Category: State Legislation

A Look Ahead: The 221st Legislature and State of the State Address

On Tuesday, the 221st Legislature commenced in Trenton. The Senate welcomed 10 new Senators to the chamber, namely: Sen. Carmen Amato, Jr. (LD9); Sen. John Burzichelli (LD3); Sen. Owen Henry (LD12); Sen. John McKeon (LD27); Sen. Angela McKnight (LD31); Sen. Paul Moriarty (LD4); Sen. Raj Mukherji (LD32); Sen. Parker Space (LD24); Sen. Britnee Timberlake (LD34); and Sen. Latham Tiver (LD8). Senators McKeon, McKnight, Moriarty, Mukherji, Space, and Timberlake each moved over to the Senate after serving in the General Assembly during the last session. Sen. Nick Scutari, of Union County, was elected to continue as Senate President, and Sen. M. Teresa Ruiz, of Essex County, will continue as the Senate Majority Leader. Sen. Shirley Turner, of Mercer County, has been named President Pro Tempore, a position she previously held twice, and Sen. Anthony Bucco, of Morris County, will continue as the Senate Minority Leader.

Gibbons Is NJ’s Top Lawyer-Lobbying Firm for 13th Straight Year

For the thirteenth year in a row, Gibbons P.C. has been ranked the #1 lawyer-lobbying firm in New Jersey, according to the New Jersey Election Law Enforcement Commission (NJ ELEC), which has just released its report on 2020 lobbying expenditures in the state. Gibbons has also ranked sixth in the state among all lobbying firms. “These rankings reflect our lawyer-lobbyists’ significant influence in Trenton and their growing presence in Washington, DC,” says Patrick C. Dunican, Jr., Chairman and Managing Director of Gibbons. “They are able to participate in the state and federal legislative and regulatory processes in constructive ways that help our clients seize the business opportunities and navigate the challenges that can result from those processes.” In 2020, the Gibbons Government & Regulatory Affairs Department reported a 20 percent increase in number of clients and ten percent increase in revenues over the prior year. Based just steps from the New Jersey State House in Trenton and supported by additional resources from the firm’s Newark and Red Bank offices, the Department offers a broad range of services and experience in state legislative affairs, regulatory affairs and departmental actions, administrative law, business incentives, government procurement and contracting, and political and campaign finance compliance. In addition, the firm’s Washington, DC office provides Gibbons lawyer-lobbyists a base from...

Roll-Out of COVID-19 Vaccines in New Jersey

Pharmaceutical innovation has positioned the world to witness the beginning of the largest vaccination effort that humankind has ever seen. Vaccine doses for COVID-19 are arriving in New Jersey this week, and the first doses will be injected in the arms of frontline healthcare workers and seniors by the close of business today in Newark’s largest hospital. More important than today’s historic event, the current New Jersey plan to vaccinate 70 percent of the Garden State’s current eligible population is worth reviewing. As the COVID-19 vaccines roll out, New Jersey plans to follow the Phased Approach framework crafted by the Centers for Disease Control and Prevention (CDC). Under the CDC’s framework, the initial wave of vaccines will be administered first to healthcare personnel. More specifically, Phase 1A of New Jersey’s COVID-19 vaccination plan will include “any paid or unpaid persons serving in healthcare settings who have the potential for direct or indirect exposure to patients or infectious materials and are unable to work from home.” Examples of workers within healthcare settings who are eligible to receive COVID-19 vaccinations during Phase 1A include, but are not limited to: Licensed healthcare professionals, such as doctors, nurses, pharmacists, and dentists; Healthcare staff, including receptionists, janitors, clergy, mortuary services, and laboratory technicians; Consultants and per diem contractors who are...

