S2584

An Act providing a credit under the corporation business tax for certain New Jersey news, weather, and sports content production expenses, supplementing P.L.1945, c.162 (C.54:10A-1 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. A taxpayer, upon application to the director and the executive director of the authority, 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 qualified news, weather, and sports content production expenses incurred by a taxpayer during a privilege period beginning on or after January 1, 2011 which exceeds the qualified news, weather, and sports content production expenses incurred by that taxpayer during a privilege period beginning on or after January 1, 2010 but before December 31, 2010; provided however, that: (1) at least 80 percent of the total news, weather, and sports content production expenses of the taxpayer will be incurred for services performed and goods used or consumed in New Jersey; and (2) at least a significant percentage, as shall be determined by the director and the executive director of the authority, of the qualified news, weather, and sports content production expenses incurred by the taxpayer will include wages and salaries paid to one or more new full-time employees in New Jersey.

b. 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, when taken together with any other credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162, 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. The priority in which credits allowed pursuant to this section and any other credits shall be taken shall be determined by the director. The amount of the credit otherwise allowable under this section which cannot be applied for the privilege period due to the limitations of this subsection or under other provisions of P.L.1945, c.162 (C.54:10A-1 et seq.) may be carried over, if necessary, to the seven privilege periods following the privilege period for which the credit was allowed.

c. A taxpayer may, with an application for credit provided for in subsection a. of this section, apply to the director and the executive director of the authority 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. The director and the executive director of the authority may consult with the New Jersey Motion Picture and Television Development Commission in consideration of any application for approval of a tax credit or tax credit transfer certificate provided pursuant to this section. The tax credit transfer certificate, upon receipt thereof by the taxpayer from the director and the executive director of the authority, may be sold or assigned, in full or in part, to any other taxpayer that may have a tax liability under P.L.1945, c.162 (C.54:10A-1 et seq.) in exchange for private financial assistance to be provided by the purchaser or assignee to the taxpayer that has applied for and been granted the credit. The certificate provided to the taxpayer shall include a statement waiving the taxpayer's right to claim 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 or assign. The sale or assignment of any amount of a tax credit transfer certificate allowed under this section shall not be exchanged for consideration received by the taxpayer of less than 75 percent of the transferred credit amount. Any amount of a tax credit transfer certificate used by a purchaser or assignee against a tax liability under P.L.1945, c.162 shall be subject to the same limitations and conditions that apply to the use of a credit provided by subsection b. of this section.

d. The value of credits, including tax credits allowed through the granting of tax credit transfer certificates, approved by the director and the executive director of the authority pursuant to this section shall not exceed a total of $5,000,000 in any fiscal year to apply against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5). If the cumulative total amount of credits and tax credit transfer certificates allowed to taxpayers for privilege periods beginning during a fiscal year under this section exceeds the amount of credits available in that year, taxpayers who have first applied for and have not been allowed a credit or tax credit transfer certificate amount for that reason shall be allowed, in the order in which they have submitted an application, the amount of tax credit or certificate on the first day of the next succeeding fiscal year in which tax credits and tax credit transfer certificates under this section are not in excess of the amount of credits available.

e. The director, in consultation with the executive director of the authority and New Jersey Motion Picture and Television Development Commission, shall adopt rules, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), as are necessary to effectuate the provisions of P.L. , c. (pending before the Legislature as this bill). The rules adopted by the director, in consultation with the executive director of the authority and the New Jersey Motion Picture and Television Development Commission, shall include but shall not be limited to examples of qualified news, weather, and sports content production expenses and the procedures and forms to apply for a credit and for a tax credit transfer certificate necessary for a taxpayer to sell or assign an amount of tax credit as provided pursuant to this section.

f. As used in this section:

“Executive director of the authority” means the Executive Director of the New Jersey Economic Development Authority;

“New full-time employee" means a person employed by the taxpayer 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 executive director of the authority to work in a newly created permanent position according to criteria it develops. "New full-time employee" shall not include any person who works as an independent contractor or on a consulting basis for the taxpayer. In determining the amount of any allowance of tax credits made pursuant to this section, the executive director of the authority shall consider the number of new full-time positions created by the taxpayer and the quality of the full-time positions created, including but not limited to the salaries and benefits provided to new full-time employees. The director, in consultation with executive director of the authority, shall establish rules for the recapture of all, or a portion of, the grant of tax credits pursuant to this section in the event the taxpayer fails to maintain the new full-time positions that were included in calculating the qualified news, weather, and sports content production expenses of the taxpayer;

“New Jersey Economic Development Authority” means the New Jersey Economic Development Authority established by section 4 of P.L.1974, c.80 (C.34:1B-4);

