NJ Releases Throwout Guidance: How Should Taxpayers React?

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Yesterday, the New Jersey Division of Taxation released guidance concerning its application of the throwout rule in light of the New Jersey Supreme Court's July 28 decision in Whirlpool Properties, Inc. v. Director, Div. of Taxation, ___ A.3d ___ (N.J. 2011).

As expected, the Division announced that there will be no significant change to its prior throwout policy. The only change is that the Division will no longer throw out receipts that are sourced to Nevada, Wyoming, or South Dakota. Otherwise, the Division will continue to exclude receipts from the sales-fraction denominator unless the taxpayer can show that those sales are sourced to a state in which the taxpayer is filing a business-activity tax return. (To listen to a more detailed discussion of Whirlpool, and the Division's reaction to it, you can access an audio file of our recent teleseminar at the following link: www.reedsmith.com/njtax.)

Specifically, the Division's guidance provides:1....

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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