NJABC Issues Guidance and Provides Relief to Certain Licensees and Permit Holders During COVID-19 Crisis

The COVID-19 pandemic has presented unforeseen challenges to countless businesses across the country. Businesses that serve alcoholic beverages for on-premises consumption have been hit particularly hard. Through Executive Order No. 107 (the “Order”), and in connection with the declared State of Emergency, New Jersey Governor Phil Murphy imposed certain restrictions on restaurants and bars. On March 30, 2020, the State of New Jersey Division of Alcoholic Beverage Control (“Division”) issued Advisory Notice 2020-03, which outlines the Division’s interpretation of the Order and provides guidance to licensees concerning the activities in which they may engage in during the COVID-19 crisis. All license holders in the state should review the advisory notice in full, in addition to some of the major points outlined below. Following those points is an explanation of the special ruling regarding Limited Brewery License holders that was issued by the Division concurrently with the advisory notice, and a summary of some recent changes in protocol for interactions with the Division and its staff. Lastly, there is a brief summary of the April 1, 2020 order issued by the Division authorizing the extension of certain alcoholic beverage permits. Advisory Notice 2020-03 Retail consumption licensees: Bars, restaurants, or other establishments holding retail licenses may be open during this time and sell alcoholic beverages in their...

NJEDA Steps Up With Funding for Approved Accelerators and Their Qualifying Cohorts With Exciting New $2.5 Million “NJ Accelerate” Program

On February 11, 2020, the New Jersey Economic Development Authority (“NJEDA”) approved a $2,500,000 pilot program labeled NJ Accelerate (“NJ Accelerate”). The NJEDA expects to attract more accelerator and start-up activities to the State by encouraging the increased participation of New Jersey based entrepreneurs in accelerator programs that provide specialized expertise, mentorship, and technical assistance. The NJ Accelerate program will be organized in a two-step process: (1) accelerator operators will be pre-qualified (“Approved Accelerators”) and, (2) financial assistance will be provided from the NJEDA to domestic New Jersey early-stage companies that complete a program at an Approved Accelerator. With a $2,500,000 pilot program budget, the NJEDA anticipates that approximately 10-15 companies will be supported in the NJ Accelerate pilot program in addition to the support and engagement of at least five Approved Accelerators. Domestic companies from an approved accelerator and meeting certain requirements are eligible to receive direct loan support from the NJEDA up to $250,000 in the form of a 10 year convertible promissory note and will be in the same amount of investment dollars funded into the start-up by the Approved Accelerator. There will be no repayment obligation for the first seven years. Domestic companies are also eligible to receive rent support up to $25,000. Additional benefits include funds for Approved Accelerator programmatic...

Opportunity Zone Update – IRS Releases Second Set of Proposed Regulations

On April 17, 2019, the Internal Revenue Service released the second set of Qualified Opportunity Zone (“QOZ”) proposed regulations (the “New Regulations”). The New Regulations address multiple issues relating to the structuring and operation of qualified opportunity zone funds (“QOFs”) and provide clarity on areas that include: Meeting the original use test for purchased tangible property Safe harbors for leased tangible property to qualify as QOZ business property Related party rules for leased tangible property and tangible personal property Investment vs. active business use of QOZ land Safe harbors to meet the 50% gross income test for the active conduct of a QOZ business Inclusion events for otherwise deferred capital gains Definitions for the term “substantially all” used in several statutory provisions Special elections when QOF partnerships and S corporations dispose of property after 10 years QOF reinvestment of the proceeds from the distribution, sale, or disposition of QOZ property Application of the 90% asset test to newly contributed QOF assets The New Regulations provide answers to many unresolved questions and present needed definitions where uncertainties were impeding investment into QOZs, particularly with respect to QOZ businesses. Our new article discusses many of the details.

Four Things to Watch After Legislature Cancels Votes on Marijuana

To the dismay of advocates and the cheers of opponents, the New Jersey Legislature canceled its scheduled votes on a three-bill package to legalize marijuana for adult use, expand the State’s medical marijuana program, and expunge the records of certain marijuana offenders. For the time being, New Jersey will not become the eleventh state to legalize cannabis for recreational use. But with legislators still committed to moving the issue in the future, here are four things to watch in the coming months. Will the Governor Take Action to Expand the State’s Existing Medical Marijuana Program? Marijuana is legal for medical use in New Jersey, and the State’s medical program has seen a rapid expansion under the Murphy Administration. Under the current framework of the “Compassionate Use of Medical Marijuana Act,” the Governor has the authority to permit more alternative treatment centers (ATCs) in the State, and to continue to expand the list of qualifying medical conditions that marijuana can be prescribed for. Governor Murphy and his Department of Health did a call for applicants in August 2018, and issued permits for six new vertically-integrated ATCs. The Governor expressed his desire to expand the medical marijuana program aggressively if legislation did not move forward. Administration officials have walked back the Governor’s statement in order to focus...

