S1885 S2354 SCS

Sponsored by:

Senator SEAN T. KEAN

District 11 (Monmouth)

Senator BRIAN P. STACK

District 33 (Hudson)

Co-Sponsored by:

Senators Van Drew, A.R.Bucco, Girgenti, Norcross, Ruiz, Sarlo, Cunningham and Beach

SYNOPSIS

Allows for five years corporation business tax and gross income tax deductions for net interest amount received on loans to certain qualified UEZ businesses.

CURRENT VERSION OF TEXT

Substitute as adopted by the Senate Economic Growth Committee.

An Act providing for certain tax deductions on interest income received on loans to qualified businesses in urban enterprise zones, and supplementing P.L.1945, c.162 (C.54:10A-1 et seq.) and Title 54A of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. For a period of five years commencing on the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), there shall be allowed as a deduction for the privilege period the amount of net interest received by the taxpayer for that privilege period in payment of indebtedness of a qualified business, as defined pursuant to section 3 of P.L.1983, c.303 (C.52:27H-62), engaged in the active conduct of a trade or business located in an urban enterprise zone established pursuant to P.L.1983, c.303 (C.52:27H-60 et seq.) or section 12 of P.L.2001, c.347 (C.52:27H-66.7).

b. A deduction shall not be allowed under this section unless at the time the indebtedness is incurred each of the following requirements is met:

(1) The qualified business is located solely within an urban enterprise zone;

(2) The indebtedness is incurred solely in connection with activity within the urban enterprise zone;

(3) The taxpayer provided to the qualified business loans having an interest rate at the prevailing market rate or less, as determined by the Department of the Treasury; and

(4) The taxpayer has no equity or other ownership interest in the debtor.

c. Within five years of the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), the Director of the Division of Taxation in the Department of the Treasury shall submit a written report, simultaneously with the report required pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill), to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature describing the demand for the program, the total amount of tax deductions awarded from the program, an assessment of the success of the program, and any recommendations as to whether the program should be continued.

2. a. For a period of five years commencing on the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), a taxpayer shall be allowed to deduct from the taxpayer’s gross income for the taxable year an amount equal to the net interest received by the taxpayer for that taxable year in payment of indebtedness of a qualified business, as defined pursuant to section 3 of P.L.1983, c.303 (C.52:27H-62), engaged in the active conduct of a trade or business located in an urban enterprise zone established pursuant to P.L.1983, c.303 (C.52:27H-60 et seq.) or section 12 of P.L.2001, c.347 (C.52:27H-66.7).

b. No deduction shall be allowed under this section unless at the time the indebtedness is incurred each of the following requirements is met:

(1) The qualified business is located solely within an urban enterprise zone;

(2) The indebtedness is incurred solely in connection with activity within the urban enterprise zone;

(3) The taxpayer provided to the qualified business loans having an interest rate at the prevailing market rate or less, as determined by the Department of the Treasury; and

(4) The taxpayer has no equity or other ownership interest in the debtor.

c. Within five years of the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), the Director of the Division of Taxation in the Department of the Treasury shall submit a written report, simultaneously with the report required pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill), to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature describing the demand for the program, the total amount of tax deductions awarded from the program, an assessment of the success of the program, and any recommendations as to whether the program should be continued.

3. This act shall take effect immediately and shall be applicable to loans made on or after the date of enactment.