Bill Text: NJ S2777 | 2014-2015 | Regular Session | Introduced
Bill Title: Allows businesses due to receive grant under Business Employment Incentive Program to elect to receive corporate or gross income tax credit if grant funds are not available.
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2015-03-09 - Introduced in the Senate, Referred to Senate Economic Growth Committee [S2777 Detail]
Download: New_Jersey-2014-S2777-Introduced.html
Sponsored by:
Senator RAYMOND J. LESNIAK
District 20 (Union)
Senator JOSEPH M. KYRILLOS, JR.
District 13 (Monmouth)
SYNOPSIS
Allows businesses due to receive grant under Business Employment Incentive Program to elect to receive corporate or gross income tax credit if grant funds are not available.
CURRENT VERSION OF TEXT
As introduced.
An Act authorizing certain tax credits under the Business Employment Incentive Program and amending P.L.1996, c.26.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 2 of P.L.1996, c.26 (C.34:1B-125) is amended to read as follows:
2. As used in sections 1 through 17 of P.L.1996, c.26 (C.34:1B-124 et seq.) and in sections 9 through 11 of P.L.2003, c.166 (C.34:1B-139.1 through C.34:1B-139.3), unless a different meaning clearly appears from the context:
"Advanced computing" means a technology used in the designing and developing of computing hardware and software, including innovations in designing the full spectrum of hardware from hand-held calculators to super computers, and peripheral equipment[;].
"Advanced computing company" means a person, whose headquarters or base of operations is located in New Jersey, engaged in the research, development, production, or provision of advanced computing for the purpose of developing or providing products or processes for specific commercial or public purposes[;].
"Advanced materials" means materials with engineered properties created through the development of specialized processing and synthesis technology, including ceramics, high value-added metals, electronic materials, composites, polymers, and biomaterials[;].
"Advanced materials company" means a person, whose headquarters or base of operations is located in New Jersey, engaged in the research, development, production, or provision of advanced materials for the purpose of developing or providing products or processes for specific commercial or public purposes[;].
"Application year" means the grant year for which an eligible partnership submits the information required under section 8 of P.L.1996, c.26 (C.34:1B-131);
"Authority" means the New Jersey Economic Development Authority created pursuant to section 4 of P.L.1974, c.80 [(C.34:1B-1 et seq.);] (C.34:1B-4).
"Base years" means the first two complete calendar years following the effective date of an agreement[;].
"Biotechnology" means the continually expanding body of fundamental knowledge about the functioning of biological systems from the macro level to the molecular and sub-atomic levels, as
well as novel products, services, technologies, and sub-technologies developed as a result of insights gained from research advances which add to that body of fundamental knowledge[;].
"Biotechnology company" means a person, whose headquarters or base of operations is located in New Jersey, engaged in the research, development, production, or provision of biotechnology for the purpose of developing or providing products or processes for specific commercial or public purposes, including but not limited to, medical, pharmaceutical, nutritional, and other health-related purposes, agricultural purposes, and environmental purposes, or a person, whose headquarters or base of operations is located in New Jersey, engaged in providing services or products necessary for such research, development, production, or provision[;].
"Bonds means bonds, notes, or other obligations issued by the authority pursuant to [this act;] P.L.1996, c.26 (C.34:1B-124 et seq.).
"Business" means a corporation; sole proprietorship; partnership; corporation that has made an election under Subchapter S of Chapter One of Subtitle A of the Internal Revenue Code of 1986, or any other business entity through which income flows as a distributive share to its owners; limited liability company; nonprofit corporation; or any other form of business organization located either within or outside this State. A grant or tax credit received under [this act] P.L.1996, c.26 (C.34:1B-124 et seq.) by a partnership, Subchapter S-Corporation, or other such business entity shall be apportioned among the persons to whom the income or profit of the partnership, Subchapter S-Corporation, or other entity is distributed, in the same proportions as those in which the income or profit is distributed[;].
"Business employment incentive agreement" or "agreement" means the written agreement between the authority and a business proposing a project in this State in accordance with the provisions of [this act] P.L.1996, c.26 (C.34:1B-124 et seq.) which establishes the terms and conditions of a grant to be awarded pursuant to [this act;] P.L.1996, c.26 (C.34:1B-124 et seq.).
