New Jersey continues to take aggressive stances against foreign corporations. It asserts that physical presence is not necessary to subject a foreign corporation to income taxation in New Jersey. See Lanco, Inc. v. Director, Division of Taxation, 188 N.J. 380 (2006) (petition for certiorari pending) (holding that Quill’s physical presence test does not apply to income taxes under the

Commerce Clause). It applies the alternative minimum assessment (“AMA”) to foreign corporations that are protected from net income based taxes by federal law P.L. 86-272 only if those corporations do not consent to jurisdiction under New Jersey’s regular Corporation Business Tax (“CBT”). It removes receipts from the denominator of the receipts fraction based on whether another state has jurisdiction to tax the corporation or whether another state has decided to exercise its right to tax the corporation, under what has become known as the “throwout” rule. Further, when New Jersey throws receipts out of the denominator, it contradicts its subjectivity position (its Lanco economic nexus position) because it applies economic nexus standards for subjectivity in New Jersey yet refuses to apply those same economic nexus standards for subjectivity in other states.

There is hope that New Jersey will be turned back. We are filing a petition for certiorari in the United

States Supreme Court in Lanco. The New Jersey Supreme Court favored the State’s fisc and misapplied Commerce Clause case law under the United States Constitution.