Do you NOW have to file Corporate Income Tax Returns in states where you do NOT have a physical presence?

States are becoming more aggressive with requiring corporations to file corporate income tax returns, even if they have no in-state physical presence (economic nexus).  Here are the thresholds a number of nearby states have landed on with regards to requirements for filing corporate income tax returns:

  • New Jersey requires C-corporations and S-corporations to file income tax returns if they have sales attributable to New Jersey with no minimum dollar threshold.
  • New York has a threshold of $1,000,000 or more for sales attributable to New York. This applies to C-corporations and S-corporations.
  • Massachusetts recently amended their regulation to impose its corporate excise tax on taxpayers when their annual sales attributable to Massachusetts exceed $500,000. This threshold applies to C-corporations and S-corporations.
  • Pennsylvania has the same threshold as Massachusetts, but it is limited to C-corporations.

Although there is a federal protection for corporations if their in-state activities are limited to selling tangible personal property and solicitating orders for sales, this only applies to taxes based on net income.  Some states still require a corporate tax filing in order to claim the federal protection.

If you would like to learn more about how these changes may impact your business, please contact your Sax advisor at (973) 472-6250, or contact our firm’s in-house nexus advisors, Peggy Tilles ([email protected]) or Mathew Giordano ([email protected]).

Get in touch with Sax by filling out the form below: