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  • NJ A1755
  • Prohibits business expense deductions for punitive damages paid in civil litigation under the corporation business tax and gross income tax.
Introduced
(1/27/2016)
In Committee
(1/27/2016)
Crossed OverPassedSignedDead/Failed/Vetoed
2016-2017 Regular Session
This bill prohibits business expense deductions for punitive damages paid in civil litigation under the corporation business tax and gross income tax. The purpose of this bill is to prevent business taxpayers from using State income tax deductions to subsidize punitive damages. On February 3, 2015, the New York Times published an article entitled "When Company Is Fined, Taxpayers Often Share Bill" that publicized the practice of large corporations to mitigate the economic cost of incurring punitive damages through the use of federal income tax deductions. Under current law, businesses may deduct punitive damages to the extent the underlying wrongful act occurred in the ordinary and necessary course of business. This deductible treatment is generally allowed for federal income tax, New Jersey gross income tax, and New Jersey corporation business tax purposes. Under this bill, punitive damages paid by a business taxpayer in civil litigation are not deductible for New Jersey gross income tax or New Jersey corporation business tax purposes. The bill specifies that punitive damages do not include compensatory damages or nominal damages.
Budget
Introduced, Referred to Assembly Budget Committee  (on 1/27/2016)
 
 

Date Chamber Action Description
1/27/2016 A Introduced, Referred to Assembly Budget Committee
Date Motion Yea Nay Other
None specified