Sponsored by:
Assemblyman SAMUEL L. FIOCCHI
District 1 (Atlantic, Cape May and Cumberland)
Assemblyman CHRIS A. BROWN
District 2 (Atlantic)
Co-Sponsored by:
Assemblymen McGuckin, Rumpf, Assemblywoman Gove, Assemblyman Rible, Assemblywomen Angelini and Handlin
SYNOPSIS
Provides corporation business tax and gross income tax credits for certain seasonal employers.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning tax credits for certain seasonal employers and 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 that is a seasonal employer 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 the product of the total number of hours worked by eligible employees during the privilege period for which they are paid the State minimum wage and the amount, if any, by which the State minimum wage exceeds the federal minimum wage.
b. 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 of the Division of Taxation.
c. If the amount of the credit allowed pursuant to this section exceeds the amount of tax otherwise due, that amount of excess shall be an overpayment for the purposes of N.J.S.54:49-14.
d. A seasonal employer who discharges an employee who is not eligible and replaces that employee with an eligible employee solely for the purpose of qualifying for this credit shall not qualify to claim the credit for any eligible employee.
e. As used in this section:
"Seasonal employer" means an employer that, because of climactic conditions or the nature of the product or service, customarily operates only during a regularly recurring period of 30 weeks or less in a calendar year.
"Eligible employee" means an individual who has been employed by a seasonal employer in the State for not more than 30 weeks in a calendar year, and who is paid the State minimum wage during some part of that period by the seasonal employer.
"Federal minimum wage" means the minimum wage rate established pursuant to 29 U.S.C. s.206 or its successors.
"State minimum wage" means the minimum wage rate established pursuant to Article I, paragraph 23 of the New Jersey State Constitution.
2. a. A taxpayer that is a seasonal employer shall be allowed a credit against the tax otherwise due for the taxable year under the "New Jersey Gross Income Tax," N.J.S.54A:1-1 et seq., in an amount equal to the product of the total number of hours worked by eligible employees during the taxable year for which they are paid the State minimum wage and the amount, if any, by which the State minimum wage exceeds the federal minimum wage.
b. 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.
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 otherwise due for the taxable year under N.J.S.54A:1-1 et seq. shall be as prescribed by the Director of the Division of Taxation.
d. If the amount of the credit allowed pursuant to this section exceeds the amount of tax otherwise due, that amount of excess shall be an overpayment for the purposes of N.J.S.54A:9-7; provided however, that subsection (f) of N.J.S.54A:9-7 shall not apply.
e. A seasonal employer who discharges an employee who is not eligible and replaces that employee with an eligible employee solely for the purpose of qualifying for this credit shall not qualify to claim the credit for any eligible employee.
f. As used in this section:
"Seasonal employer" means an employer that, because of climactic conditions or the nature of the product or service, customarily operates only during a regularly recurring period of 30 weeks or less in a calendar year.
"Eligible employee" means an individual who has been employed by a seasonal employer in the State for not more than 30 weeks in a calendar year, and who is paid the State minimum wage during some part of that period by the seasonal employer.
"Federal minimum wage" means the minimum wage rate established pursuant to 29 U.S.C. s.206 or its successors.
"State minimum wage" means the minimum wage rate established pursuant to Article I, paragraph 23 of the New Jersey State Constitution.
3. This act shall take effect immediately and apply to privilege periods and taxable years beginning on or after January 1, 2014.
STATEMENT
This bill provides seasonal employers with credits against the corporation business tax and the gross income tax for the increased cost of labor caused by recent increase in the State minimum wage.
On November 5, 2013, New Jersey voters approved a constitutional amendment to raise the State minimum wage from $7.25 to $8.25 per hour, and tie future increases in the wage to the cost of living. This change has drastically increased the cost of labor for the State's seasonal employers, many of which are located on the Jersey Shore, and are still recovering from the effects of Hurricane Sandy. Consequently, seasonal employers will be forced to shift these costs on consumers or reduce the number of employees they hire for seasonal employment. Many local students, teenagers, and residents who depend on seasonal employment will not find work.
This tax credit will alleviate this burden on seasonal employers, while allowing them to pay their workers the State minimum wage. Under the bill, seasonal employers are allowed a tax credit equal to the total number of hours worked by eligible employees during the taxable year for which they are paid the State minimum wage multiplied by the amount, if any, by which the State minimum wage exceeds the federal minimum wage. Thus, if an eligible employee works 520 hours in a season, and the current State and federal minimum wages are $8.25 and $7.25, respectively, a seasonal employer will be allowed a $520 credit for that employee.
A seasonal employer is defined as a business that, because of climactic conditions or the nature of the product or service, operates only during a regularly recurring period of 30 weeks or less in a calendar year. Examples include, but are not limited to, Shore businesses that only operate during the summer and retail stores that only operate during the holiday season. An eligible employee is an individual who has been employed by a seasonal employer in the State for not more than 30 weeks in a calendar year, and who is paid the State minimum wage during some part of that period by the seasonal employer.
Finally, to protect against abuse of the tax system, the bill provides that a seasonal employer who fires an ineligible employee and replaces that employee with an eligible one solely for the purpose of qualifying for this credit shall not qualify to claim the credit for any eligible employee.