Bill
Bill > A2831
NJ A2831
NJ A2831Disallows tax deduction under corporation business tax and gross income tax for punitive damages paid in connection with legal action; includes amount paid as punitive damages on behalf of taxpayer in income for tax purposes.
summary
Introduced
02/16/2016
02/16/2016
In Committee
02/16/2016
02/16/2016
Crossed Over
Passed
Dead
01/08/2018
01/08/2018
Introduced Session
2016-2017 Regular Session
Bill Summary
This bill disallows tax deductions under the corporation business tax and the gross income tax for punitive damages paid or incurred in connection with a judgment in or settlement of a legal action and includes in a taxpayer's taxable income the amount paid to, or on behalf of, the taxpayer as insurance or otherwise by reason of the taxpayer's liability or agreement to pay punitive damages. Under current law, a corporation or an individual business owner may deduct the cost of court-ordered punitive damages as an "ordinary business expense." This tax loophole allows companies to wreak horrible damage to public assets and private property, destroying lives and livelihoods, and write it off as a cost of doing business. This bill eliminates that tax break, and requires corporations risking environmental destruction to face the true costs of their actions.
AI Summary
This bill disallows tax deductions under the corporation business tax and the gross income tax for punitive damages paid or incurred in connection with a judgment or settlement of a legal action. It also requires corporations to include in their taxable income any amount paid to or on behalf of the taxpayer as insurance or otherwise by reason of the taxpayer's liability or agreement to pay punitive damages. This eliminates a tax loophole that allows companies to write off punitive damages as an "ordinary business expense," which can incentivize harmful corporate behavior. The bill aims to ensure corporations face the true costs of their actions that result in punitive damages.
Committee Categories
Budget and Finance
Sponsors (1)
Last Action
Introduced, Referred to Assembly Budget Committee (on 02/16/2016)
bill text
bill summary
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bill summary
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bill summary
| Document Type | Source Location |
|---|---|
| BillText | https://www.njleg.state.nj.us/2016/Bills/A3000/2831_I1.HTM |
| Bill | https://www.njleg.state.nj.us/2016/Bills/A3000/2831_I1.PDF |
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