Bill Text: NJ A1639 | 2014-2015 | Regular Session | Introduced
Bill Title: Provides corporation business tax and gross income tax credits for certain employer-provided child care expenditures.
Spectrum: Partisan Bill (Republican 9-0)
Status: (Introduced - Dead) 2014-01-16 - Introduced, Referred to Assembly Women and Children Committee [A1639 Detail]
Download: New_Jersey-2014-A1639-Introduced.html
STATE OF NEW JERSEY
216th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2014 SESSION
Sponsored by:
Assemblywoman CAROLINE CASAGRANDE
District 11 (Monmouth)
Assemblywoman AMY H. HANDLIN
District 13 (Monmouth)
Co-Sponsored by:
Assemblywomen Angelini, B.DeCroce, N.Munoz, Assemblyman O'Scanlon, Assemblywomen Gove, Simon and Assemblyman Bramnick
SYNOPSIS
Provides corporation business tax and gross income tax credits for certain employer-provided child care expenditures.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel
An Act providing credits against the corporation business tax and the gross income tax for certain employer-provided child care expenditures, supplementing P.L.1945, c.162 (C.54:10A-1 et seq.) and chapter 4 of Title 54A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. A taxpayer shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), in an amount equal to 50 percent of the cost paid or incurred by the taxpayer on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) to acquire, construct, reconstruct, renovate, or otherwise improve real property in this State that is to be used by the taxpayer, or another person under contract or agreement with the taxpayer, to conduct, maintain, and operate a qualified child care center primarily for the children of individuals employed by the taxpayer.
b. To be eligible to apply the credit allowed in accordance with subsection a. of this section against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), a taxpayer shall make and enter into an agreement with the director on or before the last day of the privilege period for which the credit is first applied.
The agreement shall require the taxpayer to submit to the director all receipts, bills, invoices, and other similar documents that the director determines to be necessary to verify the costs paid or incurred by the taxpayer.
The agreement shall require the taxpayer to demonstrate to the director that the real property acquired, constructed, reconstructed, renovated, or otherwise improved in this State is not part of the principal residence of the taxpayer or part of the principal residence of an individual employed by the taxpayer.
The agreement shall require the taxpayer to demonstrate to the director that the real property acquired, constructed, reconstructed, renovated, or otherwise improved in this State is used by the taxpayer, or another person under contract or agreement with the taxpayer, to conduct, maintain, and operate a qualified child care center primarily for the children of individuals employed by the taxpayer on the date the agreement is entered into.
The agreement shall require the taxpayer to use the real property acquired, constructed, reconstructed, renovated, or otherwise improved in this State to conduct, maintain, and operate, either directly or indirectly by another person under contract or agreement with the taxpayer, a qualified child care center primarily for the children of individuals employed by the taxpayer for a period of 60 consecutive months beginning on the first day of the first month next following the date the agreement is entered into.
The agreement shall require the taxpayer to notify the director in writing if, at any time during the 60-month period in which the real property is required to be used as a qualified child care center, the real property is not used by the taxpayer, or another person under contract or agreement with the taxpayer, to conduct, maintain, and operate a qualified child care center primarily for the children of individuals employed by the taxpayer.
The agreement shall require the taxpayer to repay the amount of credit allowed in accordance with subsection a. of this section that has been applied to reduce the taxpayer's liability for tax or that has been used as the basis of a tax credit transfer certificate that has been sold to another person in accordance with subsection e. of this section, and shall prohibit the taxpayer from applying any unused amount of credit allowed in accordance with subsection a. of this section or from making and filing an application with the director in accordance with subsection e. of this section for a tax credit transfer certificate in lieu of the taxpayer being allowed to apply any amount of the credit against the tax liability of the taxpayer, if the taxpayer is required to notify the director of the taxpayer's failure to conduct, maintain, and operate a qualified child care center during the 60-month period in which the real property is required to be used as a qualified child care center; provided however, that the taxpayer shall not be required to repay the amount of any credit, or be prohibited from applying any unused credit, allowed in accordance with subsection a. of this section, if the taxpayer's failure to conduct, maintain, and operate the qualified child care center during the 60-month period results from a casualty loss, involving the qualified child care center, or if another person, under contract or agreement with the taxpayer and the director, assumes the taxpayer's responsibility to use the real property to conduct, maintain, and operate a qualified child care center primarily for the children of individuals employed by that person for the remainder of the 60-month period.
