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54:10A-5b. Credit for air carrier, certain circumstances.
29. An air carrier, within the meaning given that term pursuant to 49 U.S.C. s.40102, that contributes more than 25% of the total amortization for capital improvement projects at Newark International Airport paid by air carriers to the Port Authority of New York and New Jersey through rates and charges for a privilege period shall be allowed a credit against the alternative minimum assessment imposed pursuant to section 7 of P.L.2002, c.40 (C.54:10A-5a) for the privilege period in an amount equal to 50% of the portion of the total amortization for capital improvement projects at Newark International Airport paid by the air carrier to the Port Authority of New York and New Jersey through rates and charges for the privilege period; provided however, that the amount of the credit applied under this section against the alternative minimum assessment for a privilege period shall not exceed 50% of the alternative minimum assessment otherwise due and shall not reduce the alternative minimum assessment to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162.
L.2002,c.40,s.29.
54:10A-5.1. Corporation surtax
In addition to the franchise tax paid by each taxpayer under subsection (c) of section 5 of P.L. 1945, c. 162 (C. 54:10A-5), every taxpayer shall be assessed and shall pay a surtax equal to a percentage rate established pursuant to section 2 of this 1986 supplementary act applied to its entire net income or such portion thereof as may be allocable to this State as provided in section 6 of P.L. 1945, c. 162 (C. 54:10A-6). The surtax imposed under this section shall be due and payable in accordance with section 15 of P.L. 1945, c. 162 (C. 54:10A-15). The surtax shall be administered pursuant to the provisions of P.L. 1945, c. 162 (C. 54:10A-1 et seq.).
L. 1986, c. 144, s. 1, eff. Nov. 12, 1986, operative Nov. 12, 1986.
54:10A-5.2. Determination of rate
The Director of the Division of Taxation, in the Department of the Treasury shall, on or before May 30, 1988 and on or before May 30 annually thereafter, review the most recent annual revenue collections in order to estimate the revenue collections from the franchise tax paid pursuant to subsection (c) of section 5 of P.L. 1945, c.162 (C.54:10A-5), attributable solely to changes in federal income tax laws effectuated by the ~Tax Reform Act of 1986,~ Pub.L.99-514 (100 Stat. 2085, 26 U.S.C.s.1 et seq.), which estimate shall be made in multiples of $1,000,000.00. The director on or before May 30, 1988 and on or before May 30 annually thereafter, shall provide a certification of the estimate of these revenues to the Legislature. The surtax rate in section 1 of this 1986 supplementary act shall be determined pursuant to the following formula: R = .5% x ((CA-FA)/60,000,000) where: R is the surtax percentage rate, which shall not be less than zero; FA is the corporate business tax revenue amount, estimated by the director, attributable solely to changes in federal income tax laws effectuated by the ~Tax Reform Act of 1986,~ Pub.L.99-514 ; and, CA is equal to 40,000,000 for the first certification year, 45,000,000 for the second certification year, 50,000,000 for the third certification year, 45,000,000 for the fourth certification year, 45,000,000 for the fifth certification year, and 45,000,000 for the sixth certification year.
The rate of surtax determined shall only be for the report covering the accounting or privilege period ending on or after July 31 of the calendar year in which the certification is made but no later than June 30 of the calendar year next succeeding the calendar year in which the certification was made.
L. 1986, c. 144, s. 2; amended 1988,c.106,s.5.
54:10A-5.3 Recycling equipment tax credit
a. A taxpayer who purchases recycling equipment certified by the Commissioner of the Department of Environmental Protection pursuant to subsection b. of this section, to be used exclusively within this State, except for vehicles which are to be used primarily within this State, shall be entitled to a credit as provided herein against the tax imposed pursuant to section 5 of P.L. 1945, c. 162 (C. 54:10A-5) in an amount equal to 50% of the cost of the recycling equipment less the amount of any loan received pursuant to section 56 of P.L. 1981, c. 278 (C. 13:1E-96). The tax imposed pursuant to section 5 of P.L. 1945, c. 162 shall first be reduced by the amount of any credit allowable pursuant to section 19 of P.L. 1983, c. 303 (C. 52:27H-78) prior to applying the credit allowed pursuant to this section. The amount of the credit claimed in the tax year for which certification of equipment is received, and the amount of credit claimed therefor in each tax year thereafter, shall not exceed 20% of the amount of the total credit allowable, shall not exceed 50% of the tax liability which would be otherwise due, and shall not reduce the amount of tax liability to less than the statutory minimum provided in subsection (e) of section 5 of P.L. 1945, c. 162. For the purposes of this section, ~recycling equipment~ means new vehicles used exclusively for the transportation of post-consumer waste material, or new machinery or new apparatus used exclusively to process post-consumer waste material and manufacturing machinery used exclusively to produce finished products, the composition of which is at least 50% post-consumer waste materials.
