By James Nani

Law360 (April 13, 2020, 7:48 PM EDT) -- The New Jersey Legislature passed Monday a bill that would push back the fiscal year and the tax filing and payment deadlines for the state's gross income tax and corporation business tax to provide relief amid the COVID-19 pandemic.

The state Senate passed by a 38-0 vote S.B. 2338, the COVID-19 Fiscal Mitigation Act, which was sponsored by Deputy Majority Leader Paul Sarlo, D-Wood-Ridge, and Sen. Steven V. Oroho, R-Sparta. The bill passed the Assembly Monday afternoon, 80-0, after being substituted for an Assembly version, A.B. 3918. That bill was sponsored by Assembly Members Eliana Pintor Marin, D-Newark, Harold Wirths, R-Hardyston, and John Burzichelli, D-Paulsboro.

The bills were introduced late last week April 9 and passage comes just before the April 15 tax day deadline. 

The bill would automatically extend the payment and filing deadline for gross income tax or corporation business tax from April 15 to July 15, matching federal deadlines. It would also change the timing for the payment of interest, penalties and assessment of tax, according to a bill summary.

The measure would require a new budget proposal from the governor by Aug. 25 and extends the quarterly payment due this week to July 15, though the second quarterly payment will still be due on June 15. 

It would also 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.

The measure now heads to the desk of Democratic Gov. Phil Murphy, who said in a statement on Monday he intends to sign the bill Tuesday. 

"As we continue to battle the COVID-19 pandemic, it is imperative that we give both the state and our residents every opportunity to endure financially," Murphy said. "Pushing this deadline into the summer will give us additional time to combat the virus and get as many taxpayers as possible back on sound financial footing."

Besides changing the duration of the state's 2020 and 2021 fiscal years, the bill would 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.

Bill co-sponsor Sen. Anthony M. Bucco, R-Boonton, as well as Sarlo and Oroho, said the extension would allow Murphy's administration and the Legislature to deal with the pandemic crisis and the economic issues associated with it.

"We don't yet know the full dimensions of the financial consequences for residents, businesses and the state, but there is no doubt that we all face some hard times," Sarlo said. "The extensions will give taxpayers more time to calculate and manage their finances, and will provide state officials a workable timetable to craft a budget that addresses our critical needs."

Bucco said the bill stemmed from not knowing when the health crisis and, by extension, the economic crisis would subside.

"Given that uncertainty, the challenges faced by taxpayers and our inability to know if a state budget rushed to passage under these circumstances would truly be balanced as required by the New Jersey Constitution, changing the tax filing deadline and extending the state fiscal year are prudent moves," he said.

Tom Bracken, president and CEO of the New Jersey Chamber of Commerce, told Law360 on Monday that he supported the bill because it would free up cash for businesses to use by deferring payments.

"Cash flow is king," Bracken said.

But Ralph Albert Thomas, CEO and executive director of the New Jersey Society of Certified Public Accountants, said the group was disappointed that amendments to S.B. 2338 didn't make it into the final bill approved by the Senate. Thomas previously told Law360 the bill failed to grant extensions for all filing and payment deadlines, as the group recommended, making it hard for taxpayers and advisers to operate under different sets of deadlines for federal and state filings.

"Once the legislation is signed by the governor, we will work with the Division of Taxation to bring greater clarity to several unresolved issues that impact businesses and individuals," Thomas said.

Marin, in a statement released from Murphy's office, said that after the state gets through the pandemic it's going to need more time to assess the impact on the budget, saying better revenue data won't come in until August. 

"We believe New Jersey tax filers need more time to file and pay their taxes," Marin said. "This bill would ensure that taxpayers only have one deadline for filing and paying both federal and state to avoid confusion for residents."

Lawmakers also unanimously passed on Monday two other bills meant to bring relief to small businesses. S.B. 2347 was sponsored by Senate President Steve Sweeney, D-West Deptford, and Sen. Linda Greenstein, D-Plainsboro. The bill would require the state's Economic Development Authority to enter into agreements with small businesses to allow them to defer payment and remittance of certain employment and business-related taxes.

And 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 employee retention credit received under the federal Coronavirus Aid, Relief and Economic Security Act, or CARES Act. The credit would work out to up to $1,000 per employee, and apply to employees in New Jersey and to businesses with 10 or fewer full-time employees.

In a statement, Sweeney said the health crisis had hit small businesses and their employees particularly hard.

"We want to help keep workers on the payrolls and give businesses the assistance to withstand the economic consequences," Sweeney said. "A financial lifeline will help prevent the collapse of business entities and make sure business infrastructure is in place to support the recovery process after the current crisis has been contained."

For S.B. 2347, 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. Agreements entered into by businesses and the EDA 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 registered to do business in New Jersey, in operation for one year or more, headquartered in New Jersey or conducting its principal business operations there, and with 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.

And for S.B. 2348, the federal credit can be claimed against employment taxes equal to 50% 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.

"Without a variety of relief efforts, including this legislation, many small enterprises will lack the financial resources to sustain the lengthy closure necessitated by the current pandemic," Kean said. "With so many businesses at risk and so many jobs at stake, we need to provide all of the support we can."

The bills moved forward Monday as the status of A.B. 3841, a bill that would have extended the state's tax filing and payment deadlines to June 30, remains unresolved. In March, the state Legislature unanimously passed the bill, but Murphy had not acted on it as of Monday. Soon after its passage, Murphy and legislative leaders agreed on pushing the deadlines back to July. The passage of S.B. 2338 could mean A.B. 3841 is dead. 

Rachael Bell, a spokeswoman for the New Jersey Society of Certified Public Accountants, said, "3841 is completely off the table now."

--Additional reporting by Paul Williams. Editing by Vincent Sherry. 

Correction: An earlier version of this story contained an error in one of the payment dates. The error has been corrected.  

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