SENATE GREENLIGHTS CODEY-BUONO BILL TO AID STRUGGLING BUSINESSES, ATTRACT NEW INVESTMENTS

TRENTON – The full Senate today approved a bill sponsored by Senate President Richard J. Codey and Senator Barbara Buono that would aid struggling businesses during the current economic crisis, and help New Jersey’s business environment remain competitive with other neighboring states. The Senate approved bill S-2130, which would increase the time period in which a net operating loss (NOL) can be deducted from a corporation’s business tax, from seven to twenty years.

“Now more than ever, this bill is desperately needed,” said Senator Codey (D-Essex). “With many businesses struggling and others facing still unforeseen losses, we need to do all we can to help them weather the storm. This bill will also help New Jersey stay competitive with many of our neighboring states that have similar provisions. Hopefully, it will also encourage new businesses to set up shop here and promote further investment.”

“Especially during these times of economic uncertainty, New Jersey needs to send the message that we’re open for business,” said Senator Buono, D-Middlesex, and Chair of the Senate Budget and Appropriations Committee. “By extending the net-operating loss provisions under the corporate business tax, we’re bringing the state’s tax law in line with neighboring states, and encouraging and fostering start-ups in New Jersey. Through this bill, we’re tearing down some of the economic barriers businesses face when deciding if they want to invest in the Garden State.”

Essentially, if a taxpayer has more business expenses than business income in a tax year, the taxpayer has a net operating loss for that year. The NOL can be deducted from taxable income in later years to reduce tax liability and help struggling businesses weather a temporary financial crises. Generally, under the corporation business tax, NOL carry-forwards have been allowed to offset liability for the seven tax years following the tax year in which the losses were incurred. The extension to 20 years that would be allowed under this bill mirrors carry-forward provisions in the federal tax code and that of other neighboring states, such as New York, Pennsylvania, Connecticut, and Delaware.

An identical bill is expected to be voted on by the General Assembly on Monday. Once approved, it would head to the Governor for his signage into law. The act would then take effect immediately and apply to net operating losses accrued for privilege periods ending after June 30, 2009.