A4110

An Act concerning the reporting of payment card and third party network transactions, amending P.L.1945, c.162 and N.J.S.54A:8‑1.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 18 of P.L.1945, c.162 (C.54:10A-18) is amended to read as follows

18. a. The director shall design a form of return and forms for such additional statements or schedules as the director may require to be filed therewith. Such forms shall provide for the setting forth of such facts as the director may deem necessary for the proper enforcement of this act. The director shall cause a supply thereof to be printed and shall furnish appropriate blank forms to each taxpayer upon application or otherwise as he may deem necessary. Failure to receive a form shall not relieve any taxpayer from the obligation to file a return under the provisions of this act. Each such return shall have annexed thereto a certification by the president, vice-president, comptroller, secretary, treasurer, assistant treasurer, accounting officer of the taxpayer or any other officer of the taxpayer duly authorized so to act to the effect that the statements contained therein are true. The fact that an individual's name is signed on a certification of the report shall be prima facie evidence that such individual is authorized to sign and certify the report on behalf of the corporation. In the case of a corporation in liquidation or in the hands of a receiver or trustee, certification shall be made by the person responsible for the conduct of the affairs of such corporation.

b. The return of an S corporation shall, in addition to any information set forth pursuant to subsection a. of this section, set forth with respect to each shareholder: the shareholder's name, address and federal taxpayer identification number (social security number or employer identification number); whether the shareholder is a resident of this State; whether the shareholder has filed a consent to jurisdictional requirements pursuant to section 3 or section 4 of P.L.1993, c.173 (C.54:10A-5.22 or C.54:10A-5.23); the allocation factor determined pursuant to sections 6 through 10 of P.L.1945, c.162 (C.54:10A-6 through 54:10A-10); the amount of any distribution made to the shareholder, including any amount paid on behalf of the shareholder pursuant to subsection c. or d. of section 4 of P.L.1993, c.173 (C.54:10A-5.23); the balance of the accumulated earnings and profits account; the balance of the accumulated adjustments account described in section 16 of P.L.1993, c.173 (C.54A:5-14), which account the corporation shall maintain; and such other information as the director may prescribe by regulation. The S corporation shall, on or before the day on which such return is required to be filed, furnish to each person who was a shareholder during the privilege period a copy of such information shown on the return as the director may by regulation prescribe.

c. (1) The return of a taxpayer that is a professional corporation organized pursuant to P.L.1969, c. 232 (C.14A:17-1 et seq.) or a similar corporation for profit organized for the purpose of rendering professional services under the laws of another state, shall in addition to any information set forth pursuant to subsection a. of this section, set forth the name, address and federal taxpayer identification number (social security number or employer identification number) of each licensed professional of the corporation.

(2) Each professional corporation organized pursuant to P.L.1969, c.232 (C.14A:17-1 et seq.) or similar corporation for profit organized for the purpose of rendering professional services under the laws of another state that has more than two licensed professionals shall at the time such return is required to be filed make a payment of a filing fee of $150 for each licensed professional of the corporation, up to a maximum of $250,000.

(3) Each professional corporation or similar corporation for profit organized under the laws of another state required to make a payment pursuant to paragraph (2) of this subsection shall also make, at the same time as making its payment pursuant to paragraph (2) of this subsection, an installment payment of its filing fee for the succeeding return period in an amount equal to 50% of the amount required to be paid pursuant to paragraph (2). The amount of the installment payment shall be credited against the amount of the filing fee due for the succeeding return period, or, if the amount of the installment payment exceeds the amount of the filing fee due for the succeeding return period, successive return periods.

(4) Notwithstanding the provisions of R.S.54:48-2 and R.S.54:48-4 to the contrary, the fee required pursuant to paragraph (2) of this subsection and the installment payment required pursuant to paragraph (3) of this subsection shall, for purposes of administration, be payments to which the provisions of the State Uniform Tax Procedure Law, R.S.54:28-1 et seq., shall be applicable and the collection thereof may be enforced by the director in the manner therein provided.

d. In addition to any information set forth pursuant to subsection a. of this section, each return shall have annexed thereto a copy of each Internal Revenue Service Form 1099-K furnished to the taxpayer by a payment settlement entity or a third party acting on behalf of a payment settlement entity.

