By James Nani

Law360 (April 10, 2020, 8:35 PM EDT) -- New Jersey's state Senate Democratic majority has introduced a package of bills meant to provide relief from the novel coronavirus pandemic, which includes pushing back tax filing and payment deadlines for the state's gross income tax and corporation income tax.

The slate of 25 bills introduced Thursday are meant to help the state deal with issues rising from the pandemic and will be voted on in a remote session Monday, according to a statement from Senate Democrats.

Among the bills are S.B. 2338, the COVID-19 Fiscal Mitigation Act, sponsored by Deputy Majority Leader Paul Sarlo, D-Wood-Ridge and Sen. Steven V. Oroho, R-Sparta. The bill would automatically extend the payment and filing deadline for gross income tax or corporation business tax from April 15 to July 15 and would change the timing for the payment of interest, penalties and assessment of tax, according to a bill summary.

The bill would also change the duration of the state's 2020 and 2021 fiscal years and require the state treasurer to provide updates on economic conditions, revenue and spending plans. The governor would also be required to present a revised budget message for the 2021 fiscal year.

The bill would extend the statute of limitations to assess taxes by 90 days following the conclusion of New Jersey's state of emergency. It would change the duration of the state's 2020 fiscal year to end on Sept. 30 instead of June 30 and set Oct. 1, 2020, as the start of the 2021 fiscal year.

In a statement, New Jersey Society of Certified Public Accountants CEO and Executive Director Ralph Albert Thomas said the group applauded the work to address tax filing and payment relief. But he said while S.B. 2338 delays the April 15 gross income and corporate business tax filing and payment deadlines, it fails to grant extensions for all filing and payment deadlines, as the group has recommended.

"It is impractical, if not impossible, for taxpayers and their advisers to operate under different sets of deadlines for federal and state filings, and no one's life should be risked to meet tax-filing obligations," Thomas said. "Taxpayers and their advisers need clarity and consistency; therefore, broad relief until July 15, 2020, is needed."

Also introduced Thursday was S.B. 2347, sponsored by Senate President Steve Sweeney, D-West Deptford, and Sen. Linda Greenstein, D-Cranbury. The bill would require the state's Economic Development Authority to enter into agreements with small businesses to allow them to defer paying and remittance certain employment and business-related taxes.

Applicable taxes would include sales and use tax, the motor fuels tax, the petroleum products gross receipts tax, the gross income tax, workers' compensation contributions, unemployment compensation contributions, temporary disability leave benefits contributions and family temporary disability leave contributions. The agreement would require business owners to agree to be personally liable for any applicable taxes and for any penalties and interest for failure to pay or remit the deferred tax, according to a bill summary.

The bill defines an eligible business as one that is registered to do business in New Jersey, has been in operation for one year or more, is headquartered in New Jersey or conducts its principal business operations there, and has 10 full-time-equivalent employees or fewer. A business would also have to show it faced economic hardship because of the pandemic, such as being temporarily shut down or required to reduce hours or had at least a 20% drop in revenue. 

S.B. 2348, sponsored by Sweeney and Sen. Thomas Kean, R-Westfield, would allow qualified taxpayers to claim a credit equal to 20% of the credit they receive under the employee-retention credit of the federal Coronavirus Aid, Relief, and Economic Security Act , or CARES Act. The credit would work out to up to $1,000 per employee, apply to employees in New Jersey and apply to businesses with 10 or fewer full-time employees.

The federal credit can be claimed against employment taxes equal to 50% percent of qualified wages up to $10,000 paid to eligible employees, taking into account wages paid after March 12 and before Jan. 1, 2021, according to the bill.

The bills have been introduced as the status of A.B. 3841, to extend the state's tax filing and payment deadlines to June 30, remains unresolved. In March, the state Legislature unanimously passed the bill, but Democratic Gov. Phil Murphy had not signed it as of Friday.

Murphy said earlier this month that New Jersey would extend its income tax filing deadlines by three months and automatically extend its April 15 filing deadlines for the state's individual gross income tax and corporation business tax to July 15, following the federal filing extension. But he didn't mention whether the April 15 income tax payment dates will also be moved.

Danielle DeSisto, a representative of Assembly Speaker Craig Coughlin, D-Woodbridge, referred to a joint statement Coughlin made with Sweeney and Murphy on April 1, in which said they had reached an agreement to push the state income tax-filing deadline and the corporation business tax filing deadline to July 15 and to extend the fiscal year to Sept. 30. The statement said they were committed to working together to enact the legislation to deal with the spread of the virus, which causes the respiratory disease COVID-19.

Sweeney's and Murphy's offices didn't respond to requests for comment.

The measures drew support from at least one state business group. Bob Considine, chief communications officer for the New Jersey Business and Industry Association, told Law360 that all the proposals in the legislative package were recommended last week in a letter the association and more than 50 business associations sent Murphy and the Legislature as part of a COVID-19 relief package for businesses and nonprofits.

Considine said the tax remittance delay in S.B. 2347 and the tax cut for keeping workers on the payroll in S.B. 2348 were both great for letting businesses keep more of their cash so they can keep their businesses afloat during this crisis. But he said the group is advocating adjusting the bills so businesses with 20 or less employees, instead of the current proposal of 10, can apply.

"Generally speaking, we're pleased the Legislature is prioritizing efforts to bring relief to businesses in New Jersey," Considine said. "Many small businesses need as much as assistance as they can get, and they need it quickly."

In response to the Senate legislative package, on Friday, Assembly Members Christopher DePhillips, R-Wyckoff, and Assemblyman Brian Bergen, R-Denville, said in a statement that they introduced their own legislation on Thursday that would increase the percentage of rent considered property taxes to 30% so renters can benefit more from the state's property tax deduction.

--Editing by Neil Cohen.

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