The agreement shall require the director to assess the amount of any credit allowed in accordance with subsection a. of this section that is required to be repaid by the taxpayer, give notice of the assessment to the taxpayer, and make demand upon the taxpayer for payment of the assessment to be made within 30 days of the date notice and demand is mailed to the taxpayer by the director.
The agreement shall require the taxpayer to pay to the director interest on an assessment, or any portion of an assessment, that is not paid in full within 30 days of the date notice and demand is mailed at a rate of three percentage points above the prime rate assessed for each month or fraction thereof, compounded annually at the end of each year, from the date the credit allowed in accordance with subsection a. of this section was first applied to reduce the taxpayer's liability for tax, or the date the taxpayer made and filed an application with the director for a tax credit transfer certificate, until the date payment is made.
The agreement shall stipulate that an assessment, and any interest on an assessment, required to be paid by the taxpayer is a deficiency with respect to the payment of a State tax: the director shall be provided all rights, powers, and duties authorized under the State Uniform Tax Procedure Law, R.S.54:48-1 et seq., to ensure the payment, collection, or recovery of the deficiency and the taxpayer shall be afforded all protections, rights, and remedies allowed under R.S.54:48-1 et seq. to challenge, protest, or appeal the deficiency or any determination or decision rendered in connection with the deficiency.
c. If two or more taxpayers pay or incur costs on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) to acquire, construct, reconstruct, renovate, or otherwise improve real property in this State that is to be used jointly by the taxpayers, or another person under contract or agreement with the taxpayers, to conduct, maintain, and operate a qualified child care center primarily for the children of individuals employed by the taxpayers, each taxpayer shall be allowed a credit in accordance with subsection a. of this section for that portion of the costs paid or incurred by that taxpayer; provided however, that to be eligible to apply the credit allowed in accordance with subsection a. of this section to reduce a liability for tax each taxpayer separately shall make and enter into an agreement with the director in accordance with subsection b. of this section.
d. The order of priority of the application of the credit allowed in accordance with subsection a. of this section and any other credits allowed by law against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) shall be as prescribed by the director.
The amount of credit allowed in accordance with subsection a. of this section that is applied against the tax liability of the taxpayer for a privilege period, together with any other credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), shall not exceed 50 percent of the tax liability otherwise due, and shall not reduce the tax liability otherwise due to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5).
The amount of any credit allowed in accordance with subsection a. of this section that is not applied to reduce the tax liability of the taxpayer for a privilege period due to the limitations and conditions of this subsection may be carried forward, if necessary, to be used by the taxpayer against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) in each of the seven privilege periods following the privilege period for which the credit is allowed.
e. A taxpayer allowed a credit in accordance with subsection a. of this section may make and file an application with the director for a tax credit transfer certificate in lieu of the taxpayer being allowed any amount of the credit against the tax liability of the taxpayer.
Upon the review and approval of an application made and filed in accordance with this subsection, the director shall issue to the taxpayer a tax credit transfer certificate.
The tax credit transfer certificate issued to a taxpayer by the director may be sold, in full or in part, to another person that may have a liability for tax under section 5 of P.L.1945, c.162 (C.54:10A-5), N.J.S.54A:1-1 et seq., sections 2 and 3 of P.L.1945, c.132 (C.54:18A-2 and 54:18A-3), section 1 of P.L.1950, c.231 (C.17:32-15), or N.J.S.17B:23-5, in exchange for private financial consideration to be provided to the taxpayer by the person making the purchase.
The tax credit transfer certificate issued to a taxpayer by the director shall include a statement waiving the taxpayer's right to apply that amount of the credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), that the taxpayer has elected to sell to another person in exchange for private financial consideration.
The sale of any amount of a tax credit transfer certificate issued to a taxpayer by the director shall not be made for private financial consideration of less than 75 percent of the transferred credit amount.
