New Jersey Can't Tax Companies That Have No Physical Presence in State

New Jersey's corporate tax on businesses that draw revenue from the state but have no employees or tangible property there violates the federal constitution, a state judge has ruled. Tax Court Judge Peter Pizzuto rebuked the state's efforts to tax a Wilmington, Del., company that owns the trademarks of the Lane Bryant clothing stores and collects royalties for their use. The ruling is significant since many businesses are organized similarly.

The issue of "tangible" versus "intangible" assets is becoming contested more frequently in audits in NJ and other states. Because of state budget deficits, it is probale there will be a push to tax everything!

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