[First Reprint]

ASSEMBLY, No. 5149

STATE OF NEW JERSEY

219th LEGISLATURE

 

INTRODUCED DECEMBER 14, 2020

 


 

Sponsored by:

Assemblyman  LOUIS D. GREENWALD

District 6 (Burlington and Camden)

Assemblyman  DANIEL R. BENSON

District 14 (Mercer and Middlesex)

Assemblyman  GORDON M. JOHNSON

District 37 (Bergen)

 

Co-Sponsored by:

Assemblywoman Murphy, Assemblymen Karabinchak, Dancer, Bergen, Thomson, Stanley, Assemblywomen Reynolds-Jackson, DiMaso and Vainieri Huttle

 

 

 

 

SYNOPSIS

     Allows deduction from tax of certain expenses when taxpayer’s federal paycheck protection program loan is forgiven and excludes those forgiven loans from gross income tax.

 

CURRENT VERSION OF TEXT

     As reported by the Assembly Appropriations Committee on February 24, 2021, with amendments.

  


An Act concerning the tax treatment of forgiven federal paycheck protection program loans.

 

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

 

      1.   Notwithstanding N.J.S.54A:5-1, a loan, or portion thereof, forgiven pursuant to section 1106 of the federal CARES Act, Pub.L.116-136, 1or any subsequent expansion of the federal Paycheck Protection Program, including the provision of second draw loans pursuant to section 311 of Division N of the “Consolidated Appropriations Act, 2021,” Pub.L.116-260,1 shall not be included in the calculation of New Jersey gross income subject to tax under the New Jersey Gross Income Tax Act.

 

      2.   a.  A taxpayer under the Corporation Business Tax Act (1945), P.L.1945, c.162 (C.54:10A-1 et seq.) shall not be denied a deduction 1for ordinary and necessary business expenses paid for with the proceeds of a federal Paycheck Protection Program loan1 by reason of the exclusion from entire net income under P.L.1945, c.162 of 1[a] such1 loan, or portion thereof, forgiven pursuant to section 1106 of the federal CARES Act, Pub.L.116-136 1or any subsequent expansion of the federal Paycheck Protection Program, including the provision of second draw loans pursuant to section 311 of Division N of the “Consolidated Appropriations Act, 2021,” Pub.L.116-2601.

      b.  A taxpayer under the 1[New Jersey Gross Income Tax Act] “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq.1 shall not be denied a deduction 1for ordinary and necessary business expenses paid for with the proceeds of a federal Paycheck Protection Program loan1 by reason of the exclusion from New Jersey gross income under the New Jersey Gross Income Tax Act of 1[a] such1 loan, or portion thereof, forgiven pursuant to section 1106 of the federal CARES Act, Pub.L.116-136, 1or any subsequent expansion of the federal Paycheck Protection Program, including the provision of second draw loans pursuant to section 311 of Division N of the “Consolidated Appropriations Act, 2021,” Pub.L.116-260,1 or pursuant to section 1 of this act.

 

      3.   This act shall take effect immediately 1and shall apply retroactively to taxable years beginning on or after January 1, 20201.