Recent New Jersey Law: Charitable Contributions Do Not a Resident Make

Asreported in today’s State Tax Today (subscription required), New Jersey hasrecently passed legislation clarifyingthat charitable contributions are not relevant in determining the domicile ofthe donor under the New Jersey gross income tax.  Portions of the statement accompanying the Act include the following:

This bill clarifies inthe New Jersey gross income tax statutes that donors’ contributions tocharities are not a factor in determining where a person is domiciled under NewJersey gross income tax for the purpose of defining who is a resident taxpayeror nonresident taxpayer.  This is the informal position taken by the NewJersey Division of Taxation since 2005 but this position has not since beenofficially communicated to taxpayers.  Whether a person lives in Floridaor Arizona, giving to charities in New Jersey, in and of itself, should notsubject the person to New Jersey income tax as a New Jersey resident. …

Taxpayers now make contributions to local, regional, and national charities viamodern financial and communication networks. …This bill recognizes thesechanges in patterns of giving and wishes to encourage contributions tocharities, regardless of the locations of the charities, from both New Jerseyresidents and nonresidents.  Although domicile is usually determined fromall the evidence and circumstances, under this bill the Division of Taxation isformally instructed in statute to no longer consider a taxpayer’s charitablecontributions as relevant or applicable in determinations of domicile.

 JRB