Bill Text: NJ S2354 | 2010-2011 | Regular Session | Introduced
Bill Title: Allows for five years corporation business tax and gross income tax deductions for net interest amount received on loans to certain qualified UEZ businesses.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2011-09-19 - Combined with S1885 (SCS) [S2354 Detail]
Download: New_Jersey-2010-S2354-Introduced.html
Sponsored by:
Senator BRIAN P. STACK
District 33 (Hudson)
SYNOPSIS
Allows for five years corporation business tax and gross income tax deductions for net interest amount received on loans to certain qualified UEZ businesses.
CURRENT VERSION OF TEXT
As introduced.
An Act providing for certain tax deductions on interest income received on loans to qualified businesses in urban enterprise zones, and supplementing P.L.1945, c.162 (C.54:10A-1 et seq.) and Title 54A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. For a period of five years commencing on the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), there shall be allowed as a deduction for the privilege period the amount of net interest received by the taxpayer for that privilege period in payment of indebtedness of a qualified business, as defined pursuant to section 3 of P.L.1983, c.303 (C.52:27H-62), engaged in the active conduct of a trade or business located in an urban enterprise zone established pursuant to P.L.1983, c.303 (C.52:27H-60 et seq.) or section 12 of P.L.2001, c.347 (C.52:27H-66.7).
b. A deduction shall not be allowed under this paragraph unless at the time the indebtedness is incurred each of the following requirements is met:
(1) The qualified business is located solely within an urban enterprise zone;
(2) The indebtedness is incurred solely in connection with activity within the urban enterprise zone; and
(3) The taxpayer has no equity or other ownership interest in the debtor.
c. Within five years of the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), the Director of the Division of Taxation in the Department of the Treasury shall submit a written report, simultaneously with the report required pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill), to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature describing the demand for the program, the total amount of tax deductions awarded from the program, an assessment of the success of the program, and any recommendations as to whether the program should be continued.
2. a. For a period of five years commencing on the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), a taxpayer shall be allowed to deduct from the taxpayer's gross income for the taxable year an amount equal to the net interest received by the taxpayer for that taxable year in payment of indebtedness of a qualified business, as defined pursuant to section 3 of P.L.1983, c.303 (C.52:27H-62), engaged in the active conduct of a trade or business located in an urban enterprise zone established pursuant to P.L.1983, c.303 (C.52:27H-60 et seq.) or section 12 of P.L.2001, c.347 (C.52:27H-66.7).
b. No deduction shall be allowed under this section unless at the time the indebtedness is incurred each of the following requirements is met:
(1) The qualified business is located solely within an urban enterprise zone;
(2) The indebtedness is incurred solely in connection with activity within the urban enterprise zone; and
(3) The taxpayer has no equity or other ownership interest in the debtor.
c. Within five years of the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), the Director of the Division of Taxation in the Department of the Treasury shall submit a written report, simultaneously with the report required pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill), to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature describing the demand for the program, the total amount of tax deductions awarded from the program, an assessment of the success of the program, and any recommendations as to whether the program should be continued.
3. This act shall take effect immediately and shall be applicable to loans made on or after the date of enactment.
STATEMENT
This bill would establish, for a period of five years commencing on the effective date of the bill, a new tax deduction for taxpayers providing loans to business located within Urban Enterprise Zones (UEZs). This bill would permit lenders making loans directly to qualified UEZ business to receive tax-free treatment of the interest income earned on those loans. The tax-free treatment of the interest income will serve as an incentive that will promote lending to small businesses within UEZs.
Specifically, the bill permits taxpayers who are subject to the corporation business tax to deduct from their entire net income the amount of net interest received in payment of indebtedness from a qualified UEZ business that is engaged in the active conduct of trade or business within a UEZ. The bill also permits taxpayers who are subject to the New Jersey gross income tax to deduct from their gross income an amount equal to the amount of net interest received in payment of indebtedness from a qualified UEZ business engaged in the active conduct of a trade or business within a UEZ.
No tax deduction shall be permitted under the bill unless all of the following requirements are met:
1) the qualified UEZ business is located solely within a UEZ;
2) the indebtedness is incurred solely in connection with activity with the UEZ; and
3) the taxpayer claiming the deduction has no equity or other ownership interest in the debtor.
The bill requires that, within five years of the effective date of the bill, the Director of the Division of Taxation in the Department of the Treasury shall submit a written report to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature describing the demand for both programs, the total amount of tax deductions awarded from each program, an assessment of the success of both programs, and any recommendations as to whether the programs should be continued.
