New Jersey: Guidance Issued on Combined Reporting and Banks

The New Jersey Division of Taxation recently issued yet another Technical Bulletin addressing the combined reporting provisions that became effective for privilege periods ending on and after July 31, 2019. The new Bulletin, TB-91, explains how banking corporations that have privilege periods that differ from the managerial member of the combined group should report their income. Under New Jersey law, the managerial member of a combined group can be either a calendar year or a fiscal year taxpayer. However, for New Jersey reporting purposes, banking corporations must file using a calendar year privilege period. The managerial member’s privilege period is the privilege period for the combined group. As such, if a banking corporation is a taxable member of a combined group (but not the managerial member), and the group has a different privilege period than a calendar year, the law is not clear on how the banking corporation should file. Per the Bulletin, if the banking corporation is part of a combined group that has a 2018 fiscal privilege period, the banking corporation should first file a 2019 BFC-1 reporting its 2018 calendar year income for its 2019 privilege period and then file a short period return (BFC-1-F) covering January 1, 2019 through the end of the month of the privilege period for the combined group. At that point and thereafter, the banking corporation should file and report all of its income on a fiscal basis using the 2019 fiscal privilege period of the combined group. If a banking corporation believes that application of the filing requirements set forth in the Bulletin would result in an unfair or distorted reflection of income, the Division will entertain requests for discretionary relief. Please contact Jim Venere at 976-912-6349 with questions.