L.2001, c.136 (C.54:10A-15.6. through C.54:10A-15.7) and multiply the resulting amount by the highest tax rate under section 5 of P.L. 1945, c.162 (C.54:10A-5);

(c) for the total distributive shares of the remaining final federal adjustments reported to nonresident direct partners subject to tax under the "New Jersey Gross Income Tax Act,"N.J.S. 54A:1-1 et seq., determine the amount of such adjustments which is New Jersey source income under paragraph (3) of subsection (a) of N.J.S. 54A:5-8 and multiply the resulting amount by the highest tax rate under N.J.S. 54A:2-1;

(d) For the total distributive shares of the remaining final federal adjustments reported to tiered partners:

(i) determine the amount of such adjustments which is of a type that it would be subject to sourcing to New Jersey under paragraph (3) of subsection (a) of N.J.S. 54A:5-8 and then determine the portion of this amount that would be sourced to the State applying these rules;

(ii) determine the amount of such adjustments which is of a type that it would not be subject to sourcing to New Jersey by a nonresident partner under subsection (c) of N.J.S. 54A:5-8;

(iii) determine the portion of the amount determined in subsubparagraph (ii) of this subparagraph that can be established, under regulation issued by the division, to be properly allocable to nonresident indirect partners or other partners not subject to tax on the adjustments; or that can be excluded under procedures for modified reporting and payment method allowed under subparagraph (f) of this paragraph;

(e) multiply the total of the amounts determined in subsubparagraphs (i) and (ii) of this subparagraph reduced by the amount determined in subsubparagraph (iii) of this subparagraph by the highest tax rate under N.J.S. 54A:2-1;

(f) for the total distributive shares of the remaining final federal adjustments reported to resident direct partners subject to tax under the "New Jersey Gross Income Tax Act,"N.J.S. 54A:1-1 et seq., multiply that amount by the highest tax rate under N.J.S. 54A:2-1;

(g) add the amounts determined in subparagraphs (b), (c), (e), and (f) of this paragraph, along with penalty and interest as provided in N.J.S. 54A:9-5, N.J.S54A:9-6, R.S. 54:49-3, or R.S. 54:49-4.

(3) Final federal adjustments subject to this election exclude:

(a) the distributive share of final audit adjustments that are required to be included in the unitary business income of any direct or indirect corporate partner, provided that the audited partnership can reasonably determine this; and

(b) any final federal adjustments resulting from an administrative adjustment request.

(4) An audited partnership not otherwise subject to any reporting or payment obligation to New Jersey that makes an election under this subsection consents to be subject to New Jersey laws related to reporting, assessment, payment, and collection of New Jersey tax calculated under the election.

e. Tiered Partners. The direct and indirect partners of an audited partnership that are tiered partners, and all of the partners of those tiered partners that are subject to tax under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., or Corporation Business Tax Act (1945), P.L. 1945, c.162 (C.54:10A-1 et seq.), are subject to the reporting and payment requirements of subsection c. of this section and the tiered partners are entitled to make the elections provided in subsections d. and f. of this section. The tiered partners or their partners shall make required reports and payments no later than 90 days after the time for filing and furnishing statements to tiered partners and their partners as established under section 6226 of the federal Internal Revenue Code (26 U.S.C. s.6226) and the regulations thereunder. The division may adopt regulations to establish procedures and interim time periods for the reports and payments required by tiered partners and their partners and for making the elections under this section.

f. Modified Reporting and Payment Method. Under procedures adopted by and subject to the approval of the division, an audited partnership or tiered partner may enter into an agreement with the division to utilize an alternative reporting and payment method, including applicable time requirements or any other provision of this section, if the audited partnership or tiered partner demonstrates that the requested method will reasonably provide for the reporting and payment of taxes, penalties, and interest due under the provisions of this section. Application for approval of an alternative reporting and payment method must be made by the audited partnership or tiered partner within the time for election as provided in subsection d. or e. of this section, as appropriate.

g. Effect of Election by Audited Partnership or Tiered Partner and Payment of Amount Due.

(1) The elections made pursuant to subsections d. and f. of this section are irrevocable, unless the division, in its discretion, determines otherwise.

(2) If properly reported and paid by the audited partnership or tiered partner, the amount determined in paragraph (2) of subsection d. of this section, or similarly under an optional election under subsection f. of this section will be treated as paid in lieu of taxes owed by its direct and indirect partners, to the extent applicable, on the same final federal adjustments. The direct partners or indirect partners may not take any deduction or credit for this amount or claim a refund of the amount in this State. Nothing in this subsection shall preclude a direct resident partner from claiming a credit against taxes paid to this State pursuant to N.J.S. 54A:4-1, any amounts paid by the audited partnership or tiered partner on the resident partner's behalf to another state or local tax jurisdiction in accordance with the provisions of N.J.S. 54A:4-1.

h. Failure of Audited Partnership or Tiered Partner to Report or Pay. Nothing in this section prevents the division from assessing direct partners or indirect partners for taxes they owe, using the best information available, in the event that a partnership or tiered partner fails to timely make any report or payment required by this section for any reason.

N.J.S. § 54:50-49

Added by L. 2022, c. 133, s. 8, eff. 12/22/2022.