Discussion:NJ Privilege Period

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Discussion Forum Index --> Basic Tax Questions --> NJ Privilege Period


Discussion Forum Index --> Tax Questions --> NJ Privilege Period

MWPXYZ (talk|edits) said:

23 September 2010
Is this just another way of saying "tax year"

Death&Taxes (talk|edits) said:

23 September 2010
In what context? I only found this link:

http://www.state.nj.us/treasury/purchase/noa/attachments/a1320-rfp.pdf

MWPXYZ (talk|edits) said:

23 September 2010
I read it in the corporate tax forms instructions. I can't find a definition anywhere. I see it used on page 9 of C corporate instructions at items 23 about AM, item 28 about interest and related parties. Sorry for no detail, I did see it on instructions for other forms and thought it was a common Noi Joisey tax toim.

The S corporation instructions have been fascinating, as well.

Although I do not believe it applicable to my client, the Schedule N looks interesting. It appears, to the untrained eye, that foreign corporations must file an income tax return as well as Schedule N to show they are not subject to NJ income tax? (Should I be doing this for my NH clients?) Actually, it must be for corporations paying a NJ sales tax but not an income tax? But it seemed amusing when I first noticed it.

I wonder if a NJ tax preparer's office equipment qualifies for the effluent equipment tax credit, which has a limit, that I can't quite decipher, for each "privilege period"

And this is for one S (not NJ, so far) corporation client who had one job in NJ, over a 2 year period.

Death&Taxes (talk|edits) said:

23 September 2010
Although I am in NJ, I have no New Jersey Corporations or S Corps but my own C Corp......since I am not a paying client, I let the software do the work!

KatieJ (talk|edits) said:

23 September 2010
The NJ Corporation Business Tax is a tax imposed for the privilege of doing business in the state in corporate form, and it pays for the use of that privilege during a specified time span, called the privilege period. The privilege period is defined in N.J. Rev. Stat. § 54:10A-4(j) as "the calendar or fiscal accounting period for which a tax is payable under this act." So the tax year and the privilege period are the same. (It appears that banking corporations are limited to reporting on a calendar year basis, and the tax is measured by the income of the preceding calendar year; see N.J. Rev. Stat. § 54:10A-34.)

That isn't true everywhere. For example, the Texas franchise tax is imposed for the privilege of doing business in a calendar year, and is measured by the corporation's activity during its calendar or fiscal year ending in the immediately preceding calendar year. The California franchise tax used to be measured by the income of Year 1 (the income year) for the privilege of doing business in Year 2 (the taxable year); since 2002 the income year and the taxable year are the same.

The fact that a tax is imposed for the privilege of doing something necessarily implies a time period during which that privilege is granted. So any time you have a franchise tax, or a privilege tax (which means essentially the same thing), the law has to specify the time period for which the privilege is granted.

Death&Taxes (talk|edits) said:

23 September 2010
WOW

MWPXYZ (talk|edits) said:

23 September 2010
Thanks KT - the context seemed to indicate that tax year and privilege period were the same, but both phrases were used in the instructions.

Why, the term privilege almost makes paying the tax a positive experience!

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