~Post-consumer waste material~ means any product generated by a business or consumer which has served its intended end use, and which has been separated from solid waste for the purposes of collection, marketing and disposition and which does not include secondary waste material or demolition waste; and ~secondary waste material~ means waste material generated after the completion of a manufacturing process.
b. In order to qualify for the tax credit pursuant to subsection a. of this section, the taxpayer shall apply for a certification from the Commissioner of the Department of Environmental Protection that certifies that the equipment purchased qualifies as recycling equipment as defined in subsection a. of this section. The certification shall specifically indicate the date of purchase, a description of the equipment, and the cost, and state that the equipment has not previously qualified for a credit pursuant to this section either for the owner or for a previous owner.
Upon certification, the Commissioner of the Department of Environmental Protection shall submit a copy thereof to the taxpayer and the Director of the Division of Taxation. When filing a tax return that includes a claim for a credit pursuant to this section, the taxpayer shall include a copy of the certification and a statement that the recycling equipment is in use in the applicable tax year and is used exclusively in New Jersey, except for vehicles which shall be used primarily in New Jersey. Any credit shall be valid in the tax year in which the certification is approved and any unused portion thereof may be carried forward into subsequent years as provided in subsection a. of this section.
The Commissioner of the Department of Environmental Protection, in consultation with the Director of the Division of Taxation, shall adopt rules and regulations establishing technical specifications and certification requirements for the qualification of recycling equipment for the credit established pursuant to this section.
c. On or before January 31 of each year, the Commissioner of the Department of Environmental Protection shall submit a report to the Governor, the State Treasurer, and the Legislature setting forth the number of certifications that were approved during the preceding calendar year and the cost of each type of recycling equipment which has been certified as qualifying for the credit.
L. 1987, c. 102, s. 42.
54:10A-5.4. Short title
1. This act shall be known and may be cited as the ~New Jobs Investment Tax Credit Act.~
L.1993,c.170,s.1.
54:10A-5.5 Definitions relative to new jobs investment tax credit.
2. As used in this act:
~Business relocation or expansion or investment~ means capital investment in a new or expanded business facility in this State.
~Business facility~ means any factory, mill, plant, refinery, warehouse, building, complex of buildings or structural components of buildings, and all machinery, equipment and personal property located within this State, used in connection with the operation of the business of a corporation that is subject to the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), and all facility preparation and start-up costs of the taxpayer for the business facility which it capitalizes for federal income tax purposes.
~Compensation~ means wages, salaries, commissions or any other form of remuneration paid to employees for personal services.
~Controlled group~ means one or more chains of corporations connected through stock ownership with a common parent corporation if stock possessing at least 50% of the voting power of all classes of stock of each of the corporations is owned directly or indirectly by one or more of the corporations; and the common parent owns directly stock possessing at least 50% of the voting power of all classes of stock of at least one of the other corporations.
~Director~ means the Director of the Division of Taxation in the Department of the Treasury.
~Expanded business facility~ means any business facility, other than a new business facility, resulting from acquisition, construction, reconstruction, installation or erection of improvements or additions to existing property if such improvements or additions are purchased on or after the operative date of this act, but only to the extent of a taxpayer@s qualified investment in such improvements or additions.
~New business facility~ means a business facility which:
a. is employed by a taxpayer in the conduct of a business which is or will be taxable under P.L.1945, c.162 (C.54:10A-1 et seq.). Such facility shall not be considered a new business facility in the hands of a taxpayer if the taxpayer@s only activity with respect to such facility is to lease it to another person;
b. is purchased by a taxpayer and is placed in service or use on or after the operative date of this act;
c. was not purchased by a taxpayer from a related person. The director may waive this requirement if the facility was acquired from a related person for its fair market value and the acquisition was not tax motivated;
d. was not in service or use during the 90-day period immediately prior to transfer of the title to the facility, provided that this restriction for the 90-day period may be waived by the director if the director determines that individuals employed at the facility may be considered as ~new employees~ as defined in this section.
