This state takes a “No Nonsense” approach to what constitutes “BAT” nexus (Business Activity Tax).
New Jersey bases its determination on two hard-core factors:
While mere solicitation of business is not sufficient to create nexus for New Jersey’s corporation business tax, as supported by P.L. 86-272, an out-of-state corporation may be subject to a tax on its gross profits or gross receipts in New Jersey known as the Alternative Minimum Assessment (“AMA”). There are thresholds for corporation’s that do not meet a minimum requirement. Corporations are not subject to the AMA if they have less than $2.6 million of New Jersey gross receipts or less than $1.8 of New Jersey gross profits.
If an out-of-state corporation is not liable for the AMA, it must file a return and pay a minimum tax of $500 ($2,000 for controlled or affiliated groups).
The presence of employees at trade shown held in New Jersey for the purposes of soliciting or generating business is sufficient to establish a physical presence in the state and triggers a tax obligation to the state. In order to avoid nexus creating activities, the out-of-state corporation must prove that its trade shows activities are solely limited in nature to conduct that “explicitly or implicitly invites an order; and activities that neither explicitly nor implicitly invite an order but that are entirely ancillary to requests for an order, and involve maintaining a display at a single location for less than two weeks during the tax year, a foreign corporation will not be subject to corporation business tax based or measured by income. (Emphasis added)
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