Senator JOSEPH PENNACCHIO
District 26 (Essex, Morris and Passaic)
Allows commercial property owner to claim tax credit against CBT or GIT for providing commercial tenant rent forgiveness during COVID-19 emergency.
CURRENT VERSION OF TEXT
An Act allowing commercial property owners to claim a tax credit against income for providing commercial tenant rent forgiveness during the COVID-19 emergency.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. For the purposes of the "Corporation Business Tax Act," P.L.1945, c.162 (C.54:10A-1 et seq.), and the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., a taxpayer shall be allowed a credit against the tax otherwise due equal to the amount of any qualifying rent forgiveness that the taxpayer provides to an eligible business. A taxpayer shall be allowed a credit against the tax otherwise due up to a total of $15,000 of cumulative qualifying rent forgiveness provided by the taxpayer to each eligible business that is a commercial property tenant of the taxpayer, and shall not be allowed a credit that exceeds $15,000 for rent forgiveness related to any individual commercial property unit.
b. The credit allowed pursuant to this section shall apply only to rent forgiven for months that occur during the emergency declared by the Governor pursuant to Executive Order No. 103 of 2020 or any extension thereof. The credit shall not be allowed for rent forgiveness for any month after the month of September 2020.
c. For the purposes of this act:
"Affiliated group" means an affiliated group as defined in section 1504 of the federal Internal Revenue Code, 26 U.S.C. s.1504.
"Controlled group" means a controlled group of corporations as defined in section 1563 of the federal Internal Revenue Code, 26 U.S.C. s.1563.
"Commercial property" means property that is classified pursuant to the requirements of N.J.A.C.18:12-2.2 as Class 4A "commercial properties".
"Eligible business" means a commercial, business, trade, wholesaling, retailing, or other profit-making enterprise, or a nonprofit organization, that leases all or a part of a commercial property in this State. “Eligible business” shall not include any commercial, business, trade, wholesaling, retailing, or other profit-making enterprise that is considered to be a part of a controlled group or an affiliated group with the taxpayer.
"Qualifying rent forgiveness" means 33.3 percent or $5,000, whichever is less, of the total amount of rent forgiveness provided by a taxpayer to an eligible business for each month up to three months, or an equivalent amount for a commercial lease that is not payable to the taxpayer on a monthly basis.
"Taxpayer" means a person or entity required to pay tax to the State pursuant to the "Corporation Business Tax Act," P.L.1945, c.162 (C.54:10A-1 et seq.) or the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., who is a commercial property owner and who leases all or part of the taxpayer’s commercial property to an eligible business.
2. The Director of the Division of Taxation in the Department of the Treasury shall adopt rules and regulations necessary to implement this act, including, but not limited to, rules and regulations to secure and verify lease and rent forgiveness documentation from taxpayers, and to calculate the allowable credits for commercial property units that are subject to leases that are payable on any regular basis that is not monthly. The Director shall impose a penalty, in the amount of three times the amount of the credit claimed, on any taxpayer that intentionally, inappropriately claims a credit allowed pursuant to this act.
3. This act shall take effect immediately.
This bill allows taxpayers that are commercial property owners who grant their tenants rent forgiveness, because of the COVID-19 pandemic, to claim a tax credit against the taxpayer’s Corporation Business Tax or Gross Income Tax liability, whichever is applicable. The tax credit allowed under the bill is to be equal to up to 33.3 percent or $15,000, whichever is less, of the amount of rent forgiveness provided by the taxpayer to each commercial tenant, over not more than three months.
The bill stipulates that a taxpayer is not allowed to claim a tax credit for any rent forgiveness provided by the taxpayer to a business that is a part of the same controlled group or the same affiliated group as the taxpayer.
The tax credit is only to be available for forgiven rent on months occurring during the public health emergency declared by the Governor, but the tax credit will not be allowed for forgiven rent on any month after September 2020. The bill also requires the Director of the Division of Taxation in the Department of the Treasury to adopt rules related to documentation requirements and the imposition of penalties for intentionally and inappropriately claiming a credit under the bill.