~New employee~ means an individual residing and domiciled in this State, hired by a taxpayer to fill a position or a job in this State which previously did not exist in the taxpayer@s business enterprise in this State prior to the date on which the taxpayer@s qualified investment is placed in service or use in this State provided that:
a. the individual@s duties in connection with the operation of the business facility are on a regular, full-time and permanent basis or regular part-time and permanent basis;
b. the individual is not a related individual as defined in subsection (i) of section 51 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.51, or does not own 10% or more of the business with such ownership interest to be determined under the rules set forth in section 267 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.267;
c. the individual is not an individual who worked for the taxpayer during the six-month period ending on the date the taxpayer@s qualified investment is placed in service or use and is rehired by the taxpayer during the six-month period beginning on the date the taxpayer@s qualified investment is placed in service or use in this State; and
d. the individual is not an employee for whom the taxpayer is allowed a credit pursuant to section 19 of P.L.1983, c.303 (C.52:27H-78) or section 12 of P.L.1985, c.227 (C.55:19-13).
As used in this definition: ~full-time~ means employment for at least 140 hours per month at a wage not less than the State or federal minimum wage, if either minimum wage provision is applicable to the business and ~permanent basis~ does not include employment that is temporary or seasonal and therefore the compensation paid to temporary or seasonal employees will not be considered for purposes of sections 4 and 6 of this act; and ~part-time~ means customarily performing such duties at least 20 hours per week for at least six months during the tax year. In no event shall the number of new employees directly attributable to the qualified investment for the purpose of the credit allowed pursuant to this act exceed the total increase in the taxpayer@s average employment in this State for the tax year over the average employment in this State for the previous tax year and in no event shall the number of new employees directly attributable to the qualified investment for the purpose of the credit allowed pursuant to this act exceed one-half of the average employment in this State for the tax year; and provided, that the director may require that the net increase in the taxpayer@s employment in this State be determined and certified for the taxpayer@s controlled group.
Provided further, however, that individuals filling jobs saved as a direct result of the taxpayer@s qualified investment in property purchased for business relocation or expansion on or after the operative date of this act may be treated as new employees filling new jobs if the taxpayer certifies the material facts to the director and the director expressly finds that: but for the new employer purchasing the assets of a business in bankruptcy under chapter 7 or 11 of the United States Bankruptcy Code and such new employer making qualified investment in property purchased for business relocation or expansion, the assets would have been sold by the United States bankruptcy court in a liquidation sale and the jobs so saved would have been lost; or but for the taxpayer@s qualified investment in property purchased for business relocation or expansion in this State, the business facility in this State would have closed and the employees located at the facility would have lost their jobs; provided that the director shall not make this certification unless the director finds that the business is insolvent as defined in paragraph (32) of 11 U.S.C. s.101 or that the business facility was destroyed in whole or in significant part by fire, flood or act of God.
~New job~ means a job which did not exist in the business of the taxpayer in this State prior to the taxpayer@s qualified investment being made, and which is filled by a new employee.
~Partnership~ means a syndicate, group, pool, joint venture or other unincorporated organization through or by means of which any business, financial operation or venture is carried on, and which is not a trust or estate, a corporation or a sole proprietorship. The term ~partner~ includes a member in such a syndicate, group, pool, joint venture or organization.