["Department" means the New Jersey Commerce and Economic Growth Commission;]
"Designated industry" means a business engaged in the field of biotechnology, pharmaceuticals, financial services [or], transportation and logistics, advanced computing, advanced materials, electronic device technology, environmental technology, or medical device technology[;].
"Director" means the Director of the Division of Taxation[;].
"Division" means the Division of Taxation in the Department of the Treasury[;].
"Electronic device technology" means a technology involving microelectronics, semiconductors, electronic equipment, and instrumentation, radio frequency, microwave, and millimeter electronics, and optical and optic-electrical devices, or data and digital communications and imaging devices[;].
"Electronic device technology company" means a person, whose headquarters or base of operations is located in New Jersey, engaged in the research, development, production, or provision of electronic device technology for the purpose of developing or providing products or processes for specific commercial or public purposes[;].
"Eligible partnership" means a partnership or limited liability company that is qualified to receive a grant or tax credit as established in [this act;] P.L.1996, c.26 (C.34:1B-124 et seq.).
"Eligible position" is a new full-time position created by a business in New Jersey or transferred from another state by the business under the terms and conditions set forth in [this act] P.L.1996, c.26 (C.34:1B-124 et seq.) during the base years or in subsequent years of a grant or tax credit. In determining if positions are eligible positions, the authority shall give greater consideration to positions that average at least 1.5 times the minimum hourly wage during the term of an agreement authorized pursuant to [this act] P.L.1996, c.26 (C.34:1B-124 et seq.). For grants or tax credits awarded on or after July 1, 2003, eligible position includes only a position for which a business provides employee health benefits under a group health plan as defined under section 14 of P.L.1997, c.146 (C.17B:27-54), a health benefits plan as defined under section 1 of P.L.1992, c.162 (C.17B:27A-17), or a policy or contract of health insurance covering more than one person issued pursuant to Article 2 of Title 17B of the New Jersey Statutes. ["Eligible] An "eligible position" shall also [includes] include all current and future partners or members of a partnership or limited liability company created by a business in New Jersey or transferred from another state by the business pursuant to the conditions set forth in [this act] P.L.1996, c.26 (C.34:1B-124 et seq.) during the base years or in subsequent years of a grant or tax credit. An "eligible position" shall also include a position occupied by a resident of this State whose position is relocated to this State from another state but who does not qualify as a "new employee" because prior to relocation [his] the resident's wages or [his] the resident's distributive share of income from a gain, from a loss or deduction, or [his] the resident's guaranteed payments or any combination thereof, prior to the relocation, were not subject to income taxes imposed by the state or municipality in which the position was previously located. An "eligible position" shall also include a position occupied by a resident of another State whose position is relocated to this State but whose income is not subject to the New Jersey gross income tax pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. An "eligible position" shall not include any position located within New Jersey, which, within a period either three months prior to the business' application for a grant or tax credit under [this act] P.L.1996, c.26 (C.34:1B-124 et seq.) or six months after the date of application, ceases to exist or be located within New Jersey[;].
"Employment incentive" means the amount of a grant determined pursuant to subsection a. of section 6 of [this act;] P.L.1996, c.26 (C.34:1B-124 et seq.).
"Environmental technology" means assessment and prevention of threats or damage to human health or the environment, environmental cleanup, or the development of alternative energy sources[;].
"Environmental technology company" means a person, whose headquarters or base of operations is located in New Jersey, engaged in the research, development, production, or provision of environmental technology for the purpose of developing or providing products or processes for specific commercial or public purposes[;].
"Estimated tax" means an amount calculated for a partner in an eligible position equal to [6.37%] 6.37 percent of the lesser of [(i)]: a. the amount of the partner's net income from the eligible partnership that is sourced to New Jersey as reflected in Column B of the partner's Schedule NJK-1 of the application year less the amount of the partner's net income from the eligible partnership that is sourced to New Jersey as reflected in column B of the partner's Schedule NJK-1 in the foundation year [,]; or [(ii)] b. the net of all items of partnership income upon which tax has been paid as reflected on the partner's New Jersey Gross Income Tax return in the application year[;].
