New Jersey Adopts Important Changes
to S Corporation Election Requirements
Historically, in order for a federal S corporation to be recognized as an S corporation for New Jersey tax purposes, shareholders were required to make a separate New Jersey S corporation election. This requirement often took taxpayers by surprise, resulting in a continuous stream of requests for retroactive relief from taxpayers that failed to elect S corporation status in New Jersey.
New Law: Beginning January 1, 2023, no New Jersey S corporation election is required. A federal S corporation is automatically treated as a New Jersey S corporation, unless the corporation takes affirmative steps to opt out. The new legislation provides the following provisions for “opting out” of S corporation status in New Jersey:
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