~Property purchased for business relocation or expansion~ means improvements to real property and tangible personal property, but only if that improvement or personal property was constructed or purchased and placed in service or use by the taxpayer, for use as a component part of a new or expanded business facility located in this State.
a. Property purchased for business relocation or expansion shall include only:
(1) improvements to real property placed in service or use on or after the operative date of this act by the taxpayer;
(2) tangible personal property placed in service or use by the taxpayer on or after the operative date of this act, with respect to which depreciation, or amortization in lieu of depreciation, is allowable in determining the corporation business tax liability of the taxpayer under P.L.1945, c.162, and which has a remaining recovery period of three or more years at the time the property is placed in service or use in this State; or
(3) tangible personal property owned and used by the taxpayer at a business location outside this State which is moved into this State on or after the operative date of this act, for use as a component part of a new or expanded business facility located in this State; provided that the property is depreciable or amortizable personal property for income tax purposes, and has a remaining recovery period of three or more years at the time the property is placed in service or use in this State.
b. Property purchased for business relocation or expansion shall not include:
(1) Repair costs, including materials used in the repair, unless for federal income tax purposes, the cost of the repair must be capitalized and not expensed;
(2) Airplanes;
(3) Property which is primarily used outside this State with that use being determined based upon the amount of time the property is actually used both within and without this State;
(4) Property which is acquired incident to the purchase of the stock or assets of the seller unless for good cause shown, the director consents to waiving this disqualification; or
(5) Property purchased on or after the operative date of this act, unless pursuant to a written contract to purchase executed prior to the operative date of this act, the cost or consideration for which cannot be quantified with any reasonable degree of accuracy at the time such property is placed in service or use; provided that if the contract of purchase specifies a minimum purchase price the amount thereof shall be used to determine the qualified investment in such property under section 5 of this act if the property otherwise qualifies as property purchased for business relocation or expansion.
c. Property shall be deemed to have been purchased prior to a specified date only if:
(1) the physical construction, reconstruction or erection of the property was begun prior to the specified date, or such property was constructed, reconstructed, erected or acquired pursuant to a written contract as existing and binding on the purchase prior to the specified date; or
(2) the machinery or equipment was owned by the taxpayer prior to the specified date, or was acquired by the taxpayer pursuant to a binding purchase contract which was in effect prior to the specified date.
~Purchase~ means any acquisition of property, including an acquisition pursuant to a lease, but only if:
a. the property is not acquired from a person whose relationship to the person acquiring it would result in the disallowance of deductions under section 267 or subsection (b) of section 707 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.267 or s.707;
b. the property is not acquired by one member of a controlled group from another member of the same controlled group. The director may waive this requirement if the property was acquired from a related party for its then fair market value; and
c. the basis of the property for federal income tax purposes, in the hands of the person acquiring it, is not determined:
(1) in whole or in part by reference to the federal adjusted basis of such property in the hands of the person from whom it was acquired; or
(2) under subsection (e) of section 1014 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.1014.
~Related person~ means:
a. a corporation, partnership, association or trust controlled by the taxpayer;
b. an individual, corporation, partnership, association or trust that is in control of the taxpayer;
c. a corporation, partnership, association or trust controlled by an individual, corporation, partnership, association or trust that is in control of the taxpayer; or
d. a member of the same controlled group as the taxpayer.
As used in the definition of related person and as is applicable to the definitions of purchase and small or mid-size business taxpayer, ~control,~ with respect to a corporation, means ownership, directly or indirectly, of stock possessing 50% or more of the total combined voting power of all classes of the stock of the corporation entitled to vote; ~control,~ with respect to a trust, means ownership, directly or indirectly, of 50% or more of the beneficial interest in the principal or income of the trust. The ownership of stock in a corporation, of a capital or profits interest in a partnership or association or of a beneficial interest in a trust shall be determined in accordance with the rules for constructive ownership of stock provided in subsection (c) of section 267 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.267, other than paragraph (3) of subsection (c) of that section.
