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PRESS RELEASE

E. Martin Davidoff & Associates, Certified Public Accountants

353 Georges Road l P.O. Box 835 l Dayton, NJ 08810-0835 l 732-274-1600

FOR IMMEDIATE RELEASE: May 22, 2003 Contact: Natalie Rodriguez 732-274-1600 or Lisa Mills 973-827-6225

CPA CALLS FOR GUTSY LEGISLATION FROM TAX COMMISSION

In testimony before the New Jersey Corporation Business Tax Study Commission, E. Martin Davidoff, a CPA/tax attorney from E. Martin Davidoff & Associates in Dayton, urged the Commission to "recommend gutsy legislation" that would make necessary changes to the state’s business tax structure.

Established in the fall of 2002, the nine-member Commission monitors and assesses the performance of the restructured Corporate Business Tax to ensure that all companies pay their fair share of taxes. Five of the members were appointed by Governor James E. McGreevey who said he expected tax reforms to "create a reliable revenue stream and achieve long-term structural balance in state finances."

During a May 15 public hearing at the Labor Education Center at Rutgers University in New Brunswick, Davidoff said, "Businesses of every type have been attacked and burdened by additional taxes." He appealed to the Commission to make several changes that include:

Repealing the processing fee on partnerships. The $150 processing fee is causing large, sophisticated partnerships and companies to relocate out of New Jersey, and forcing small partnerships to completely close their doors. Davidoff said this fee is snuffing out new businesses the way "a hard frost kills a seedling plant."

Reducing the corporate minimum tax from $500 to the previous amount of $210. The higher tax, which Davidoff called "one of the most irresponsible actions of our State Legislature," is discouraging new businesses from forming in New Jersey and forcing fledgling businesses to shut down.

In addition, Davidoff testified that the two-year suspension of the net operating loss provisions has had the unintended impact of permanently eliminating carryovers of net operating losses for companies that liquidate their assets at a profit. Davidoff explained that one of his clients paid nearly $27,000 in additional tax for a transaction that took place five months before the legislation was passed. Because the law was retroactive, the loss was not suspended, but lost forever. "What could be more unfair? At the time of the transaction, their loss could be utilized," he said, stressing that the law unfairly cost the company substantial dollars. He asked the Commission to correct such unintended distortions so that the two-year suspension of net operating losses does not apply to:

Years in which companies sell substantially all of their assets as part of a liquidation plan. Instead of being deferred, the net operating losses of these companies are being totally eliminated.

The last or next to last year of a corporation’s operation.

"Correct these inequities and you will have done New Jersey a huge service," Davidoff said. He also encouraged the Commission to seek opportunities to raise revenue for the state, consider a temporary surtax, and close loopholes that benefit multi-national corporations. The Commission will hold its last public hearing on May 29, 2003 at the Rutgers-Camden Campus Center.

E. Martin Davidoff & Associates, Certified Public Accountants, established in 1981, provides expert services in IRS problems resolution, individual taxation, income tax research and planning, S corporations, business start-ups and business consulting. Visit the firm at www.TaxAttorneyCPA.com.