A4388

An Act concerning family leave to attend events of employee’s child, establishing tax credits for employers that provide paid family leave, and supplementing various parts of the statutory law.

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

1. a. There is established in the Department of Labor and Workforce Development a program, administered by the commissioner, to provide tax credits to employers that provide full paid family leave for up to two full working days, in addition to the earned sick leave that is required to be paid pursuant to P.L.2018, c10 (C.34:11D-1 et seq.), to employees for time needed by the employee in connection with a child of the employee to attend a school-related conference, meeting, function or other event. The purpose of the program is to provide tax credits to these employers to offset the cost to the employer of wages paid to employees using the time provided by the employer.

b. An employer subject to the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill) may apply to the commissioner for an award of tax credits under this section. A tax credit allowed pursuant to this section shall be in the amount provided in subsections c. and d. of this section against the corporation business tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) or the gross income tax imposed pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., whichever of the two taxes is applicable to the employer.

c. The final amount of the tax credit provided to an employer for paying full paid family leave to employees during a tax year shall be the amount that the employer actually paid for each employee for full paid family leave.

d. An employer may qualify for a tax credit pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) in a taxable year or privilege period beginning on or after January 1, 2023.

e. The combined value of all tax credits approved annually by the commissioner pursuant to this section shall not exceed $10,000,000 in a calendar year. The commissioner shall annually review and report to the Legislature in accordance with section 2 of P.L.1991, c.164 (C.52:14-19.1) on the sufficiency of the tax credit cap authorized pursuant to this subsection and any recommendations with respect thereto to the Legislature.

f. As used in sections 1 through 4 of P.L. , c. (C. ) (pending before the Legislature as this bill):

"Commissioner" means the Commissioner of Labor and Workforce Development.

"Employer" means any nongovernmental business entity including, but not limited to, a nonprofit organization, a corporation, S corporation, limited liability company, partnership, limited partnership, and sole proprietorship, and shall include all entities related by common ownership or control.

"Tax year" means the calendar year or fiscal year in which a taxpayer's gross income tax or corporation business tax liability is due and payable.

2. a. Notwithstanding any provision of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the commissioner, in consultation with the State Treasurer, may adopt, upon filing with the Office of Administrative Law, such regulations that the commissioner deems necessary to implement the provisions of sections 1 through 4 of P.L. , c. (C. ) (pending before the Legislature as this bill), which regulations shall be effective for a period not to exceed 180 days from the date of the filing. The commissioner shall thereafter amend, adopt, or readopt the regulations in accordance with the requirements of P.L.1968, c.410 (C.52:14B-1 et seq.). The regulations adopted by the commissioner shall include the following:

(1) standards and procedures for determining which employers are eligible of employers for tax credits;

(2) any additions to, or modifications of, wage record-keeping requirements needed to calculate the amounts of tax credits under sections 1 through 4 of P.L. , c. (C. ) (pending before the Legislature as this bill);

(3) a method for employers to submit certificates of credit to the Division of Taxation pursuant to sections 3 and 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).

b. Beginning the year next following the year in which P.L. , c. (C. ) (pending before the Legislature as this bill) takes effect and every two years thereafter, the commissioner shall prepare a report concerning the award of tax credits under sections 1 through 4 of P.L. , c. (C. ) (pending before the Legislature as this bill), and submit the report to the Governor, and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature. Each biennial report required under this subsection shall include the names and locations of, and the amount of tax credits allowed to, each employer allowed a tax credit under sections 1 through 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).

3. a. The Director of the Division of Taxation in the Department of the Treasury shall allow an employer a credit against the corporation business tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) in the amount certified by the Commissioner of Labor and Workforce Development as the taxpayer's tax credit amount pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill). To claim the tax credit amount for a privilege period, the taxpayer shall submit to the director the certificate of credit issued for that privilege period by the commissioner pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).

b. An employer shall apply the credit awarded against the employer's liability under section 5 of P.L.1945, c.162 (C.54:10A-5) for the privilege period during which the director allows the employer a tax credit pursuant to this section. An employer shall not carry forward an unused credit.

c. The director shall prescribe the order of priority of the application of the credit allowed under this section and any other credits allowed by law against the tax imposed under section 5 of P.L.1945, c.162 (C.54:10A-5). 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 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).

4. a. The Director of the Division of Taxation in the Department of the Treasury shall allow an employer a credit against the gross income tax imposed pursuant to the "New Jersey Gross Income Tax Act" N.J.S.54A:1-1 et seq. in the amount certified by the Commissioner of Labor and Workforce Development as the taxpayer's tax credit amount pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill). To claim the tax credit amount for a taxable year, the taxpayer shall submit to the director the certificate of credit issued for that taxable year by the commissioner pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).

b. An employer shall apply the credit awarded against the employer's liability under the "New Jersey Gross Income Tax Act" N.J.S.54A:1-1 et seq. for the taxable year during which the director allows the employer a tax credit pursuant to this section. An employer shall not carry forward an unused credit.

c. The director shall prescribe the order of priority of the application of the credit allowed under this section and any other credits allowed by law against the tax imposed under the "New Jersey Gross Income Tax Act" N.J.S.54A:1-1 et seq. The amount of the credit applied under this section against the tax imposed pursuant to the "New Jersey Gross Income Tax Act" N.J.S.54A:1-1 et seq. for a taxable year, together with any other credits allowed by law, shall not reduce the tax liability to an amount less than zero. No tax credit shall be allowed pursuant to this section for any wages and payroll taxes included in the calculation of any other tax credit granted pursuant to a claim made on a tax return filed with the director for a period of time that coincides with the taxable year for which a tax credit authorized pursuant to this section is allowed.

d. A business entity that is classified as a partnership for federal income tax purposes shall not be allowed the tax credit directly under N.J.S.54A:1-1 et seq., but the amount of credit of the taxpayer in respect of a distributive share of partnership income shall be determined by allocating to the taxpayer that proportion of the credit acquired by the partnership that is equal to the taxpayer's share, whether or not distributed, of the total distributive income or gain of the partnership for its taxable year ending within or with the taxpayer's taxable year.

A taxpayer that is a New Jersey S corporation shall not be allowed the tax credit directly under N.J.S.54A:1-1 et seq., but the amount of 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 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.

5. This act shall take effect immediately.

STATEMENT

This establishes a permissive program wherein an employer that provides full paid leave for employees, for up to two full work days, to take time needed by the employee in connection with a child of the employee to attend a school-related conference, meeting, function or other event, will be entitled to a tax credit for the amount of wages paid to an employee for the use of the leave.