ASSEMBLY, No. 2039

STATE OF NEW JERSEY

220th LEGISLATURE

 

PRE-FILED FOR INTRODUCTION IN THE 2022 SESSION

 


 

Sponsored by:

Assemblyman  DANIEL R. BENSON

District 14 (Mercer and Middlesex)

Assemblyman  STERLEY S. STANLEY

District 18 (Middlesex)

Assemblyman  ANTHONY S. VERRELLI

District 15 (Hunterdon and Mercer)

 

 

 

 

SYNOPSIS

     Provides tax credits to small employers that rehire employees laid off for reasons of economy due to COVID-19 public health emergency.

 

CURRENT VERSION OF TEXT

     Introduced Pending Technical Review by Legislative Counsel.

  


An Act providing tax credits to small employers that rehire employees laid off for reasons of economy due to the COVID-19 public health emergency.

 

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

 

     1.    a.  For taxable years 2020, 2021, 2022, and any subsequent year in which the COVID-19 public health emergency is in effect pursuant to Executive Order No. 103 of 2020, or any extension thereof, a taxpayer that is a qualified small 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., in an amount equal to $250 for each qualified employee rehired or called back from layoff during the taxable year to a vacant position previously held by the qualified employee and from which the qualified employee was terminated for reasons of economy due to the COVID-19 public health emergency.

     b.    The amount of the credits applied under this section for a taxable year, together with any other credits allowed by law, shall not exceed 50 percent of the taxpayer’s liability otherwise due for the taxable year.  The priority in which credits allowed pursuant to this section and any other credits that shall be taken shall be determined by the director.  The amount of the credit otherwise allowable under this section that cannot be applied for the taxable year due to the limitations of this subsection may be carried over, if necessary, to the seven taxable years following the taxable year for which the credit was allowed.

     c.     (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.

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

     e.     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, rules and regulations that the director deems necessary to implement the provisions of this section, which rules and regulations shall be effective for a period not to exceed 18 months 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.).

     f.     As used in this section:

     "Qualified employee" means an individual who is employed by the qualified small employer and works an average of 20 or more hours per week over any 13-week period during the taxable year.

     "Qualified small employer" means a business entity, including all entities related by common ownership or control, that is independently owned and operated, has a North American Industry Classification System code of 44, 45, 62, 71, 72, or 81, and had an average weekly number of full-time employees of not more than 100 employees during the taxable year.

 

     2.    a.  For privilege periods ending in 2020, 2021, 2022, and any subsequent year in which the COVID-19 public health emergency is in effect pursuant to Executive Order No. 103 of 2020, or any extension thereof, a taxpayer that is a qualified small employer shall be allowed a credit against the tax otherwise due pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) in an amount equal to $250 for each qualified employee rehired or called back from layoff during the taxable year to a vacant position previously held by the qualified employee and from which the qualified employee was terminated for reasons of economy due to the COVID-19 public health emergency.

     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, 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).  The priority in which credits allowed pursuant to this section and any other credits that shall be taken shall be determined by the director.  The amount of the credit otherwise allowable under this section that 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.     An application for the tax credit shall be submitted to the Division of Taxation in the Department of the Treasury in a form and manner prescribed by the director.

     d.    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, rules and regulations that the director deems necessary to implement the provisions of this section, which rules and regulations shall be effective for a period not to exceed 18 months 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.).

     e.     As used in this section:

     "Qualified employee" means an individual who is employed by the qualified small employer and works an average of 20 or more hours per week over any 13-week period during the privilege period.

     "Qualified small employer" means a business entity, including all entities related by common ownership or control, that is independently owned and operated, has a North American Industry Classification System code of 44, 45, 62, 71, 72, or 81, and had an average weekly number of full-time employees of not more than 100 employees during the privilege period.

 

     3.    This act shall take effect immediately.

 

 

STATEMENT

 

     This bill provides tax credits to qualified small employers in an amount equal to $250 for each qualified employee rehired or called back from layoff during the taxable year to a vacant position previously held by the qualified employee and from which the qualified employee was terminated for reasons of economy due to the COVID-19 public health emergency.  Under the bill, a qualified employee is an individual who is employed by the qualified small employer and works an average of 20 or more hours per week over any 13-week period during the year.

     Under the bill, a qualified small employer is a business entity, including all entities related by common ownership or control, that is independently owned and operated, has a North American Industry Classification System (NAICS) code of 44, 45, 62, 71, 72, or 81, and had an average weekly number of full-time employees of not more than 100 employees during the taxable year.  The industries classified under these NAICS codes include: retail trade; health care and social assistance; arts, entertainment, and recreation; accommodation and food services; and other services (except public administration).

     The credits would be available for taxable years beginning or privilege periods ending in 2020, 2021, 2022, and any subsequent year in which the COVID-19 public health emergency is in effect pursuant to Executive Order No. 103 of 2020, or any extension thereof.