In February 2018, the New Jersey Tax Court delivered another blow to the Division of Taxation’s (the “Division”) attempts to use partnership income tax withholding to tax out-of-state limited partners. In so doing, the Tax Court has arguably called into question New Jersey’s entire partnership remittance or withholding regime.
In National Auto Dealers Exchange, L.P. v. Director, Division of Taxation, No. 000028-2014, the Tax Court held that the Division could not impose the partnership remittance in accordance with N.J.S.A. 54:10A-15.11 on a limited partnership whose 99-percent corporate limited partner declared that it maintained a regular place of business in New Jersey.