The amount of any tax credit transfer certificate that may be used by a purchaser against a tax liability of the purchaser under section 5 of P.L.1945, c.162 (C.54:10A-5), N.J.S.54A:1-1 et seq., sections 2 and 3 of P.L.1945, c.132 (C.54:18A-2 and 54:18A-3), section 1 of P.L.1950, c.231 (C.17:32-15), or N.J.S.17B:23-5 shall be subject to any limitations and conditions on the application of tax credit transfer certificates that may be prescribed by the director.
f. As used in this section:
"Highly compensated employee" means the individuals employed by the taxpayer who, in the aggregate, receive the top 25 percent of all employee compensation paid by the taxpayer.
"Qualified child care center" means a facility that is licensed as a child care center by the Department of Children and Families in accordance with the "Child Care Licensing Act," P.L.1983, c.492 (C.30:5B-1 et seq.); provided however, that a "qualified child care center" shall not include a facility licensed by the department if:
the principal use of the facility is for some purpose other than the care, development, and supervision of children, unless the facility is the principal residence of the person who owns and operates the qualified child care center;
the facility is not used on a regular basis to provide for the care, development, and supervision of children;
enrollment in the facility is not open to children of individuals employed by the taxpayer; or
use of the facility is limited or restricted under procedures, criteria, or other systems of selection that unfairly discriminate in favor of highly compensated employees, or that unfairly discriminate in favor of individuals employed by the taxpayer on the basis of race, creed, religion, sex, national origin, disability, or marital status.
2. a. A taxpayer shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), in an amount equal to:
50 percent of the cost paid or incurred by the taxpayer during the privilege period to conduct, maintain, and operate a qualified child care center of the taxpayer that is used primarily by the children of individuals employed by the taxpayer;
50 percent of the amount paid by the taxpayer during the privilege period to another person to conduct, maintain, and operate, under contract or agreement with the taxpayer, a qualified child care center of the taxpayer that is used primarily by the children of individuals employed by the taxpayer;
50 percent of the amount paid by the taxpayer during the privilege period to another person, under contract or agreement with the taxpayer, for the provision of child care to children of individuals employed by the taxpayer at a qualified child care center; or
10 percent of the cost paid or incurred by the taxpayer during the privilege period for the provision, by the taxpayer or by another person under contract or agreement with the taxpayer, of qualified child care information and referral services to individuals employed by the taxpayer.
b. If two or more taxpayers jointly pay or incur costs or jointly pay amounts eligible for the credit allowed in accordance with subsection a. of this section during the privilege period, each taxpayer shall be allowed a credit for that portion of the costs paid or incurred by that taxpayer or that portion of the amounts paid by that taxpayer.
c. The order of priority of the application of the credit allowed in accordance with subsection a. of this section and any other credits allowed by law against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) shall be as prescribed by the director.
The amount of credit allowed in accordance with subsection a. of this section that is applied against the tax liability of the taxpayer for a privilege period, together with any other credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), shall not exceed 50 percent of the tax liability otherwise due, and shall not reduce the tax liability otherwise due to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5).
The amount of any credit allowed in accordance with subsection a. of this section that is not applied to reduce the tax liability of the taxpayer for a privilege period due to the limitations and conditions of this subsection may be carried forward, if necessary, to be used by the taxpayer against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) in each of the seven privilege periods following the privilege period for which the credit is allowed.
d. As used in this section:
"Highly compensated employee" means the individuals employed by the taxpayer who, in the aggregate, receive the top 25 percent of all employee compensation paid by the taxpayer.
"Qualified child care center" means a facility that is licensed as a child care center by the Department of Children and Families in accordance with the "Child Care Licensing Act," P.L.1983, c.492 (C.30:5B-1 et seq.); provided however, that a "qualified child care center" shall not include a facility licensed by the department if:
the principal use of the facility is for some purpose other than the care, development, and supervision of children, unless the facility is the principal residence of the person who owns and operates the qualified child care center;
the facility is not used on a regular basis to provide for the care, development, and supervision of children;
enrollment in the facility is not open to children of individuals employed by the taxpayer; or
use of the facility is limited or restricted under procedures, criteria, or other systems of selection that unfairly discriminate in favor of highly compensated employees, or that unfairly discriminate in favor of individuals employed by the taxpayer on the basis of race, creed, religion, sex, national origin, disability, or marital status.
