A5593

An Act providing tax credits for certain improvements to small business properties, designated as the “Main Street Storefront Investment Credit Act,” 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. As used in this section:

“Eligible investment” means an expense incurred by a qualified small business for improvements to a property owned or leased by the business for use in its principal business operations, which improvements are intended to increase the profitability of the business, including, but not limited to: storefront improvements; accessibility improvements; installation of a security system; improvements to the exterior lighting, signage, awnings, and façade; installation of energy-efficient windows; commercial kitchen upgrades; and heating, ventilation, and air conditioning improvements.

“Qualified small business” means a business with no more than 50 full-time employees, that is independently owned and operated, has its principal place of business in the State, and is not delinquent or deficient with respect to the payment of any State tax.

b. A taxpayer that is a qualified small business 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 30 percent of the eligible investments incurred during the privilege period by the taxpayer, provided that the total value of credits allowed to a taxpayer during any privilege period shall not exceed $30,000.

c. When filing a return that includes a claim for a tax credit allowed pursuant to this section, a taxpayer shall include such business records as may be required by the director documenting the eligible investments incurred by the taxpayer during the privilege period.

d. 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.

e. The order of priority in which the tax credit allowed pursuant to this section and any other tax credits allowed by law may be taken shall be as prescribed by the director. The amount of the tax 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, when taken together with any other payments, credits, deductions, and adjustments allowed by law shall not reduce the tax liability of the taxpayer 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 allowed, after which the credit shall expire.

2. a. As used in this section:

b. A taxpayer that is a qualified small business shall be allowed a credit against the tax otherwise due for the taxable year under the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. in an amount equal to 30 percent of the eligible investments incurred during the taxable year by the taxpayer, provided that the total value of credits allowed to a taxpayer during any taxable year shall not exceed $30,000.

d. 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.

e. The order of priority in which the tax credit allowed pursuant to this section and any other tax credits allowed by law may be taken shall be as prescribed by the director. The amount of the tax credit applied under this section against the tax imposed pursuant to “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. for a taxable year, when taken together with any other payments, credits, deductions, and adjustments allowed by law, shall not reduce the tax liability of the taxpayer 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 section or other provisions of N.J.S.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 allowed, after which the credit shall expire.

f. (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 of 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 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.

3. The Director of the Division of Taxation in the Department of the Treasury shall adopt, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations necessary to implement the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).

4. This act shall take effect immediately and shall apply to privilege periods and taxable years beginning on or after the effective date of this act.

STATEMENT

This bill, to be known as the “Main Street Storefront Investment Credit Act,” creates a corporation business tax and gross income tax credit for qualified small businesses that make certain improvements to their business properties.

Under the bill, a qualified small business may claim a credit equal to 30 percent of the eligible investments incurred during the tax period, up to $30,000 per tax period. When filing a tax return that includes a claim for the tax credit allowed under the bill, a taxpayer is required to include such business records as may be required by the Director of the Division of Taxation in the Department of the Treasury documenting the eligible investments incurred by the taxpayer.

Under the bill, “qualified small business” means a business with no more than 50 full-time employees that is independently owned and operated, has its principal place of business in this State, and is not delinquent or deficient with respect to the payment of any State tax.

The bill defines “eligible investment” as an expense incurred by a qualified small business for improvements to property owned or leased by the business for use in its principal business operations, which improvements are intended to increase the profitability of the business, including, but not limited to: storefront improvements; accessibility improvements; installation of a security system; improvements to the exterior lighting, signage, awnings, and façade; installation of energy-efficient windows; commercial kitchen upgrades; and heating, ventilation, and air conditioning improvements.