New Jersey Statutes 54:10A-5.23. Requirements for New Jersey S corporation
Terms Used In New Jersey Statutes 54:10A-5.23
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- State: extends to and includes any State, territory or possession of the United States, the District of Columbia and the Canal Zone. See New Jersey Statutes 1:1-2
b. Deliver a consent to the jurisdictional requirements as set forth in section 3 of P.L.1993, c.173 (C. 54:10A-5.22), in a form and manner determined by the director.
c. A New Jersey S corporation shall make payments to the Director of the Division of Taxation on behalf of each nonconsenting shareholder in an amount equal to the shareholder’s pro rata share of S corporation income allocated to this State, as defined pursuant to section 12 of P.L.1993, c.173 (C. 54A:5-10), reflected on the corporation’s return for the accounting or privilege period, multiplied by the maximum tax bracket rate provided under N.J.S. 54A:2-1 in effect at the end of the accounting or privilege period. The payments shall be made no later than the time for filing of the return for the accounting or privilege period. The director may, by regulation, require that amounts estimated to be equal to the liability expected to be due pursuant to this subsection be withheld from any distribution made to a nonconsenting shareholder.
d. If a shareholder that is not an initial shareholder of a New Jersey S corporation fails to deliver a consent to the jurisdictional requirements set forth in section 3 of P.L.1993, c.173 (C. 54:10A-5.22), and objects to New Jersey’s jurisdiction to withhold payments pursuant to subsection c. of this section, then this State shall have the right and jurisdiction to collect a tax each year directly from the corporation equal to the pro rata share of the S corporation income allocated to this State, as defined pursuant to section 12 of P.L.1993, c.173 (C. 54A:5-10), of the nonconsenting shareholder times the maximum tax bracket rate provided under N.J.S. 54A:2-1 for the appropriate accounting or privilege period. In such case, the corporation shall have the right, but not the obligation, to recover payments made by the corporation pursuant to this subsection from each nonconsenting shareholder. The corporation shall not be liable for the pass-through business alternative income tax pursuant to P.L.2019, c.320 (C. 54A:12-1 et al.) relative to collections made in a taxable year for such nonconsenting members.
L.1993, c.173, s.4; amended 2019, c.320, s.7; 2022, c.133, s.21.