"Qualified child care information and referral services" means services that, at a minimum, identify local child care services, provide information describing local child care services available to individuals employed by the taxpayer, and make referrals of individuals employed by the taxpayer to appropriate child care services when openings are available.
3. a. A taxpayer shall be allowed a credit against the tax otherwise due for the taxable year under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., in an amount equal to 50 percent of the cost paid or incurred by the taxpayer on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) to acquire, construct, reconstruct, renovate, or otherwise improve real property in this State that is to be used by the taxpayer, or another person under contract or agreement with the taxpayer, to conduct, maintain, and operate a qualified child care center primarily for the children of individuals employed by the taxpayer.
b. To be eligible to apply the credit allowed in accordance with subsection a. of this section against the tax otherwise due for the taxable year under N.J.S.54A:1-1 et seq., a taxpayer shall make and enter into an agreement with the director on or before the last day of the taxable year for which the credit is first applied.
The agreement shall require the taxpayer to submit to the director all receipts, bills, invoices, and other similar documents that the director determines to be necessary to verify the costs paid or incurred by the taxpayer.
The agreement shall require the taxpayer to demonstrate to the director that the real property acquired, constructed, reconstructed, renovated, or otherwise improved in this State is not part of the principal residence of the taxpayer or part of the principal residence of an individual employed by the taxpayer.
The agreement shall require the taxpayer to demonstrate to the director that the real property acquired, constructed, reconstructed, renovated, or otherwise improved in this State is used by the taxpayer, or another person under contract or agreement with the taxpayer, to conduct, maintain, and operate a qualified child care center primarily for the children of individuals employed by the taxpayer on the date the agreement is entered into.
The agreement shall require the taxpayer to use the real property acquired, constructed, reconstructed, renovated, or otherwise improved in this State to conduct, maintain, and operate, either directly or indirectly by another person under contract or agreement with the taxpayer, a qualified child care center primarily for the children of individuals employed by the taxpayer for a period of 60 consecutive months beginning on the first day of the first month next following the date the agreement is entered into.
The agreement shall require the taxpayer to notify the director in writing if, at any time during the 60-month period in which the real property is required to be used as a qualified child care center, the real property is not used by the taxpayer, or another person under contract or agreement with the taxpayer, to conduct, maintain, and operate a qualified child care center primarily for the children of individuals employed by the taxpayer.
The agreement shall require the taxpayer to repay the amount of credit allowed in accordance with subsection a. of this section that has been applied to reduce the taxpayer's liability for tax or that has been used as the basis of a tax credit transfer certificate that has been sold to another person in accordance with subsection f. of this section, and shall prohibit the taxpayer from claiming any unused amount of credit allowed in accordance with subsection a. of this section or from making and filing an application with the director in accordance with subsection f. of this section for a tax credit transfer certificate in lieu of the taxpayer being allowed to apply any amount of the credit against the tax liability of the taxpayer, if the taxpayer is required to notify the director of the taxpayer's failure to conduct, maintain, and operate a qualified child care center during the 60-month period in which the real property is required to be used as a qualified child care center; provided however, that the taxpayer shall not be required to repay the amount of any credit, or be prohibited from applying any unused credit, allowed in accordance with subsection a. of this section, if the taxpayer's failure to conduct, maintain, and operate the qualified child care center during the 60-month period results from a casualty loss, involving the qualified child care center, or if another person, under contract or agreement with the taxpayer and the director, assumes the taxpayer's responsibility to use the real property to conduct, maintain, and operate a qualified child care center primarily for the children of individuals employed by that person for the remainder of the 60-month period.
The agreement shall require the director to assess the amount of any credit allowed in accordance with subsection a. of this section that is required to be repaid by the taxpayer, give notice of the assessment to the taxpayer, and make demand upon the taxpayer for payment of the assessment to be made within 30 days of the date notice and demand is mailed to the taxpayer by the director.
