For out-of-state corporations that do business in New Jersey through the use of “virtual offices,” the recent decision by the Appellate Division of the Superior Court of New Jersey in Telebright Corporation, Inc. v. Director, New Jersey Division of Taxation is a reminder that employees who “telecommute” from New Jersey will not relieve their employers

New Jersey’s gross income tax system is unique because (1) it allows few deductions (that’s what they mean by “gross income”) and (2) income is separated into different categories or baskets (such as partnership income, interest income, etc.). Allowable deductions in one basket cannot offset income in another basket. This system can create mismatches with