NJBIA Testifies in Support of COVID-19 Tax Relief for Businesses

NJBIA testifies in favor of COVID-19 Tax relief for businesses
The NJBIA testified today in favor of legislation that would ensure by law that New Jersey businesses that have received federal assistance under the Paycheck Protection Program (PPP) will not have to pay taxes on their loans even if those loans are canceled.

The bill, A-5149, sponsored by Assembly Majority Leader Lou Greenwald (D-6), would also allow taxpayers to deduct qualifying business expenses from state income tax , even though the expenses were paid with a PPP loan which was later canceled.

The IRS has previously declared that canceled P3 loans are not taxable because federal government income and qualifying business expenses paid with canceled P3 loans remain deductible for federal tax purposes.

Although Governor Phil Murphy recently announced that New Jersey will follow the federal government’s lead for the 2020 tax season, it is important to codify this practice into law and ensure that canceled PPP loans remain tax-free for the purposes of state tax beyond fiscal year 2020, said NJBIA Vice President of Government Affairs Christopher Emigholz.

“New Jersey PPP recipients have contacted the NJBIA because they are concerned about this tax issue,” Emigholz said. “This legislation will provide businesses with peace of mind knowing that canceled PPP loans will not be treated as taxable income by the state.”
The Assembly’s Appropriations Committee voted unanimously to publish the bill. An identical law, S. 3234, sponsored by Senator Troy Singleton (D-7) and also strongly supported by the NJBIA, was unanimously approved by the Senate on January 28.

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