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New Jersey Issues Guidance on P.L. 86-272 Changes

Tax Development Sep 25, 2023

New Jersey Issues Guidance on P.L. 86-272 Changes

The New Jersey Division of Taxation issued Technical Bulletin TB-108 (“TB”), Nexus for Corporate Business Tax for Privilege Periods Ending on or After July 31, 2023, on September 5, 2023, to provide information on updated nexus standards under recent tax bill P.L. 2023. The TB also includes guidelines established by the Multistate Tax Commission (MTC), expanding definitions of business activities protected and unprotected under Federal P.L. 86-272. These activities generally include any interactive communication with an in-state customer via the internet.  

This TB provides general guidelines for determining whether the activities of a corporation create nexus with New Jersey for the purposes of imposing the Corporation Business Tax (CBT) for privilege periods ending on and after July 31, 2023. In addition, the TB incorporates changes made by recent tax law passed to adopt a bright-line economic nexus standard for CBT purposes as well as a Finnigan approach to apportionment. 

P.L. 86-272 Protected and Unprotected Activities

The TB provides guidance as to how the MTC’s revisions to incorporate internet business activities affect New Jersey taxpayers. The state previously issued TB-97(R) to provide examples of the activities protected and unprotected under application of P.L. 86-272. These lists of activities are incorporated into the new guidance, with the addition of a few new activities. The TB also explains that business activities involving financial products, financial instruments, and financial services are not protected activities under P.L. 86-272 because they are not tangible personal property. Soliciting credit cards from New Jersey customers is an unprotected activity. In addition, the state includes activities involving digital assets, such as virtual currency and non-fungible tokens, and services related to the digital assets as unprotected activities.

Bright-Line Nexus

For tax periods ending on or after July 31, 2023, a corporation will be subject to the CBT if either of the following applies:

  • The corporation receives receipts from sources in New Jersey exceeding $100,000 during its fiscal or calendar year; or
  • The corporation has 200 or more separate transactions delivered to New Jersey customers during the fiscal or calendar year.

It should be noted that although this bright-line threshold amount is the same as the state’s sales tax threshold, it is much lower than the MTC’s recommended threshold of $500,000 in revenue. 

Finnigan Method of Apportionment

For purposes of combined reporting, the new law now requires the Finnigan approach to apportionment of sales revenue that looks to the combined reporting group as one entity when determining nexus. The protections of P.L. 86-272 will now be applied at the group level, not at the individual member level of the previously applied Joyce method. A combined group cannot claim P.L. 86-272 protection if any one of its members has business activities that exceed the protections of P.L. 86-272.


As these changes are effective until regulations can be issued, it is critical to review the impact on your business for tax periods ending on or after July 31, 2023.  

These changes will not be applied retroactively – reach out to a Ryan tax professional for assistance with interpreting and implementing these changes while there is still time.


Mark Nachbar

Argi O’Leary

The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at