Sponsored by:
Assemblyman GERRY SCHARFENBERGER
District 13 (Monmouth)
SYNOPSIS
“Hire New Jersey Act”; provides corporation business tax and gross income tax credits to small businesses for hiring and retaining certain New Jersey residents.
CURRENT VERSION OF TEXT
As introduced.
An Act providing corporation business tax and gross income tax credits for small businesses hiring and retaining certain New Jersey residents, designated as the “Hire Jersey 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. (1) 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 amount equal to the qualified wages paid by the taxpayer to an eligible employee during the privilege period, subject to limitations set forth in paragraph (2) of this subsection, except that total credit allowed to a taxpayer during any privilege period shall not exceed $50,000. A taxpayer may only be allowed the credit once per eligible employee and may not claim a credit for the qualified wages paid to the same eligible employee in any successive privilege period.
(2) The amount of the credit allowed pursuant to this subsection for each eligible employee shall be subject to the greater of the following limitations:
(a) $2,500 for an eligible employee;
(b) $4,000 for an eligible employee who is a veteran, is a person with a disability, or a recent graduate; or
(c) $5,000 for an eligible employee who is paid at least 125 percent of the local median wage.
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 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 may be carried forward, if necessary, to the three privilege periods following the privilege period for which the tax credit was issued, after which the tax credit shall expire.
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 qualified wages paid by the taxpayer to each eligible employee 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, deduction, 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. As used in this section:
“Community college” means a county college established pursuant to chapter 64A of Title 18A of the New Jersey Statutes.
“Eligible employee” means an individual who resides in the State and is employed by a qualified small business for consideration for at least 35 hours a week, or who renders any standard service generally accepted by custom or practice as full-time employment, and who has been employed in such capacity for not less than 12 consecutive months.
“Local median wage” means the median wage paid to full-time employees in the county in which the eligible employee principally performs their work duties, as reported in the occupational employment statistics wage survey issued by the Department of Labor and Workforce Development during the preceding calendar year.
“Person with a disability” means the same as the term is defined in section 4 of P.L.1985, c.222 (C.52:27D-304).
“Qualified small business” means a business that is registered to do business in this State, maintains a business location or otherwise derives a majority of its income from business activities or operations conducted within the State, and has no more than 75 employees in any calendar month during the privilege period for which the credit is claimed.
“Qualified wages” means any salaries, wages, and renumeration subject to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq., paid in the course of employment by a qualified small business to an eligible employee.
“Recent graduate” means an individual who obtained an associate’s degree from a community college within the last three years.
“Veteran” means any citizen and resident of this State honorably discharged or released under honorable circumstances from active service in any branch of the Armed Forces of the United States.
2. a. (1) A taxpayer that is a qualified small business 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 qualified wages paid by the taxpayer to an eligible employee during the taxable year, subject to limitations set forth in paragraph (2) of this subsection, except that the total credit allowed to a taxpayer during any taxable year shall not exceed $50,000. A taxpayer may only be allowed the credit once per eligible employee and may not claim a credit for the qualified wages paid to the same eligible employee in any successive taxable year.
(2) The amount of the credit allowed pursuant to this subsection for each eligible employee shall be subject to the greater of the following limitations:
(a) $2,500 for an eligible employee;
(b) $4,000 for an eligible employee who is a veteran, is a person with a disability, or a recent graduate; or
(c) $5,000 for an eligible employee who is paid at least 125 percent of the local median wage.
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 may be carried forward, if necessary, to the three taxable years following the taxable year for which the tax credit was issued, after which the tax credit shall expire.
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 qualified wages paid by the taxpayer to each eligible employee during the taxable year.
d. (1) A business entity that is classified as a partnership for federal income tax purposes shall not be allowed a 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.
(2) A business entity 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.
e. No tax credit shall be allowed pursuant to this section for any costs or expenses included in the calculation of any other tax credit, deduction, 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.
f. As used in this section:
“Community college” means a county college established pursuant to chapter 64A of Title 18A of the New Jersey Statutes.
“Eligible employee” means an individual who resides in the State and is employed by a qualified small business for consideration for at least 35 hours a week, or who renders any standard service generally accepted by custom or practice as full-time employment, and who has been employed in such capacity for not less than 12 consecutive months.
“Local median wage” means the median wage paid to full-time employees in the county in which the eligible employee principally performs their work duties, as reported in the occupational employment statistics wage survey issued by the Department of Labor and Workforce Development during the preceding calendar year.
“Person with a disability” means the same as the term is defined in section 4 of P.L.1985, c.222 (C.52:27D-304).
“Qualified small business” means a business that is registered to do business in this State, maintains a business location or otherwise derives a majority of its income from business activities or operations conducted within the State, and has no more than 75 employees in any calendar month during the privilege period for which the credit is claimed.
“Qualified wages” means any salaries, wages, and renumeration subject to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq., paid in the course of employment by a qualified small business to an eligible employee.
“Recent graduate” means an individual who obtained an associate’s degree from a community college within the last three years.
“Veteran” means any citizen and resident of this State honorably discharged or released under honorable circumstances from active service in any branch of the Armed Forces of the United States.
3. This act shall take
effect on January 1 of the first privilege period or taxable year following the
date of enactment.
STATEMENT
This bill provides corporation business tax and gross income tax credits to qualified small businesses that employ certain State residents for at least 12 months.
Under the bill, a qualified small business would be allowed a tax credit, up to $50,000 per taxable period, based on the wages paid to an eligible employee during the taxable period. However, the bill provides that a qualified small business may only claim the tax credit once per eligible employee. Specifically, the amount of the credit allowed for each eligible employee may not exceed the greater of: (1) $2,500 for an eligible employee; (2) $4,000 for an eligible employee that is a veteran, a person with a disability, or a recent graduate of a State community college; or (3) $5,000 for an eligible employee that is paid at least 125 percent of median wage paid to full-time employees in the county in which the employee principally performs their work duties.
Under the bill, a “qualified small business” includes any business that is registered to do business in this State, maintains a business location or otherwise derives a majority of its income from business activities or operations conducted within the State, and has no more than 75 employees in any calendar month during the taxable year for which the credit is claimed. The bill also defines “eligible employee” as an individual who resides in the State and is employed by a qualified small business for consideration for at least 35 hours a week, or who renders any standard service generally accepted by custom or practice as full-time employment, and who has been employed in such capacity for not less than 12 consecutive months.