~Small or mid-size business taxpayer~ means a taxpayer that has an annual payroll, as calculated pursuant to section 6 of P.L.1945, c.162 (C.54:10A-6), of $5,000,000 or less and annual gross receipts, as calculated pursuant to section 6 of P.L.1945, c.162 (C.54:10A-6), of not more than $10,000,000 for the tax year in which property purchased for business relocation or expansion is placed in service or use by the taxpayer; provided that beginning with tax years commencing on and after January 1 next following the operative date of P.L.2002, c.40 the director shall prescribe the amount of annual payroll and annual gross receipts which shall apply by increasing each such amount hereinabove by an annual inflation adjustment factor, which prescribed amount shall be rounded to the next lowest multiple of $50. ~Annual inflation adjustment factor~ means the factor calculated by dividing the consumer price index for urban wage earners and clerical workers for the nation, as prepared by the United States Department of Labor for September of the calendar year prior to the calendar year in which the tax year begins, by that index for September of the calendar year two years prior to the calendar year in which the tax year begins. The annual payroll of a taxpayer shall include the employees of its domestic and foreign affiliates, whether employed on a full-time, part-time, temporary, or other basis, during the preceding 12 months. If a taxpayer has not been in existence for 12 months, the payroll of the taxpayer shall be divided by the number of weeks, including fractions of a week, that it has been in business, and the result multiplied by 52. That amount shall then be added to the 12-month payrolls of its domestic and foreign affiliates to determine the annual payroll of the taxpayer for purposes of this definition. The annual gross receipts of a taxpayer shall include the annual gross receipts of its foreign and domestic affiliates. The annual gross receipts of a taxpayer which has been in business for three or more complete tax years means the average of the annual gross receipts of the business for the last three tax years. For purposes of this definition, the gross receipts of the taxpayer includes receipts from sales of tangible personal property and services, interests, rents, royalties, fees, commissions and receipts from any other source, but less returns and allowances, sales of fixed assets, interaffiliated transactions between a business and its domestic and foreign affiliates, and taxes collected for remittance to a third party, as shown on its books for federal income tax purposes. The annual receipts of a taxpayer that has been in business for less than three complete tax years means its total receipts for the period it has been in business, divided by the number of weeks including fractions of a week that it has been in business, and multiplied by 52. ~Affiliates~ includes all concerns that are affiliates of each other when either directly or indirectly one concern controls the other or a third party or parties controls both. In determining whether concerns are independently owned and operated and whether or not affiliation exists, the director shall consider all appropriate factors, including common ownership, common management and contractual relationships. ~Concern~ means any business entity organized for profit (even if its ownership is in the hands of a nonprofit entity), having a place of business located in this State, and which makes a contribution to the economy of this State through payment of taxes, or the sale or use in this State of tangible personal property, or the procurement or providing of services in this State, or the hiring of employees who work in this State. ~Concern~ includes but is not limited to any person as defined in R.S.1:1-2.
~Tax year~ means the fiscal or calendar accounting year of a taxpayer.
L.1993,c.170,s.2; amended 2002, c.40, s.18.
54:10A-5.6 Determination of taxpayer credit allowed.
3. a. A taxpayer shall be allowed a credit against the portion of the tax imposed in section 5 of P.L.1945, c.162 (C.54:10A-5), that is attributable to and the direct consequence of the taxpayer@s qualified investment in a new or expanded business facility in this State which results in the creation of at least five new jobs in the case of a small or mid-size business taxpayer, or at least 50 new jobs in the case of any other taxpayer, provided that the median compensation of all new jobs included in the taxpayer@s determination of the new jobs factor shall not be less than $27,000 per year, provided that beginning with tax years commencing on and after January 1 next following the operative date of this act the director shall adjust the median annual compensation which shall apply as provided in subsection e. of this section. The amount of this credit shall be determined and applied as hereinafter provided.
b. The amount of the credit allowed shall be determined by multiplying the amount of the taxpayer@s ~qualified investment,~ determined under section 5 of this act, in ~property purchased for business relocation or expansion~ by the taxpayer@s new jobs factor determined under section 6 of this act. The product of this calculation shall establish the maximum amount of credit allowed under this act due to the qualified investment.
c. The amount of credit allowed shall be taken over a five-year period, at the rate of one-fifth of the amount thereof per tax year, beginning with the tax year in which the taxpayer places the qualified investment in service or use in this State.
d. For purposes of the credit allowed by this section, property shall be considered placed in service or use in the earlier of the following tax years:
(1) The tax year in which, under the taxpayer@s depreciation practice, the period for depreciation with respect to such property begins; or
(2) The taxable year in which the property is placed in a condition or state of readiness and availability for a specifically assigned function.
e. Beginning with tax years commencing on and after January 1 next following the operative date of this act the director shall prescribe the annual median compensation of all new jobs included in the taxpayer@s determination of new jobs factor by increasing the amount of median compensation set forth in subsection a. of this section by an annual inflation adjustment factor, which prescribed amount shall be rounded to the next lowest multiple of $50. ~Annual inflation adjustment factor~ means the factor calculated by dividing the consumer price index for urban wage earners and clerical workers for the nation, as prepared by the United States Department of Labor for September of the calendar year prior to the calendar year in which the tax year begins, by that index for September of the calendar year two years prior to the calendar year in which the tax year begins.
