A4840

An Act providing temporary corporation business tax and gross income tax credits for job creation related to manufacturing of personal protective equipment, supplementing P.L.1945, c.162 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. For privilege periods ending in 2020, 2021, and 2022, a taxpayer, upon approval of an application to the director shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) in the amount of $10,000 for each qualifying new hire involved in the manufacture of personal protective equipment in the State during the privilege period.

b. The total credit allowed to a taxpayer during the privilege period shall not exceed $500,000.

c. Notwithstanding the minimum tax schedule imposed pursuant to subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5), if the amount of the tax credit allowed exceeds the amount of corporation business tax otherwise due pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), the amount of excess shall be treated as a refundable overpayment except that interest shall not be paid pursuant to section 7 of P.L.1992, c.175 (C.54:49-15.1) on the amount of overpayment attributable to this credit amount. The director shall determine the order of priority of the application of the credit allowed pursuant to this section and any other credits allowed by law.

d. The combined value of all tax credits approved by the director pursuant to this section and pursuant to section 2 of P.L. , c. (C. )(pending before the Legislature as this bill) shall not exceed $10,000,000 in any State fiscal year to apply against the tax imposed pursuant to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq., and the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5).

e. An application for the tax credit shall be submitted to the Division of Taxation in the Department of Treasury in a form and manner prescribed by the director.

f. Notwithstanding any provision of the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the director is authorized to adopt immediately upon filing with the Office of Administrative Law such rules and regulations shall be effective for a period not to exceed 360 days following the date of filing and may thereafter be amended, adopted, or readopted by the director in accordance with the requirements of P.L.1968, c.410 (C.52:14B-1 et seq.). The director shall consult with the Commissioner of Health related to any specification requirements for what manufactured products are to qualify as personal protective equipment pursuant to this section.

g. As used in this section:

“Director” means Director of the Division of Taxation;

“Personal protective equipment” means coveralls, face shields, gloves, gowns, masks, respirators, and other equipment designed to protect the wearer from the spread of infection or illness.

“Qualifying new hire” means a full-time employee hired by the taxpayer during the privilege period for the manufacturing of personal protective equipment in this State. The person hired shall be employed for at least 35 hours a week, or render 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. “Qualifying new hire” shall not include any person who works as an independent contractor or on a consulting basis for the business. “Qualifying new hire” includes only a position for which the taxpayer 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 chapter 27 of Title 17B of the New Jersey Statutes.

2. a. For taxable years 2020, 2021, and 2022, a taxpayer, upon approval of an application to the director shall be allowed a credit against the tax imposed pursuant to the “New Jersey Gross Income Tax Act” N.J.S.54A:1-1 et seq. in the amount of $10,000 for each qualifying new hire involved in the manufacture of personal protective equipment in the State during the taxable year.

b. The total credit allowed to a taxpayer during the taxable year shall not exceed $500,000.

c. If the amount of the credit exceeds the amount of tax 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. The director shall determine the order of priority of the application of the credit allowed pursuant to this section and any other credits allowed by law.

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. The combined value of all tax credits approved by the director pursuant to this section and pursuant to section 1 of P.L. , c. (C. )(pending before the Legislature as this bill) shall not exceed $10,000,000 in any State fiscal year to apply against the tax imposed pursuant to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq., and the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5).

f. An application for the tax credit shall be submitted to the Division of Taxation in the Department of Treasury in a form and manner prescribed by the director.

g. Notwithstanding any provision of the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the director is authorized to adopt immediately upon filing with the Office of Administrative Law such rules and regulations shall be effective for a period not to exceed 360 days following the date of filing and may thereafter be amended, adopted, or readopted by the director in accordance with the requirements of P.L.1968, c.410 (C.52:14B-1 et seq.). The director shall consult with the Commissioner of Health related to any specification requirements for what manufactured products are to qualify as personal protective equipment pursuant to this section.

h. As used in this section:

“Director” means Director of the Division of Taxation;

“Personal protective equipment” means coveralls, face shields, gloves, gowns, masks, respirators, and other equipment designed to protect the wearer from the spread of infection or illness.

“Qualifying new hire” means a full-time position created by the taxpayer during the taxable year for the manufacturing of personal protective equipment in the State. The person hired shall be employed for at least 35 hours a week, or render 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. “Qualifying new hire” shall not include any person who works as an independent contractor or on a consulting basis for the business. “Qualifying new hire” includes only a position for which the taxpayer 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 chapter 27 of Title 17B of the New Jersey Statutes.

3. This act shall take effect immediately.

STATEMENT

This bill provides corporation business tax and gross income tax credits to taxpayers that create jobs involved in the manufacturing of personal protective equipment in the State in response to the COVID-19 pandemic. Under the bill, personal protective equipment includes coveralls, face shields, gloves, gowns, masks, respirators, and other equipment designed to protect the wearer from the spread of infection or illness.

The bill establishes the credit at $10,000 for each new hire, if the job is related to the manufacturing of personal protective equipment. The maximum credit for any individual taxpayer is $500,000 and the overall cap on the value of all credits awarded is $10,000,000 for each State fiscal year. Taxpayers are required to apply for the tax credit in a manner prescribed by the Division of Taxation, and the Director of the Division of Taxation is responsible for determining the order of priority for the application of the credits. The bill provides that if the amount of the credit exceeds the tax due, the amount in excess is to be treated as an overpayment and be refunded to the taxpayer. This bill takes effect immediately and expires after two years.

The bill defines a “qualifying new hire” to mean a full-time position in this State that requires employment of a person for at least 35 hours a week or other service that can be deemed full-employment, and whose wages are subject to withholding per the “New Jersey Gross Income Tax Act.” Additionally, the qualifying new hire only includes positions for which the taxpayer provides the employee with certain minimum health insurance.

The bill authorizes the Director of the Division of Taxation to adopt rules and regulations immediately upon filing with the Office of Administrative Law to administer the bill, and requires the director to consult with the Commissioner of Health related to any specification requirements for what manufactured products are to qualify as personal protective equipment under the bill.