A2394

An Act providing corporation business tax credits and gross income tax credits to employers for hiring certain individuals and supplementing P.L.1945, c.162 (C.54:10A-1 et seq.) 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. A taxpayer 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 the salary and wages paid by the taxpayer during the privilege period to each qualified employee employed by the taxpayer, provided that:

(1) the amount of the tax credit shall not to exceed $3,000 for each qualified employee employed by the taxpayer during the privilege period;

(2) the amount of the tax credit shall be prorated for each qualified employee who was not employed by the taxpayer for the entire privilege period; and

(3) the tax credit shall not be allowed for the salary and wages paid to any qualified employee who was employed by the taxpayer for less than 90 calendar days.

b. The order of priority of the application of the credit allowed pursuant to this section and any other credits allowed by law against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) shall be as prescribed by the director. 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 amount of the tax 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 forward, if necessary, to the seven privilege periods following the privilege period for which the tax credit was issued, after which the tax credit shall expire.

c. No tax credit shall be allowed pursuant to this section for any costs or expenses included in the calculation of any other tax credit or exemption granted pursuant to a claim made on a tax return filed with the director, or included in the calculation of an award of business assistance or incentive, for a period of time that coincides with the privilege period for which a tax credit authorized pursuant to this section is allowed.

d. The director shall determine the form and manner in which a taxpayer shall apply for the tax credit, and the director shall collaborate with the Commissioner of Labor and Workforce Development, as appropriate, to determine the hiring and employment information to be included by the taxpayer and to confirm that each qualified employee attended all required training services provided through a One-Stop Career Center and achieved an industry valued or nationally recognized credential during the period of unemployment immediately preceding the date of employment by the taxpayer.

e. As used in this section:

“One-Stop Career Center” means the same as that term is defined in section 3 of P.L.1992, c.43 (C.34:15D-3).

“Qualified employee” means an individual who is employed by a taxpayer in this State, which individual was unemployed for at least 60 calendar days prior to the date of employment by the taxpayer, and which individual has attended all required training services provided through the One-Stop Career Center and achieved an industry valued or nationally recognized credential during the period of unemployment immediately preceding the date of employment by the taxpayer.

2. a. A taxpayer that is an employer shall be allowed a credit against the tax otherwise due under the “New Jersey Gross Income Tax Act,” N.J.S.A.54A:1-1 et seq., in an amount equal to the salary and wages paid by the taxpayer during the taxable year to each qualified employee employed by the taxpayer, provided that:

(1) the amount of the tax credit shall not to exceed $3,000 for each qualified employee employed by the taxpayer during the taxable year;

(2) the amount of the tax credit shall be prorated for each qualified employee who was not employed by the taxpayer for the entire taxable year; and

(3) the tax credit shall not be allowed for the salary and wages paid to any qualified employee who was employed by the taxpayer for less than 90 calendar days.

b. The order of priority of the application of the credit allowed pursuant to this section and any other credits allowed by law against the tax imposed pursuant to the “New Jersey Gross Income Tax Act,” N.J.S.A.54A:1-1 et seq., for a taxable year shall be as prescribed by the director. The amount of the credit applied under this section against the tax imposed pursuant to N.J.S.A.54A:1-1 et seq. for a taxable year, together with other payments, credits, deductions, and adjustments allowed by law, shall not reduce a taxpayer’s tax liability to an amount less than zero. The amount of the tax credit otherwise allowable under this section which cannot be applied for the taxable year due to the limitations of this subsection or under other provisions of N.J.S.A.54A:1-1 et seq. may be carried forward, if necessary, to the seven taxable years following the taxable year for which the tax credit was issued, after which the tax credit shall expire.

c. No tax credit shall be allowed pursuant to this section for any costs or expenses included in the calculation of any other tax credit or exemption granted pursuant to a claim made on a tax return filed with the director, or included in the calculation of an award of business assistance or incentive, for a period of time that coincides with the taxable year for which a tax credit authorized pursuant to this section is allowed.

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 a 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 income of the New Jersey S Corporation for its privilege period ending within or with the taxpayer’s taxable year.

e. The director shall determine the form and manner in which a taxpayer shall apply for the tax credit, and the director shall collaborate with the Commissioner of Labor and Workforce Development, as appropriate, to determine the hiring and employment information to be included by the taxpayer and to confirm that each qualified employee attended all required training services provided through a One-Stop Career Center and achieved an industry valued or nationally recognized credential during the period of unemployment immediately preceding the date of employment by the taxpayer.

f. As used in this section:

“One-Stop Career Center” means the same as that term is defined in section 3 of P.L.1992, c.43 (C.34:15D-3).

3. This act shall take effect immediately and shall apply to privilege periods and taxable years beginning on or after January 1 of the year next following the date of enactment.

STATEMENT

This bill provides corporation business tax credits and gross income tax credits to employers that employ qualified employees who received employment-related assistance through a One-Stop Career Center.

Under the bill, a taxpayer is allowed a tax credit based on the salary and wages paid to each qualified employee during the tax period. However, the bill limits the amount of the tax credit to $3,000 per qualified employee. The bill requires the amount of the tax credit to be prorated for each qualified employee who was not employed by the taxpayer for the entire tax period. The bill also provides that a taxpayer can only claim the tax credit for the salary and wages paid to a qualified employee who has been employed for a minimum period of 90 calendar days. Any amount of any unused tax credit may be carried forward to the seven tax periods following the year for which the tax credit was issued, after which the tax credit expires.

As defined in the bill, “qualified employee” means an individual who is employed by a taxpayer in this State, which individual was unemployed for at least 60 calendar days prior to the date of employment by the taxpayer, and which individual has attended all required training services provided through the One-Stop Career Center and achieved an industry valued or nationally recognized credential during the period of unemployment immediately preceding the date of employment by the taxpayer. A “One-Stop Career Center” means any of the facilities established, sponsored, or designated by the State, a political subdivision of the State, and a Workforce Investment Board in a local area to coordinate or make available State and local programs providing employment and training services or other employment-directed and workforce development programs and activities, including job placement services, and any other similar facility as may be established, sponsored, or designated at any later time to coordinate or make available any of those programs, services, or activities.

The bill requires the Director of the Division of Taxation to determine the form and manner by which a taxpayer can apply for the tax credit. The director is also required to collaborate with the Commissioner of Labor and Workforce Development, as appropriate, to determine the hiring and employment information to be included by the taxpayer and to confirm that each qualified employee attended all required training services provided through a One-Stop Career Center and achieved an industry valued or nationally recognized credential during the period of unemployment immediately preceding the date of employment by the taxpayer.