Qualified Opportunity Funds – An Important Step Forward – IRS Issues Proposed Regulations

On October 19, 2018, the IRS issued highly-anticipated proposed regulations regarding qualified opportunity funds (“QOFs”). As hoped, the proposed regulations provide taxpayers with sufficient initial guidance to start taking advantage of the outstanding tax benefits available to taxpayers making investments in QOFs investing in qualified opportunity zones. Under the new provisions, QOFs allow qualifying taxpayers to invest capital gain proceeds and achieve two significant and distinct tax benefits, (i) a deferral (and 10-15% reduction) of taxation on the original gains and (ii) essentially unlimited tax-free treatment of appreciation while invested in the QOF. The proposed regulations address several key issues relating to the establishment and qualification of a QOF, as well as the initial investments by taxpayers into such funds. Key sections provide that: only capital gains are eligible for deferral, QOFs may be structured as corporations or partnerships (or LLCs taxed as such), and gain proceeds may be split into one or more QOF investments. The proposed regulations also clarify rules relating to partnerships and create a new working capital 31-month safe harbor with respect to meeting the definition of a qualified opportunity zone business. Our new article on the significance and implications of the proposed regulations discusses many of the details. The experienced and dedicated attorneys at Gibbons are happy to discuss any...

Qualified Opportunity Zones – Waiting for Guidance

As part of the comprehensive 2017 Tax Reform, Congress enacted a set of provisions originally introduced in the Investing in Opportunity Act. These provisions present investors with an entirely new taxpayer-friendly investment vehicle. Rolling over the gain proceeds from the sale of any property, presumably including stock or real estate (the “initial property”), into an investment in a qualified opportunity zone (“QOZ”) offers investors the chance to defer and reduce capital gains on that initial sale, and achieve a subsequent tax-free exit from the QOZ investment. Tax Benefits Again, the tax benefits start with a deferral of gain on the current sale of the initial property until December 31, 2026 if the gain proceeds from that initial sale are invested within 180 days in a Qualified Opportunity Zone Fund (“QOF”), or until the investor exits the QOF (if before December 31, 2026). If the proceeds remain in the QOF for at least five years, the basis of the investment is increased by 10% (which will reduce taxes by 10% on the gain from the sale of such initial property). If the proceeds are kept in a QOF for at least seven years, the basis is increased an additional 5%, providing an investor with a total tax savings of 15%. Critically, December 31, 2026 is a...

Tax Changes Funding New Jersey’s New 2019 Budget

This past weekend, Governor Phil Murphy and the New Jersey legislature avoided a government shutdown by agreeing to a $37.4 billion compromise budget deal, which included significant changes to New Jersey’s business and individual taxes, including: A new “millionaire’s tax” on individuals earning $5 million or more increasing the top marginal Gross Income Tax (“GIT”) rate from 8.97% to 10.75% Business taxpayers with NJ allocated income in excess of $1 million will be liable for a 2.5% surtax (on top of the current 9% rate) for the next two years, with the surtax reduced to 1.5% for the following two years The new federal pass-through business income deduction (IRC Section 199A) will be unavailable for Corporation Business Tax (“CBT”) or GIT purposes; other decoupling provisions were adopted For CBT apportionment purposes, sales of services will be sourced to New Jersey if, or to the extent that, the benefit of the service is received at a location in New Jersey Additional legislation to expand the reach of the sales and use tax to remote sellers in light of the recent Supreme Court ruling in Wayfair v. South Dakota is awaiting the Governor’s signature Mandatory unitary combined reporting under the CBT is now required, effective for tax years beginning on or after January 1, 2019; these rules...