L.1993,c.170,s.3; amended 2002, c.40, s.19.
54:10A-5.7. Determination of aggregate annual credit allowed
4. a. The aggregate annual credit allowed for a tax year shall be an amount equal to the sum of:
(1) The one-fifth part allowed under section 3 for qualified investment placed into service or use during a prior tax year, plus
(2) The one-fifth part allowed under section 3 for qualified investment placed into service or use during the current tax year.
b. (1) The amount determined under subsection a. shall be allowed as a credit against that portion of the taxpayer@s corporation business tax liability which is attributable to and the direct result of the taxpayer@s qualified investment. The amount determined under subsection a. and allowed as a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162, for a tax year shall not reduce that tax liability by more than 50% of that portion of the taxpayer@s tax liability otherwise due for the tax year which is attributable to and the direct result of the taxpayer@s qualified investment and shall not reduce the tax liability for the tax year to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162.
(2) If any amount of credit determined under subsection a. remains after the amount allowed as a credit under the limitations of paragraph (1) of this subsection, that amount of credit remaining shall be refunded to the taxpayer. The amount refunded to the taxpayer shall not exceed 50% of the sum of the amount of property taxes timely paid in the taxable year pursuant to R.S.54:4-1 et seq. and the amount of implicit property taxes paid through rent or lease payments in respect of property taxable pursuant to R.S.54:4-1 et seq., and for which taxes another party that is not a related person is liable, which is attributable to and the direct result of the taxpayer@s qualified investment.
c. (1) If the taxes due under section 5 of P.L.1945, c.162 (determined before application of allowable credits against the tax), the sum of the amount of property taxes timely paid in the taxable year pursuant to R.S.54:4-1 et seq. and the amount of implicit property taxes paid through rent or lease payments in respect of property taxable pursuant to R.S.54:4-1 et seq., and for which taxes another party that is not a related person is liable, are not solely attributable to and the direct result of the taxpayer@s qualified investment, the amount of those taxes which are so attributable shall be determined by multiplying the amount of taxes due under those acts for the tax year (determined before application of allowable credits against tax) by a fraction, the numerator of which is all compensation paid during the tax year to all employees of the taxpayer employed in this State whose positions are directly attributable to the qualified investment. The denominator of the fraction is the compensation paid during the taxable year to all employees of the taxpayer employed in this State.
(2) Any credits allowable under section 42 of P.L.1987, c.102 (C.54:10A-5.3), section 19 of P.L.1983, c.303 (C.52:27H-78), and section 12 of P.L.1985, c.227 (C.55:19-13), shall be applied against and reduce only the amount of corporation business tax not apportioned to the qualified investment under this act. Provided, that any excess of those credits may be applied against the amount of corporation business tax apportioned to the qualified investment under this act that is not offset by the amount of annual credit against the tax allowed under this act for the tax year, unless their application is otherwise prohibited by P.L.1987, c.102, P.L.1983, c.303, or P.L.1985, c.227.
(3) If any credit for the tax year pursuant to this section remains after application of the provisions of subsections a. and b. of this section, the amount thereof shall be forfeited. No carryover to a subsequent tax year or carryback to a prior tax year shall be allowed for the amount of any unused portion of any annual credit allowance.
d. For the purposes of this act, ~implicit property taxes~ means 15% of the amount of the rent or lease payments made by the taxpayer in respect of property taxable pursuant to R.S.54:4-1 et seq., and for which taxes another party that is not a related person is liable.
L.1993,c.170,s.4.