The agreement shall require the taxpayer to pay to the director interest on an assessment, or portion of an assessment, that is not paid in full within 30 days of the date notice and demand is mailed at a rate of three percentage points above the prime rate assessed for each month or fraction thereof, compounded annually at the end of each year, from the date the credit allowed in accordance with subsection a. of this section was first applied to reduce the taxpayer's liability for tax, or the date the taxpayer made and filed an application with the director for a tax credit transfer certificate, until the date payment is made.
The agreement shall stipulate that an assessment, and any interest on an assessment, required to be paid by the taxpayer is a deficiency with respect to the payment of a State tax: the director shall be provided all rights, powers, and duties authorized under the State Uniform Tax Procedure Law, R.S.54:48-1 et seq., to ensure the payment, collection, or recovery of the deficiency and the taxpayer shall be afforded all protections, rights, and remedies allowed under R.S.54:48-1 et seq. to challenge, protest, or appeal the deficiency or any determination or decision rendered in connection with the deficiency.
c. If two or more taxpayers pay or incur costs on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) to acquire, construct, reconstruct, renovate, or otherwise improve real property in this State that is to be used jointly by the taxpayers, or another person under contract or agreement with the taxpayers, to conduct, maintain, and operate a qualified child care center primarily for the children of individuals employed by the taxpayers, each taxpayer shall be allowed a credit in accordance with subsection a. of this section for that portion of the costs paid or incurred by that taxpayer; provided however, that to be eligible to apply the credit allowed in accordance with subsection a. of this section to reduce a liability for tax each taxpayer separately shall make and enter into an agreement with the director in accordance with subsection b. of this section.
d. A business entity that is classified as a partnership for federal income tax purposes shall not be allowed the credit directly under N.J.S.54A:1-1 et seq., but the amount of credit of the taxpayer in respect of a distributive share of partnership income shall be determined by allocating to the taxpayer that proportion of the credit acquired by the partnership that is equal to the taxpayer's share, whether or not distributed, of the total distributive income or gain of the partnership for its taxable year ending within or with the taxpayer's taxable year.
A taxpayer that is a New Jersey S corporation shall not be allowed the credit directly under N.J.S.54A:1-1 et seq., but the amount of credit of a taxpayer in respect of a pro rata share of S corporation income shall be determined by allocating to the taxpayer that proportion of the credit acquired by the New Jersey S corporation that is equal to the taxpayer's share, whether or not distributed, of the total pro rata share of S corporation income of the New Jersey S corporation for its privilege period ending within or with the taxpayer's taxable year.
e. The order of priority of the application of the credit allowed in accordance with subsection a. of this section and any other credits allowed by law against the tax otherwise due for the taxable year under N.J.S.54A:1-1 et seq. shall be as prescribed by the director.
f. A taxpayer allowed a credit in accordance with subsection a. of this section may make and file an application with the director for a tax credit transfer certificate in lieu of the taxpayer being allowed any amount of the credit against the tax liability of the taxpayer.
Upon the review and approval of an application made and filed in accordance with this subsection, the director shall issue to the taxpayer a tax credit transfer certificate.
The tax credit transfer certificate issued to the taxpayer by the director may be sold, in full or in part, to another person that may have a liability for tax under section 5 of P.L.1945, c.162 (C.54:10A-5), N.J.S.54A:1-1 et seq., sections 2 and 3 of P.L.1945, c.132 (C.54:18A-2 and 54:18A-3), section 1 of P.L.1950, c.231 (C.17:32-15), or N.J.S.17B:23-5, in exchange for private financial consideration to be provided to the taxpayer by the person making the purchase.
The tax credit transfer certificate issued to a taxpayer by the director shall include a statement waiving the taxpayer's right to apply that amount of the credit against the tax otherwise due for the taxable year under N.J.S.54A:1-1 et seq., that the taxpayer has elected to sell to another person in exchange for private financial consideration.
The sale of any amount of a tax credit transfer certificate issued to a taxpayer by the director shall not be made for private financial consideration of less than 75 percent of the transferred credit amount.
