If your company has operations in New Jersey and other states but does not necessarily have complete or clear tax reporting in New Jersey (and you are dreading it), a new initiative may represent a significant opportunity.
Now (September 2022) through March 2, 2023, the New Jersey Division of Taxation is implementing a voluntary corporate transfer pricing program to expedite the resolution of corporate intercompany pricing issues and provide certainty to taxpayers. The program applies to all taxpayers who have filed corporate income tax returns in the state of New Jersey that are within the statute of limitations and have intercompany transactions that would be subject to adjustment under the applicable laws.
To enter the program, taxpayers must agree in writing by Sept. 15, 2022, to participate and provide all transfer pricing documentation by October 31, 2022. From there, the clock starts ticking. Within 90 days, the department would respond (with a proposal if necessary), and taxpayers would then have 30 days to accept the proposal. If settled, a Closing Agreement would be ratified within 30 days.
This would bring certainty within a year to issues that may have been unclear for much longer. In addition, all penalties would be waived for issues resolved as part of the settlement.
If you are interested in exploring the program, Withum’s dedicated transfer pricing professionals would be happy to assist you. Withum can create critical transfer pricing documentation to support the economic substance of the transactions and ensure the results are consistent with the arm’s length standard of tax regulations.