Greenwald, Benson & Johnson Bill Granting Forgiven Paycheck Protection Program Loans to State Tax Advances to Assembly

Greenwald, Benson & Johnson Bill Granting Forgiven Paycheck Protection Program Loans to State Tax Advances to Assembly

(TRENTON) – To align New Jersey policy with federal government policy on the taxation of Paycheck Protection Program (P3P) loans, Assembly Democrats Louis Greenwald, Daniel Benson and Gordon Johnson are sponsoring legislation to make PPP loans that have been canceled exempt from gross state income corporate tax and corporation tax.

The PPP was created by the federal CARES law to provide loans to small businesses to help them keep their employees on the payroll during the pandemic. These loans can be canceled for certain businesses meeting specific requirements, and all canceled loans are exempt from federal income tax.

The law project (A-5149) ensures that New Jersey businesses will not have to pay state taxes on a canceled PPP loan, while also allowing businesses to deduct expenses paid through the loan – even if it was canceled.

The Assembly’s appropriations committee moved the bill forward on Wednesday, Assembly sponsors Greenwald (D-Camden, Burlington), Benson (D-Mercer, Middlesex) and Johnson (D-Bergen) released the following joint statement:

“Small businesses in our state have been hit hard by COVID-19, which means many of their employees have also felt the impact of the pandemic. The Paycheck Protection Program has helped companies keep workers on the payroll when they might otherwise have had to layoffs during the height of the economic crisis.

“Loans that have been made and then canceled to help businesses and their employees overcome difficult circumstances beyond their control should not be subject to income tax or restrictions on tax deductions. This legislation will align our state’s policy with federal policy for the benefit of New Jersey small businesses. “

The legislation is now heading to the Speaker of the Assembly for further consideration.

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