Bill Text: NJ A5068 | 2018-2019 | Regular Session | Introduced
Bill Title: Allows corporation business tax credits and gross income tax credits for small businesses required to provide earned sick leave.
Spectrum: Partisan Bill (Democrat 4-0)
Status: (Introduced - Dead) 2019-02-14 - Introduced, Referred to Assembly Commerce and Economic Development Committee [A5068 Detail]
Download: New_Jersey-2018-A5068-Introduced.html
Sponsored by:
Assemblyman ROY FREIMAN
District 16 (Hunterdon, Mercer, Middlesex and Somerset)
Assemblywoman LISA SWAIN
District 38 (Bergen and Passaic)
Assemblywoman VALERIE VAINIERI HUTTLE
District 37 (Bergen)
SYNOPSIS
Allows corporation business tax credits and gross income tax credits for small businesses required to provide earned sick leave.
CURRENT VERSION OF TEXT
As introduced.
An Act allowing corporation business tax credits and gross income tax credits for small businesses required to provide earned sick leave, supplementing P.L.1945, c.162 (C.54:10A-1 et seq.) and 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 small business that is required to provide earned sick leave to an employee pursuant to section 2 of P.L.2018, c.10 (C.34:11D-2), 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 50 percent of the rate of pay the employee normally earns for each hour of work performed for the employer multiplied by the number of hours, or fraction thereof, for which earned sick leave is taken during a privilege period.
b. The order of priority of the application of the credit allowed pursuant to this section and any other credits allowed by law shall be as prescribed by the director. The amount of the credit applied under this section against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for a privilege period, together with any other credits allowed by law, shall not exceed 50 percent of the tax liability otherwise due and shall not reduce the tax liability 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).
c. The amount of the tax credit otherwise allowable under this section which cannot be applied for the privilege period may be carried forward, if necessary, to the four privilege periods following the privilege period for which the tax credit was allowed.
d. No tax credit shall be allowed pursuant to this section for any costs or expenses included in the calculation of any other tax credit or exemption granted pursuant to a claim made on a tax return filed with the director, or included in the calculation of an award of business assistance or incentive, for a period of time that coincides with the privilege period for which a tax credit pursuant to this section is allowed.
e. A small business shall submit to the director a report to verify the number of earned sick leave hours accrued by each employee, the number of earned sick leave hours taken by each employee, and the hourly rate of pay each employee receives during the privilege period. The report shall include any additional information as shall be determined necessary by the director.
f. As used in this section:
"Small business" shall have the same meaning as "employer," as the term is defined in section 1 of P.L.2018, c.10 (C.34:11D-1), except that it shall not include any person, firm, business, education institution, nonprofit agency, corporation, limited liability company, or other entity that employs 25 or more employees in this State.
2. a. A small business that is required to provide earned sick leave to an employee pursuant to section 2 of P.L.2018, c.10 (C.34:11D-2), 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.54:1-1 et seq., in an amount equal to the product of 50 percent of the rate of pay the employee normally earns for each hour of work performed for the employer multiplied by the number of hours, or fraction thereof, for which earned sick leave is taken during the taxable year.
b. The amount of the credit allowed pursuant to this section shall be applied against the tax otherwise due under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., after all other credits and payments. If the credit exceeds the amount of tax liability 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.
c. No tax credit shall be allowed pursuant to this section for any costs or expenses included in the calculation of any other tax credit or exemption granted pursuant to a claim made on a tax return filed with the director, or included in the calculation of an award of business assistance or incentive, for a period of time that coincides with the taxable year, for which a tax credit authorized pursuant to this section is allowed.
d. (1) A business entity that is classified as a partnership for federal income tax purposes shall not be allowed a tax credit pursuant to this section directly, but the amount of tax credit of a taxpayer in respect to distributive share of entity income, shall be determined by allocating to the taxpayer that proportion of the tax credit acquired by the entity that is equal to the taxpayer's share, whether or not distributed, of the total distributive income or gain of the entity for its taxable year ending within or with the taxpayer's taxable year.
(2) A New Jersey S Corporation shall not be allowed a tax credit pursuant to this section directly, but the amount of the tax 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 tax 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. A small business shall
submit to the director a report to verify the number of earned sick leave hours
accrued by each employee, the number of earned sick leave hours taken by each
employee, and the hourly rate of pay each employee receives during the taxable
year. The report shall include any additional information as shall be
determined necessary by the director.
f. As used in this section:
"Small business" shall have the same meaning as "employer," as the term is defined in section 1 of P.L.2018, c.10 (C.34:11D-1), except that it shall not include any person, firm, business, education institution, nonprofit agency, corporation, limited liability company, or other entity that employs 25 or more employees in this State.
3. This act shall take effect immediately and apply to taxable years and privilege periods beginning on or after January 1 next following the date of enactment.
STATEMENT
This bill allows corporation business tax (CBT) credits and gross income tax (GIT) credits for small businesses required to provide earned sick leave pursuant to P.L.2018, c.10 (N.J.S.A.34:11D-1 et seq.).
The bill provides small businesses with tax credits equal to the product of 50 percent of the rate of pay the employee normally earns for each hour of work performed for the employer multiplied by the number of hours, or fraction thereof, for which earned sick leave is taken during the privilege period or taxable years, whichever applies. The term "small business" is to have the same meaning as "employer" in section 1 of P.L.2018, c.10, the law requiring employers to provide earned sick leave, except that small business in this bill does not include any person, firm, business, education institution, nonprofit agency, corporation, limited liability company, or other entity that employs 25 or more employees in this State.
Any amount of the tax credit that cannot be taken against a small business's CBT liability can be carried forward for four privilege periods following the privilege period for which the tax credit was allowed. If the GIT credit exceeds a small business's liability, the small business can receive a refund for the amount in excess.
The bill requires a small business to submit to the Director of the Division of Taxation in the Department of the Treasury a report to verify the number of earned sick leave hours accrued by each employee, the number of earned sick leave hours taken by each employee, and the hourly rate of pay each employee receives during the privilege period. The report is to include any additional information as determined to be necessary by the director.
