A4721 —

2020, c.095 (A4721) §2CHAPTER -95 T&E  &An NoteAct toimposing C.54:10A-5.41the §3corporation -business Notetax  surtax P.L.at a rate of 2.5 percent through December 31, and amending P.L.2018, c.48.

2020, CHAPTER 95, approved September 29, 2020 Assembly, No.

4721     An Act imposing the corporation business tax surtax at a rate of 2.5 percent through December 31, and amending P.L.2018, c.48.

      1.   C.54:10A-5.41  a.Assessment, payment of surtax.

     1.

a.

     (1)   For a taxpayer, except a public utility, that has allocated taxable net income in excess of $1 million for the privilege periods, beginning on or after January 1, 2018 through December 31, [2019] 2023, the surtax imposed shall be 2.5%;

provided, however, that that if the federal corporate income tax rate imposed pursuant to section 11 of the federal Internal Revenue Code of 1986 (26 U.S.C.

     (2)   [For a taxpayer, except a public utility, that has allocated taxable net income in excess of $1 million for the privilege periods, beginning on or after January 1, 2020 through December 31, 2021, the surtax imposed shall be 1.5%.] (Deleted by amendment, P.L.   P.L.2020, ,c.95) c.    ) (pending before the Legislature as this bill)      b.    For purposes of this section,      (1)   "taxpayer" shall mean any business entity that is subject to tax as provided in the Corporation Business Tax (1945), P.L.1945, c.162 (C.54:10A-1 et seq.).

(cf:       2.    The Director of the Division of Taxation in the Department of the Treasury shall waive all penalties incurred by a taxpayer because of the retroactive imposition of an increased surtax rate pursuant to P.L.2020, c.95.

P.L.2018, c.131, s.7)        2.    (New section) The Director of the Division of Taxation in the Department of the Treasury shall waive all penalties incurred by a taxpayer because of the retroactive imposition of an increased surtax rate pursuant to P.L.    , c.  (pending before the Legislature as this bill).

    STATEMENT        ThisApproved billSeptember imposes29, the2020. existing corporation business tax (CBT) surtax at a rate of 2.5 percent until December 31, 2023.  However, if the federal corporate income tax rate is increased to its pre-Tax Cut and Jobs Act (35% of taxable income) level, the surtax will be suspended at the end of a taxpayer’s current privilege period.  Under current law, the CBT surtax rate was reduced to 1.5 percent on January 1, 2020, and is scheduled to be eliminated after December 31, 2021.       The bill also requires the Director of the Division of Taxation in the Department of the Treasury to waive all penalties that a taxpayer may incur because of the retroactive imposition of the surtax rate.

     The CBT surtax is currently imposed on taxpayers that are not public utilities and that have allocated taxable net income in excess of $1 million.  Taxpayers are not allowed to apply tax credits against the surtax liability, except those credits for installment payments, estimated payments with a request for an extension of time for filing a return, or overpayments from prior privilege periods.

                                            Imposes CBT surtax at rate of 2.5 percent until December 31, 2023.