New Jersey Assembly Bill A350

New Jersey 2022-2023 Regular Session

• Introduced: 1/11/22
• Refer: 1/11/22

Caption

Allows commercial property owners to claim certain amounts of commercial tenant rent forgiveness during COVID-19 emergency as deduction against property owner's income under CBT or GIT.

Impact

The bill limits deductions to rent forgiveness provided for eligible businesses during the public health emergency declared by the Governor, specifically for months prior to September 2020. Eligible businesses must lease commercial properties and cannot be part of the same controlled or affiliated group as the property owner. This legislation aims to bolster economic recovery by ensuring that landlords can mitigate some of their losses while aiding tenants who may otherwise be forced out of business due to the financial strain of rent obligations.

Summary

Assembly Bill A350 allows commercial property owners in New Jersey to claim deductions for certain amounts of rent forgiveness granted to tenants during the COVID-19 pandemic. Specifically, it permits property owners to deduct up to 33.3 percent of forgiven rent or $15,000, whichever is less, from their Corporation Business Tax (CBT) or Gross Income Tax (GIT) liabilities. The bill is designed to provide financial relief to business owners who have been adversely affected by the pandemic, helping to ease their tax burdens while supporting commercial tenants who are struggling to meet their rental obligations.

Contention

One notable point of contention within the discussions around AB350 pertains to the scope and definition of 'eligible businesses.' Some lawmakers may argue about the fairness and potential loopholes that could allow larger corporate entities to benefit disproportionately from the deductions, while smaller, locally-owned businesses might struggle without similar support mechanisms. Additionally, questions may arise regarding the effectiveness of such tax incentives in stimulating economic recovery and whether more direct assistance to tenants might be a more effective approach.