New Jersey Proposes Tax Relief to Attract and Retain Businesses
Corporate & Finance Alert
November 18, 2008
On October 27, 2008, in response to the ongoing financial crisis, the New Jersey Assembly passed a bill designed to help New Jersey businesses. The bill would allow C corporations a much longer period of time to use net operating losses to offset future net income. Although such a change in the New Jersey Corporation Business Tax has been advocated unsuccessfully in the past, it was adopted unanimously this week as a result of the pressure and urgency that lawmakers are feeling as a result of the financial crisis. It is hoped that this measure will create a more business-friendly environment in New Jersey and make New Jersey more competitive with its neighboring states.
Assembly bill A-3124 (S-2130) amends N.J.S.A. 54:10A-4 to provide that a company’s net operating losses for any tax period ending after June 30, 2009 can be carried over for twenty (20) years following the year of the loss. Previously, New Jersey’s law only allowed corporations seven (7) tax years over which to carry and deduct a loss. The federal government and more than half of the states that have a corporation income tax, including New Jersey’s regional competitors like New York, Pennsylvania, Connecticut and Delaware, allow net operating losses to be deducted for 20 years. The bill was sponsored by a host of lawmakers including Senate President, Richard J. Codey.
The bill is now awaiting Governor Corzine’s signature for enactment into law. Having previously recommended such a bill, the Governor is expected to sign. Lawmakers hope that this bill will encourage new businesses to set up in N.J., will act to promote further investment, and will represent some relief in the face of the financial crisis.