The amount of any tax credit transfer certificate that may be used by a purchaser against a tax liability of the purchaser under section 5 of P.L.1945, c.162 (C.54:10A-5), N.J.S.54A:1-1 et seq., sections 2 and 3 of P.L.1945, c.132 (C.54:18A-2 and 54:18A-3), section 1 of P.L.1950, c.231 (C.17:32-15), or N.J.S.17B:23-5 shall be subject to any limitations and conditions on the application of tax credit transfer certificates that may be prescribed by the director.
g. As used in this section:
"Highly compensated employee" means the individuals employed by the taxpayer who, in the aggregate, receive the top 25 percent of all employee compensation paid by the taxpayer.
"Qualified child care center" means a facility that is licensed as a child care center by the Department of Children and Families in accordance with the "Child Care Licensing Act," P.L.1983, c.492 (C.30:5B-1 et seq.); provided however, that a "qualified child care center" shall not include a facility licensed by the department if:
the principal use of the facility is for some purpose other than the care, development, and supervision of children, unless the facility is the principal residence of the person who owns and operates the qualified child care center;
the facility is not used on a regular basis to provide for the care, development, and supervision of children;
enrollment in the facility is not open to children of individuals employed by the taxpayer; or
use of the facility is limited or restricted under procedures, criteria, or other systems of selection that unfairly discriminate in favor of highly compensated employees, or that unfairly discriminate in favor of individuals employed by the taxpayer on the basis of race, creed, religion, sex, national origin, disability, or marital status.
4. a. A taxpayer shall be allowed a credit against the tax otherwise due for the taxable year under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., in an amount equal to:
50 percent of the cost paid or incurred by the taxpayer during the taxable year to conduct, maintain, and operate a qualified child care center of the taxpayer that is used primarily by the children of individuals employed by the taxpayer;
50 percent of the amount paid by the taxpayer during the taxable year to another person to conduct, maintain, and operate, under contract or agreement with the taxpayer, a qualified child care center of the taxpayer that is used primarily by the children of individuals employed by the taxpayer;
50 percent of the amount paid by the taxpayer during the taxable year to another person, under contract or agreement with the taxpayer, for the provision of child care to children of individuals employed by the taxpayer at a qualified child care center; or
10 percent of the cost paid or incurred by the taxpayer during the taxable year for the provision, by the taxpayer or by another person under contract or agreement with the taxpayer, of qualified child care information and referral services to individuals employed by the taxpayer.
b. If two or more taxpayers jointly pay or incur costs or jointly pay amounts eligible for the credit allowed in accordance with subsection a. of this section during the taxable year, each taxpayer shall be allowed a credit for that portion of the costs paid or incurred by that taxpayer or that portion of the amounts paid by that taxpayer.
c. A business entity that is classified as a partnership for federal income tax purposes shall not be allowed the credit directly under N.J.S.54A:1-1 et seq., but the amount of credit of the taxpayer in respect of a distributive share of partnership income shall be determined by allocating to the taxpayer that proportion of the credit acquired by the partnership that is equal to the taxpayer's share, whether or not distributed, of the total distributive income or gain of the partnership for its taxable year ending within or with the taxpayer's taxable year.
A taxpayer that is a New Jersey S corporation shall not be allowed the credit directly under N.J.S.54A:1-1 et seq., but the amount of credit of a taxpayer in respect of a pro rata share of S corporation income shall be determined by allocating to the taxpayer that proportion of the credit acquired by the New Jersey S corporation that is equal to the taxpayer's share, whether or not distributed, of the total pro rata share of S corporation income of the New Jersey S corporation for its privilege period ending within or with the taxpayer's taxable year.
d. The order of priority of the application of the credit allowed in accordance with subsection a. of this section and any other credits allowed by law against the tax otherwise due for the taxable year under N.J.S.54A:1-1 et seq. shall be as prescribed by the director.
e. As used in this section:
"Highly compensated employee" means the individuals employed by the taxpayer who, in the aggregate, receive the top 25 percent of all employee compensation paid by the taxpayer.