"News, weather, and sports content” means a television show, series, or production of 22 minutes or more in length which features news, current events, weather, sports, or other similar public programming and which is intended to be of interest primarily for a New Jersey audience. "News, weather, and sports content” shall not include a television show, series, or production featuring a game show, award show, or other gala event; a television show, series, or production that solicits funds; a television show, series, or production containing obscene material as defined by N.J.S.2C:34-2 and N.J.S.2C:34-3; or a television show, series, production primarily for private, industrial, corporate or institutional purposes;

"Qualified news, weather, and sports content production expenses" means an expense incurred in New Jersey for the production of news, weather, and sports content. Qualified news, weather, and sports content production expenses shall include but shall not be limited to wages and salaries of individuals employed in the production of news, weather, and sports content on which the tax imposed by the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. has been paid or is due; the costs of construction, operations, editing, photography, sound synchronization, lighting, wardrobe and accessories and the cost of rental of facilities and equipment. Qualified news, weather, and sports content production expenses shall not include expenses incurred in marketing or advertising news, weather, and sports content; and

"Total news, weather, and sports content production expenses" means costs for services performed and property used or consumed in the production of news, weather, and sports content.

2. This act shall take effect immediately and apply to qualified production expenses incurred on or after the date of enactment and apply to privilege periods beginning on or after January 1, 2011.

STATEMENT

The bill provides a tax credit under the corporation business tax for certain New Jersey qualified news, weather, and sports content production expenses.

Specifically, the bill provides that a business, upon application to the Director of the Division of Taxation in the Department of the Treasury and the Executive Director of the New Jersey Economic Development Authority, may be allowed to claim a corporation business tax credit in an amount equal to 10 percent of the qualified news, weather, and sports content production expenses incurred by the taxpayer during a privilege period beginning on or after January 1, 2011 which exceeds the qualified news, weather, and sports content production expenses incurred by that taxpayer during a privilege period beginning on or after January 1, 2010 but before December 31, 2010.

The bill provides that in order to be eligible to claim the credit at least 80 percent of the total news, weather, and sports content production expenses must be incurred for services performed and goods used or consumed in New Jersey. Additionally, the bill provides that to be eligible to claim the credit a significant percentage, as determined by the Director of the Division of Taxation and the Executive Director of the New Jersey Economic Development Authority, of the qualified news, weather, and sports production expenses will include wages and salaries paid to one or more new full-time employees in this State.

For purposes of the bill, “news, weather, and sports content” is defined as a television show, series, or production of 22 minutes or more in length which features news, current events, weather, sports, or other similar public programming and which is intended to be of interest primarily for a New Jersey audience. Under the bill, the term does not, however, include a television show, series, or production featuring a game show, award show, or other gala event; a television show, series, or production soliciting funds; a television show, series, or production containing obscene material; or a television show, series, or production primarily for private, industrial, corporate, or institutional purposes.

The bill provides that qualified news, weather, and sports content production expenses eligible for a credit include amounts paid or incurred by the taxpayer for wages and salaries, construction, operations, editing, photography, sound, lighting, wardrobe and accessories, rental facilities, and equipment costs if the expenses are incurred in New Jersey. The bill specifies that eligible expenses do not include any expenses incurred by the taxpayer in the process of marketing or otherwise advertising the news, weather, and sports content.

The bill provides that taxpayers eligible to claim credits credit for qualified news, weather, and sports content production expenses may apply for a tax credit transfer certificate in lieu of being allowed any amount of the credit against the liability of the taxpayer. If approved for a tax credit transfer certificate, the bill specifies that a taxpayer may elect to sell or assign the tax certificate to any other taxpayer with a New Jersey corporation business tax liability in exchange for private financial assistance. The transfer of a credit amount must provide the seller of the credit with private financial assistance equal to at least 75 percent of the amount of the credit transferred.

The bill provides that credits and transferable tax credit certificates are not allowed in excess of $5,000,000 in each fiscal year. If, in any fiscal year, credit applications exceed $5,000,000, the bill provides that taxpayers will be allowed credits beginning in the next fiscal year based on the order in which they had applied for credits during the prior year.

The bill provides that the Director of the Division of Taxation, in conjunction with the Executive Director of the of the New Jersey Economic Development Authority and the New Jersey Motion Picture and Television Development Commission, must develop rules for the administration of the credit. The rules adopted by the director, in conjunction with the executive director of the authority and the development commission, must include examples of qualified news, weather, and sports content production expenses and the procedures and forms to apply for a credit and for a tax credit transfer certificate necessary for a taxpayer to sell or assign an amount of tax credit.

The purpose of this credit is to provide businesses that produce New Jersey news, weather, and sports content an incentive similar to the tax credits permitted for qualified film and qualified digital media content production expenses under current law.