"Foundation year" means the year immediately prior to the creation of the eligible position[;].
"Full-time employee" means a person who is employed for consideration for at least 35 hours a week, or who renders any other standard of service generally accepted by custom or practice as full-time employment, whose wages are subject to withholding as provided in the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., and who is determined by the authority to be employed in a permanent position according to criteria it develops, or who is a partner of an eligible partnership, who works for the partnership for at least 35 hours a week, or who renders any other standard of service generally accepted by custom or practice as full-time employment, and whose distributive share of income, gain, loss, or deduction, or whose guaranteed payments, or any combination thereof, is subject to the payment of estimated taxes, as provided in the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. "Full-time employee" shall not include any person who works as an independent contractor or on a consulting basis for the business[;].
"Grant" means a business employment incentive grant as established in [this act;] P.L.1996, c.26 (C.34:1B-124 et seq.).
"Medical device technology" means a technology involving any medical equipment or product [(other], other than a pharmaceutical [product)] product, that has therapeutic value, diagnostic value, or both, and is regulated by the federal Food and Drug Administration.[;].
"Medical device technology company" means a person, whose headquarters or base of operations is located in New Jersey, engaged in the research, development, production, or provision of medical device technology for the purpose of developing or providing products or processes for specific commercial or public purposes[;].
"Net income from the eligible partnership" means the net combination of a partner's distributive share of the eligible partnership's income, gain, loss, deduction, or guaranteed payments[;].
"New employee" means a full-time employee first employed in an eligible position on the project which is the subject of an agreement or who is a partner of an eligible partnership, who works for the partnership for at least 35 hours a week, or who renders any other standard of service generally accepted by custom or practice as full-time employment, and whose distributive share of income, gain, loss or deduction, or whose guaranteed payments, or any combination thereof, is subject to the payment of estimated taxes, as provided in the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq.; except that [such] a New Jersey resident whose position is relocated to this State shall not be classified as a "new employee" unless [his] the employee's wages, or [his] the employee's distributive share of income from a gain, from a loss or deduction, or [his] the employee's guaranteed payments or any combination thereof, prior to the relocation, were subject to income taxes imposed by the state or municipality in which the position was previously located. "New employee" may also include an employee rehired or called back from a layoff during or following the base years to a vacant position previously held by that employee or to a new position established during or following the base years. "New employee" shall not include any employee who was previously employed in New Jersey by the business or by a related person as defined in section 2 of P.L.1993, c.170 (C.54:10A-5.5) if the employee is transferred to the business, which is the subject of an agreement, unless the employee's position at [his] the employee's previous employer is filled by a new employee. "New employee" also shall not include a child, grandchild, parent, or spouse of an individual associated with the business who has direct or indirect ownership of at least [15%] 15 percent of the profits, capital, or value of the business. New employee shall also include an employee whose position is relocated to this State but whose income is not subject to the New Jersey gross income tax pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq.[;].
"Partner" means a person who is entitled to either a distributive share of a partnership's income, gain, loss, or deduction, or guaranteed payments, or any combination thereof, by virtue of holding an interest in the partnership. "Partner" also includes a person who is a member of a limited liability company which is treated as a partnership, as provided in the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq.[;].
"Refunding Bonds" means bonds, notes or other obligations issued to refinance bonds, notes or other obligations previously issued by the authority pursuant to the provision of [this act;] P.L.1996, c.26 (C.34:1B-124 et seq.).
"Residual withholdings" means for any period of time, the excess of the estimated cumulative withholdings for all executed agreements eligible for payments under [this act] P.L.1996, c.26 (C.34:1B-124 et seq.) over the cumulative anticipated grant amounts[;].
"Schedule NJK-1" means Schedule NJK-1 as the form existed for taxable year 1997[;].
"Withholdings" means the amount withheld by a business from the wages of new employees or estimated taxes paid by, or on behalf of, partners that are new employees, or any combination thereof, pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., and, if the new employee is an employee whose position has moved to New Jersey but whose income is not subject to the New Jersey gross income tax pursuant to N.J.S.54A:1-1 et seq., the amount of withholding that would occur if the employee were to move to New Jersey.