"Qualified child care center" means a facility that is licensed as a child care center by the Department of Children and Families in accordance with the "Child Care Licensing Act," P.L.1983, c.492 (C.30:5B-1 et seq.); provided however, that a "qualified child care center" shall not include a facility licensed by the department if:
the principal use of the facility is for some purpose other than the care, development, and supervision of children, unless the facility is the principal residence of the person who owns and operates the qualified child care center;
the facility is not used on a regular basis to provide for the care, development, and supervision of children;
enrollment in the facility is not open to children of individuals employed by the taxpayer; or
use of the facility is limited or restricted under procedures, criteria, or other systems of selection that unfairly discriminate in favor of highly compensated employees, or that unfairly discriminate in favor of individuals employed by the taxpayer on the basis of race, creed, religion, sex, national origin, disability, or marital status.
"Qualified child care information and referral services" means services that, at a minimum, identify local child care services, provide information describing local child care services available to individuals employed by the taxpayer, and make referrals of individuals employed by the taxpayer to appropriate child care services when openings are available.
5. This act shall take effect immediately and apply to privilege periods and taxable years beginning on or after January 1 next following the date of enactment.
STATEMENT
This bill provides businesses with credits against the corporation business tax and the gross income tax for certain employer-provided child care expenditures.
The bill permits businesses subject to the corporation business tax or the gross income tax to apply a credit against the tax liability otherwise due for a percentage of eligible expenditures made to acquire, construct, reconstruct, renovate, or otherwise improve real property to be used as a qualified child care center. The bill also permits businesses to apply a separate, additional credit for a percentage of eligible expenditures made in connection with the provision of certain child care services.
The bill provides that the amount of the credit allowed for the construction of a child care center is equal to 50 percent of the cost paid or incurred by a business to acquire, construct, reconstruct, renovate, or otherwise improve real property in this State that is to be used by the business, or another person under contract or agreement with the business, to conduct, maintain, and operate a qualified child care center primarily for the children of individuals employed by the business.
The bill provides that the amount of the credit allowed for the provision of child care services is equal to:
-- 50 percent of the cost paid or incurred by a business to conduct, maintain, and operate a qualified child care center of the business that is used primarily by the children of individuals employed by the business;
-- 50 percent of the amount paid by a business to another person to conduct, maintain, and operate, under contract or agreement with the business, a qualified child care center of the business that is used primarily by the children of individuals employed by the business;
-- 50 percent of the amount paid by a business to another person, under contract or agreement with the business, for the provision of child care to children of individuals employed by the business at a qualified child care center; or
-- 10 percent of the cost paid or incurred by a business for the provision, by the business or by another person under contract or agreement with the business, of qualified child care information and referral services to individuals employed by the business.
The bill provides that to be eligible to apply the credit for the construction of a child care center a business must make and enter into an agreement with the Director of the Division of Taxation in the Department of the Treasury. The bill specifies that the agreement must require the business to demonstrate the intended use and status of the real property acquired, constructed, reconstructed, renovated, or otherwise improved in this State, and require the business to use that property to conduct, maintain, and operate a qualified child care center primarily for the children of individuals employed by the business for a 60-month period.
The bill provides that, under the credit for the construction of a child care center, a business may make and file an application with the Director of the Division of Taxation for a tax credit transfer certificate in lieu of being allowed any amount of the credit against the tax liability of the business. The bill specifies that, if issued, the certificate may be sold to a another person that may have a tax liability under certain other State taxes in exchange for private financial consideration, but stipulates that the sale cannot be made for consideration of less than 75 percent of the transferred credit amount.
The bill defines a "qualified child care center" as a facility that is licensed as a child care center by the Department of Children and Families, but specifically excludes from that definition facilities licensed by the department if: the principal use of the facility is for some purpose other than the care, development, and supervision of children; the facility is not used on a regular basis to provide for the care, development, and supervision of children; enrollment in the facility is not open to children of individuals employed by the business claiming the credit; or use of the facility is limited or restricted under procedures, criteria, or other systems of selection that unfairly discriminate.
The bill takes effect immediately and applies to privilege periods and taxable years beginning on or after January 1 next following the date of enactment.
The purpose of this bill is to encourage New Jersey businesses to take a more active role in the provision of child care to employees and their children. Businesses that are active in providing child care typically have a more engaged and productive workforce and play an integral part in reducing the overall demand for quality, affordable child care in this State.
