A2347

An Act concerning the corporation business tax benefit certificate transfer program and amending P.L.1999, c.140.

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

1. Section 1 of P.L.1999, c.140 (C.34:1B-7.42b) is amended to read as follows:

1. As used in P.L.1997, c.334 (C.34:1B-7.42a et al.):

"Authority" means the New Jersey Economic Development Authority established pursuant to section 4 of P.L.1974, c.80 (C.34:1B-4).

"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 that add to that body of fundamental knowledge.

"Biotechnology company" means an emerging corporation that has its headquarters or base of operations in this State; that owns, has filed for, or has a valid license to use protected, proprietary intellectual property; and that is 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.

"Full-time employee" means a person employed by a new or expanding emerging technology or biotechnology company 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 and whose wages are subject to withholding as provided in the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., or who is a partner of a new or expanding emerging technology or biotechnology company 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. To qualify as a "full-time employee," an employee shall also receive from the new or expanding emerging technology or biotechnology company 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 chapter 27 of Title 17B of the New Jersey Statutes. "Full-time employee" shall not include any person who works as an independent contractor or on a consulting basis for the new or expanding emerging technology or biotechnology company.

"New or expanding" means a technology or biotechnology company that (1) on June 30 of the year in which the company files an application for surrender of unused but otherwise allowable tax benefits under P.L.1997, c.334 (C.34:1B-7.42a et al.) and on the date of the exchange of the corporation business tax benefit certificate, has fewer than 225 employees in the United States of America; (2) on June 30 of the year in which the company files such an application, has at least one full-time employee working in this State if the company has been incorporated for less than three years, has at least five full-time employees working in this State if the company has been incorporated for more than three years but less than five years, and has at least 10 full-time employees working in this State if the company has been incorporated for more than five years; and (3) on the date of the exchange of the corporation business tax benefit certificate, the company has the requisite number of full-time employees in New Jersey that were required on June 30 as set forth in part (2) of this definition. At the discretion of the authority, “new or expanding” may also mean a technology or biotechnology company with 225 or more employees if all of the following conditions are met:

(1) the company has fewer than 1,000 employees, of whom 75% are New Jersey-based employees filling a position or job in this State;

(2) the company provides for, encourages, and promotes the efficient use of energy resources, including renewable and alternative energy resources; and

(3) the company meets all other criteria necessary for the approval of an application to surrender tax benefits pursuant to the corporation business tax benefit certificate transfer program established pursuant to section 1 of P.L.1997, c.334 (C.34:1B-7.42a).

"Technology company" means an emerging corporation that has its headquarters or base of operations in this State; that owns, has filed for, or has a valid license to use protected, proprietary intellectual property; and that employs some combination of the following: highly educated or trained managers and workers, or both, employed in this State who use sophisticated scientific research service or production equipment, processes or knowledge to discover, develop, test, transfer or manufacture a product or service.

(cf: P.L.2010, c.10, s.2)

2. This act shall take effect immediately.

STATEMENT

The bill would grant the New Jersey Economic Development Authority (“EDA”) broader discretion to approve applications submitted pursuant to the corporation business tax benefit certificate transfer program. Upon application to the EDA, the tax benefit certificate transfer program allows a new or emerging technology or biotechnology company to sell research and development credits and net operating loss deductions to other companies in exchange for financial assistance. Current law defines new or expanding technology or biotechnology companies as those with fewer than 225 employees. This bill grants the EDA the authority to deem a company with 225 or more employees as new or emerging, and thus eligible for participation in the program, provided the company meets the following conditions:

(1) the company has fewer than 1,000 employees, of whom 75 percent are New Jersey-based employees filling a position or job in this State;

(2) the company provides for, encourages, and promotes the efficient use of energy resources, including renewable and alternative energy resources; and

(3) the company meets all other criteria necessary for the approval of an application to surrender tax benefits pursuant to the corporation business tax benefit certificate transfer program.