Bill Text: NJ S3875 | 2018-2019 | Regular Session | Introduced
Bill Title: Provides corporation business tax credits and gross income tax credits to small business employers and farm employers for increases in certain mandatory employer contributions.
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2019-06-03 - Introduced in the Senate, Referred to Senate Budget and Appropriations Committee [S3875 Detail]
Download: New_Jersey-2018-S3875-Introduced.html
Sponsored by:
Senator BOB ANDRZEJCZAK
District 1 (Atlantic, Cape May and Cumberland)
SYNOPSIS
Provides corporation business tax credits and gross income tax credits to small business employers and farm employers for increases in certain mandatory employer contributions.
CURRENT VERSION OF TEXT
As introduced.
An Act providing corporation business tax credits and gross income tax credits to small business employers and farm employers for increases in certain mandatory employer contributions, 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 taxpayer that is a small business employer or farm employer shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), for a privilege period in an amount equal to the difference of: 1) the amounts expended by the small business employer or farm employer as mandatory employer contributions for workers' compensation insurance and New Jersey Temporary Disability Insurance and Unemployment Insurance during the privilege period; minus 2) the amounts that would have been expended by the small business employer or farm employer as mandatory employer contributions for workers' compensation insurance and New Jersey Temporary Disability Insurance and Unemployment Insurance for the same amount of employees and wages during the preceding privilege period.
b. The credit allowed pursuant to this section shall not exceed $12,000 annually for each taxpayer per privilege period.
c. 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).
d. 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 a portion of the tax credit was allowed.
e. 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.
f. A small business employer or farm employer shall apply, in a form and manner to be determined by the director, for the tax credit provided pursuant to this section.
g. The credit allowed pursuant to this section shall only be available for the privilege periods commencing on or after January 1, 2020, but before January 1, 2030.
h. As used in this section:
"Farm employer" means a taxpayer in this State who engages individuals in this State on a piece-rate or regular hourly rate basis to labor on a farm.
"Small business employer" means a taxpayer that: 1) employs fewer than 25 employees in this State, which employees shall have been employed by the employer for not less than 48 weeks of the calendar year and which are employed by the taxpayer as of the last day of the calendar year; and 2) generates less than $1 million in annual net receipts, based on the average of the three preceding privilege periods.
2. a. A taxpayer that is a small business employer or farm employer shall be allowed a credit against the tax otherwise due under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., for a taxable year in an amount equal to the difference of: 1) the amounts expended by the small business employer or farm employer as mandatory employer contributions for workers' compensation insurance and New Jersey Temporary Disability Insurance and Unemployment Insurance during the taxable year; minus 2) the amounts that would have been expended by the small business employer or farm employer as mandatory employer contributions for workers' compensation insurance and New Jersey Temporary Disability Insurance and Unemployment Insurance for the same amount of employees and wages during the preceding taxable year.
b. The credit allowed pursuant to this section shall not exceed $12,000 annually for each taxpayer per taxable year.
c. 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.
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 taxable year, for which a tax credit authorized pursuant to this section is allowed.
e. (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.
f. A small business employer or farm employer shall apply, in a form and manner to be determined by the director, for the tax credit provided pursuant to this section.
g. The credit allowed pursuant to this section shall only be available for the taxable years commencing on or after January 1, 2020, but before January 1, 2030.
h. As used in this section:
"Farm employer" means a taxpayer in this State who engages individuals in this State on a piece-rate or regular hourly rate basis to labor on a farm.
"Small business employer" means a taxpayer that: 1) employs fewer than 25 employees in this State, which employees shall have been employed by the employer for not less than 48 weeks of the calendar year and which are employed by the taxpayer as of the last day of the calendar year; and 2) generates less than $1 million in annual net receipts, based on the average of the three preceding taxable years.
3. 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 corporation business tax (CBT) credits and gross income tax (GIT) credits to small business employers and farm employers for increases in certain mandatory employer contributions.
The bill provides small business employers and farm employers with tax credits in an amount equal to the difference of: 1) the amounts expended by the small business employer or farm employer as mandatory employer contributions for workers' compensation insurance and New Jersey Temporary Disability Insurance and Unemployment Insurance during the privilege period or taxable year; minus 2) the amounts that would have been expended by the small business employer or farm employer as mandatory employer contributions for workers' compensation insurance and New Jersey Temporary Disability Insurance and Unemployment Insurance during the preceding for the same amount of employees and wages during the preceding privilege period or taxable year.
The term "small business employer" means a taxpayer that: 1) employs fewer than 25 employees in this State, which employees shall have been employed by the employer for not less than 48 weeks of the calendar year and which are employed by the taxpayer as of the last day of the calendar year; and 2) generates less than $1 million in annual net receipts, based on the average of the three preceding privilege periods or taxable years. The term "farm employer" means a taxpayer in this State who engages individuals in this State on a piece-rate or regular hourly rate basis to labor on a farm.
The bill caps the credit amount at $12,000 annually for each taxpayer per privilege period and taxable year, and the credit is only available for the privilege periods and taxable years commencing on or after January 1, 2020, but before January 1, 2030. Any amount of the tax credit that cannot be taken against a small business employer's or farm employer's CBT liability can be carried forward for four privilege periods following the privilege period for which a portion of the tax credit was allowed. If the credit exceeds a small business employer's or farm employer's GIT liability, the small business employer or farm employer can receive a refund for the amount in excess.
The bill requires the Director of the Division of Taxation in the Department of the Treasury to determine the form and manner by which a taxpayer can apply for the tax credit.