(cf: P.L.2003, c.166, s.1)
2. Section 8 of P.L.1996, c.26 (C.34:1B-131) is amended to read as follows:
8. a. No later than March 1 of each year, for the preceding grant or tax credit year, every business which is awarded a grant or tax credit under [this act] P.L.1996, c.26 (C.34:1B-124 et seq.) shall submit to the authority a copy of its applicable New Jersey tax return within 30 days of filing showing business income and withholdings as a condition of its continuation in the grant program, together with an annual payroll report showing: (1) the eligible positions which were created during the base years; and (2) the new eligible positions created during each subsequent year of the grant or tax credit. Should any business which is awarded a grant under this act fail to submit to the authority a copy of its annual payroll report or submit its annual payroll report without the information required by paragraphs (1) and (2) [above] of this subsection, any grant payment or tax credit to be received by [any such] the business shall be forfeited for the applicable reporting year unless the Chief Executive [Director] Officer of the authority determines that there are extenuating circumstances excusing the timely filing required herein.
b. The division may require by regulation any information which it deems necessary to effectuate the provisions of [this act] P.L.1996, c.26 (C.34:1B-124 et seq.).
c. The authority may cause an audit of any business receiving a grant or tax credit to be conducted at any time.
(cf: P.L.2003, c.166, s.5)
3. Section 9 of P.L.1996, c.26 (C.34:1B-132) is amended to read as follows:
9. a. f the business receiving a grant or tax credit fails to meet or comply with any condition or requirement set forth in a grant agreement or in rules and regulations of the authority or the division, the authority may amend the agreement to reduce the amount of the employment incentive or the term of the grant or tax credit agreement. The reduction of the employment incentive shall be applicable to the grant year immediately following the grant year in which the authority amends the agreement.
b. If a business fails to maintain employment at the levels stipulated in the agreement or otherwise fails to comply with any condition of the grant agreement for any two consecutive years, the authority may terminate the agreement.
(cf: P.L.1996, c.26, s.9)
4. Section 10 of P.L.1996, c.26 (C.34:1B-133) is amended to read as follows:
10. No amount shall be disbursed to a recipient business as a grant or tax credit under [this act ] P.L.1996, c.26 (C.34:1B-124 et seq.) in any year until the State Treasurer has certified that the amount of withholdings or estimated taxes of partners, or any combination thereof, received in that year by the division from the business or the partners of the business equals or exceeds the amount of the grant or tax credit.
(cf: P.L.1998, c.33, s.3)
5. Section 11 of P.L.1996, c.26 (C.34:1B-134) is amended to read as follows:
11. a. A business that is receiving a business relocation grant pursuant to the provisions of P.L.1996, c. 25 (C.34:1B-112 et seq.) shall not be eligible to receive a grant or tax credit under [this act] P.L.1996, c.26 (C.34:1B-124 et seq.) except upon the approval of the State Treasurer.
b. A business that is receiving any other grant by operation of State law shall not receive an amount as a grant or tax credit pursuant to [this act] P.L.1996, c.26 (C.34:1B-124 et seq.) which, when combined with [such] other grants, exceeds the total of [50%] 50 percent of its withholdings or [30%] 30 percent of its estimated tax, or any combination thereof paid, except upon the approval of the State Treasurer. Amounts received as grants from the Office of Customized Training pursuant to the "1992 New Jersey Employment and Workforce Development Act," P.L.1992, c.43 (C.34:15D-1 et seq.) shall be excluded from the calculation of the total amount permitted under this subsection.
c. A business that qualifies under subsection b. of section 6 of P.L.1996, c.26 (C.34:1B-129) for a grant of up to [80%] 80 percent of its withholdings or up to [50%] 50 percent of its estimated tax and is receiving any other grant by operation of State law shall not receive an amount as a grant or tax credit pursuant to [this act] P.L.1996, c.26 (C.34:1B-124 et seq.) which, when combined with [such] other grants, exceeds the total of up to [80%] 80 percent of its withholdings or [50%] 50 percent of the estimated tax, or any combination thereof paid except upon approval of the State Treasurer. Amounts received as grants from the Office of Customized Training pursuant to the "1992 New Jersey Employment and Workforce Development Act," P.L.1992, c.43 (C.34:15D-1 et seq.) shall be excluded from the calculation of the total amount permitted under this subsection.
