New Jersey Enacts New Tax Credit Legislation
The Grow New Jersey Assistance Act (the "Act") was recently signed by Governor Christie. The purpose of the Act is to encourage capital investment, create new jobs and preserve current New Jersey jobs that are in jeopardy of being relocated out of state.
The Act generally provides for the award of tax credits to a business that demonstrates at the time of the application that (1) it will make, acquire or lease a capital investment of at least $20,000,000 in facilities located in designated areas, at which it will employ at least 100 full-time employees in retained full-time jobs, or create at least 100 new full-time jobs in an industry identified as desirable for New Jersey to maintain or attract; (2) the capital investment and resulting retention and creation of jobs will yield a net benefit to New Jersey; and (3) the award of tax credits is a material factor in the business's decision to create or retain the requisite number of full-time jobs for eligibility under the program.
The program will be administered by the New Jersey Economic Development Authority (the "Authority"). The Authority will determine if an award of tax credits should be made. The amount of tax credits awarded will be between $5,000 - $8,000 per year (as determined by the Authority) for ten years for each new or retained full-time job. The tax credits can be applied against corporation business tax or insurance premium tax. The amount of such tax credits that may be used by the business annually may not exceed the lesser of one tenth of the capital investment certified by the Authority or $ 4,000,000.
Applications must be submitted by July 1, 2014. Documentation evidencing that a business has met the capital investment and job creation or retention requirements must be submitted no later than July 28, 2017.
The Act provides that businesses may satisfy the capital investment requirement by leasing a facility where a capital investment will be made. Further, the Act provides that affiliates of a business may contribute to meeting the capital investment or full-time employee requirements of the Act.
To the extent the tax credit exceeds the tax liability of the business for a tax period, it may be carried over for 20 tax periods.
A business that receives an award of tax credits under the Act may apply to the New Jersey Division of Taxation and the Authority for a tax credit transfer certificate, which may be sold or assigned in whole or in part by the business.
Businesses awarded tax credits under the Act will not be eligible for certain other tax credits and incentives designated by the Act.
Riker Danzig has developed a strong New Jersey State Tax practice, and is well-positioned to advise on any New Jersey State Tax matters. Please contact Robert C.Daleo, who heads the firm's State Tax and Tax Controversy Groups, if you have any questions or need assistance with regard to New Jersey State Tax issues.