(cf: P.L.2002, c.40, s.14)

2. N.J.S.54A:8-1 is amended to read as follows:

54A:8-1. Payment of tax; returns; extension of time. With respect to each taxpayer, the tax imposed by this act shall be due and payable annually, hereafter, in the manner provided in this section:

a. Every taxpayer shall annually pay the tax imposed by this act with respect to all or any part of each of his fiscal or calendar accounting years beginning on and after July 1, 1976, to be computed as in this act provided, for such fiscal or calendar accounting year or part thereof, on a return which shall be filed, in the case of a taxpayer reporting on a calendar year basis, on or before April 15 following the close of such calendar year, or, in the case of a taxpayer reporting on a fiscal year basis, on or before the fifteenth day of the fourth month following the close of such fiscal year, and the full amount of the tax shall be due and payable on or before the date prescribed herein for the filing of the return.

In the case of a taxable year which ends on or after July 1, 1976, and prior to December 31, 1976, an income tax return for such taxable year shall be filed on or before April 15, 1977.

Notwithstanding any law to the contrary, the director may extend either the filing or payment due date, or both, for any return under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., to coincide with a similar extended filing or payment due date established for federal personal income tax returns and may adopt the same terms or conditions specified by federal law or regulation for any such filing extension or payment due date.

b. Each return shall carry a signature by the taxpayer certifying that all statements contained therein are true, under the same penalties as for perjury committed. The director is authorized to promulgate regulations and procedures setting forth the manner in which a taxpayer may satisfy the signature requirement. Blank forms of return shall be furnished on application, but failure to secure the form shall not relieve any taxpayer of the obligation of making any return herein required. Subject to regulations under this act and in such form as may be indicated thereby, taxpayers whose net income taxable under this act is or may be subject to tax under a similar law of another jurisdiction may be permitted to file a simple, short form return attached to a copy of his return as filed or about to be filed by him in such other jurisdiction.

Subject to regulations under this act, reasonable extensions of time for good cause shown, may be granted for not more than six months unless exceptional circumstances justify a longer period, within which returns may be filed.

In addition, persons in active service with the Armed Forces of the United States, who may be prevented by distance or injury or hospitalization arising out of such service, may be allowed such extension of time for the filing of returns, without interest or penalty, as may be fixed by regulations under this act.

c. Every return filed with the director pursuant to subsection a. of this section shall have annexed thereto a copy of each Internal Revenue Service Form 1099-K furnished to the taxpayer by a payment settlement entity or a third party acting on behalf of a payment settlement entity.

(cf: P.L.2005, c.297)

3. This act shall take effect immediately.

STATEMENT

This bill requires New Jersey corporation business tax and gross income tax filers to append to their tax returns a copy of any Internal Revenue Service (IRS) Form 1099-K provided to a taxpayer by a payment settlement entity. This sponsor hopes this bill will encourage voluntary compliance with State tax laws and improve the State’s tax enforcement efforts.

IRS Form 1099-K is an information return filed by payment settlement entities to report certain payment transactions, such as those made via credit card or an online payment service. A payment settlement entity must file Form 1099-K for each payment if the gross amount of total reportable payment transactions exceeds $20,000 and the total number of such transactions exceeds 200. Federal law requires each payment settlement entity to send Form 1099-K to each participating payee, such as a retail merchant or governmental unit.

Payment settlement entities are already required to submit a copy of the form with their New Jersey tax returns. However, New Jersey taxpayers that receive the Form 1099-K are not required to transmit a copy of the form to the State. If a taxpayer is selected for audit, the Division of Taxation may request a copy of Form 1099-K, but the taxpayer is not required to provide the duplicate, thereby making it difficult to identify if a taxpayer is underreporting their income.