(cf: P.L.2003, c.166, s.6)
6. Section 15 of P.L.1996, c.26 (C.34:1B-138) is amended to read as follows:
15. The [New Jersey Commerce and Economic Growth Commission] authority shall submit a report on the Business Employment Incentive Program to the Governor [, President of the Senate, and Speaker of the General Assembly] and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature on or before October 31 of each year. The report shall include information on the number of agreements entered into during the preceding fiscal year, a description of the project under each agreement, the number of jobs created, new income tax revenue received from withholdings, amounts awarded as grants or tax credits, and an update on the status of projects under agreement before the preceding fiscal year.
(cf: P.L.2003, c.166, s.8)
7. Section 17 of P.L.1996, c.26 (C.34:1B-139) is amended to read as follows:
17. a. There is appropriated to the New Jersey Economic Development Authority from the General Fund such sums as may be necessary to fund the Business Employment Incentive Program established by [this act] P.L.1996, c.26 (C.34:1B-124 et seq.), the amount of which shall not exceed the total amount of revenues received as withholdings, as defined in section 2 of P.L.1996, c.26 (C.34:1B-125) from all businesses receiving grants pursuant to [this act] P.L.1996, c.26 (C.34:1B-124 et seq.), as certified by the Director of the Division of Taxation.
b. If, in any fiscal year, there are no sums appropriated from the General Fund to the authority or a sum of an amount insufficient to provide grant funding as provided under the Business Employment Incentive Program pursuant to subsection a. of this section, a business eligible for a grant under P.L.1996, c.26 (C.34:1B-124 et seq.) may elect to receive a corporate income tax credit, pursuant to the provisions of paragraph (1) of this subsection, or a gross income tax credit, pursuant to the provisions of paragraph (2) of this subsection.
(1) 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 10 percent of the total grant amount otherwise due to the taxpayer, during any privilege period in which the business is eligible to receive a grant under the Business Employment Incentive Program but during which grant funding is not received. The order of priority of the application of the credit allowed pursuant to this subsection and any other credits allowed by law shall be 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 the 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). An amount of expense claimed as a credit pursuant to this section shall not be allowed as an amount calculated or claimed pursuant to any other credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5).
(2) A taxpayer shall be allowed a credit against the tax otherwise due for the taxable year pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A-1 et seq., in an amount equal to 10 percent of the total grant amount otherwise due to the taxpayer, during any taxable year the business is eligible to receive a grant under the Business Employment Incentive Program but during which grant funding is not received. The order of priority of the application of the credit allowed pursuant to this subsection and any other credits allowed by law shall be prescribed by the director. The amount of the credit applied under this section against the tax imposed pursuant to "New Jersey Gross Income Tax Act," N.J.S.54A-1 et seq., for a taxable year together with any other credits allowed by law, shall not exceed 50 percent of the tax liability otherwise due. An amount of expense claimed as a credit pursuant to this section shall not be allowed as an amount calculated or claimed pursuant to any other credit against the tax imposed pursuant to "New Jersey Gross Income Tax Act," N.J.S.54A-1 et seq.
A business classified as a partnership for federal income tax purposes shall not be allowed a credit directly under the gross income tax, but the amount of credit of a 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 New Jersey S Corporation shall not be allowed a credit directly under the gross income tax, 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.
(cf: P.L.1996, c.26, s.17)
8. This act shall take effect immediately but shall remain inoperative until July 1, 2016.
STATEMENT
This bill allows a business that is eligible to receive a grant under the Business Employment Incentive Program (BEIP) to elect to receive corporate or gross income tax credits for an amount equal to 10 percent of the total grant amount that was due to be awarded to the business under the criteria established by the New Jersey Economic Development Authority for the BEIP if grant funding is not provided.
