Several significant tax cases have been decided in New Jersey in 2014. Perhaps even more notably, nearly all of them have been decided in favor of the taxpayer. The decisions address a broad spectrum of issues, including the imposition of the amnesty and late payment penalties and various aspects of the corporation business tax (CBT), including add-backs, federal depreciation deductions, the throw-out rule, operational versus non-operational income, and the ability of corporate limited partners to apply for refunds of CBT liabilities paid on their behalf. A brief discussion of each case is provided below.

Late Payment and Amnesty Penalties -

On Dec. 4, 2014, the New Jersey Supreme Court affirmed the decisions of the tax court and Appellate Division and held that the director did not properly exercise his discretion when he declined to waive late payment penalties, and that the amnesty penalty did not apply where a taxpayer timely filed tax returns, paid all reported tax liabilities, and was found to be liable for additional taxes following an audit where the assessment was issued after the close of the amnesty period.

Originally published in New Jersey State Bar Association Taxation Law Section Newsletter Vol. 34, No 2 on March 1, 2015.