SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

SENATE, No. 447

STATE OF NEW JERSEY

DATED: JANUARY 14, 1997

      The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 447 of 1996.

      Senate Bill No. 447 extends the carryforward period for utilizing the net operating loss deduction allowance under the corporation business tax by certain companies with advanced technology research expenditures in New Jersey. These taxpayers contributing to advanced technology research in New Jersey will be able to carry forward their net operating loss deduction for up to 15 years instead of the seven years allowed for other corporate taxpayers.

      As reported, this bill is identical to Senate Bill No. 1506 of 1996 (Felice/Impreveduto).

FISCAL IMPACT

      In a fiscal note prepared by the Office of Legislative Services, the Division of Taxation in the Department of Treasury observes that any additional tax revenue loss would not begin to occur until eight years following enactment of this bill (approximately FY 2005). This would be the first fiscal year following the end of the maximum seven-year net operating loss carryforward period allowed under existing law. According to the division, the revenue loss would slowly increase after this point and reach a plateau of $12 million per year in FY 2012 and thereafter, depending on the future levels of net operating losses. The division calculates that approximately $12 million in unused operating loss deductions will be available each year to be carried forward from the eighth through the 15th year following the tax year in which the loss is actually incurred.