54:10A-5.8. Qualified investment in property purchased for business relocation, expansion
5. a. The qualified investment in property purchased for business relocation or expansion shall be the applicable percentage of the cost of each property purchased for business relocation or expansion which is placed in service or use in this State by the taxpayer during the tax year. Provided, that only the cost of property purchased for business relocation or expansion placed in service or use in this State during the tax year for which the average value of the taxpayer@s real and tangible personal property within the State as shall be determined pursuant to subsection (A) of section 6 of P.L.1945, c.162 (C.54:10A-6), is greater than that average value for the previous tax year, shall be considered in determining qualified investment.
b. For the purpose of subsection a., the applicable percentage of any cost of property purchased for business relocation or expansion shall be determined under the following table:
The applicable
If property has a: percentage is:
three year recovery period .................... 35%
five year recovery period ..................... 70%
seven year or more recovery period ............. 100%
The recovery period of any property, for purposes of this section, shall be determined as of the date such property is first placed in service or use in this State by the taxpayer, determined in accordance with section 168 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.168.
c. For purposes of subsection a., the cost of each property purchased for business relocation or expansion shall be determined under the following restrictions:
(1) cost shall not include the value of property given in trade or exchange for the property purchased for business relocation or expansion;
(2) if property is damaged or destroyed by fire, flood, storm or other casualty, or is stolen, the cost of replacement property shall not include any insurance proceeds received in compensation for the loss;
(3) in the case of self-constructed property, the cost thereof shall be the amount properly charged to the capital account for depreciation in accordance with federal income tax law; and
(4) the cost of property used by the taxpayer out-of-State and then brought into this State shall be determined based on the remaining recovery period of the property at the time it is placed in service or use in this State, and the cost shall be the original cost of the property to the taxpayer less straight line depreciation allowable for the tax years or portions thereof the taxpayer used the property outside this State.
(5) The cost of equipment acquired by written lease is the minimum amount required by the agreement, agreements, contract or contracts to be paid over the term of the lease, provided however, that the minimum amount shall not include any amount required to be paid, as determined by the director, after the expiration of the recovery period of the equipment.
d. No amount of cost for property the cost of which qualifies for the credit allowable under section 42 of P.L.1987, c.102 (C.54:10A-5.3), or for the credits allowed under the ~Manufacturing Equipment and Employment Investment Tax Credit Act,~ P.L.1993, c.171 (C.54:10A-5.16 et al.), shall be allowed as qualified investment under this section.
L.1993,c.170,s.5.
54:10A-5.9 New jobs factor to determine amount of credit allowed.
6. a. The new jobs factor used to determine the amount of credit allowed under this act shall be based on the number of new jobs created in this State that are directly attributable to the qualified investment of the taxpayer.
b. (1) (a) For a taxpayer that is not a small or mid-size business taxpayer, if 50 new jobs are created and filled during the tax year in which the qualified investment is placed in service or use in this State, the applicable new jobs factor shall be 0.005. For each 50 additional new jobs over the initial 50, up to 1000 total new jobs, the applicable new jobs factor of 0.005 shall be increased by adding thereto 0.005, up to a maximum new jobs factor of 0.10.
(b) During each of the remaining four years of the five-year credit period, the taxpayer shall redetermine the new jobs factor for the tax year on the annual return based on the average number of new employees employed in new jobs during that tax year (determined on a monthly basis) created as the direct result of the taxpayer@s qualified investment.
(2) (a) For a taxpayer that is a small or mid-size business taxpayer, if five new jobs are created and filled during the tax year in which the qualified investment is placed in service or use in this State, the applicable new jobs factor shall be 0.01. For each five additional new jobs over the initial five, up to 100 total new jobs, the applicable new jobs factor of 0.01 shall be increased by adding thereto 0.01, up to a maximum new jobs factor of 0.20.
(b) During each of the remaining four years of the five-year credit period, the taxpayer shall redetermine the new jobs factor for the tax year on the annual return based on the average number of new employees employed in new jobs during that tax year (determined on a monthly basis) created as the direct result of the taxpayer@s qualified investment.
c. An employee@s position shall be directly attributable to the qualified investment if:
(1) the employee@s service is performed or the employee@s base of operations is at the new or expanded business facility;
(2) the position did not exist prior to the construction, renovation, expansion or acquisition of the business facility and the making of the qualified investment; and
(3) but for the qualified investment, the position would not have existed.
d. With the annual corporation business tax return filed under P.L.1945, c.162, for each tax year during the five-year credit period for a qualified investment, the taxpayer shall certify:
(1) the new jobs factor for that tax year for the qualified investment;
(2) the amount of the credit allowed for that year for the qualified investment;
(3) that the qualified investment property continued to be used in the business, or if any of it was disposed of during the year, the date of disposition, and that such property was not disposed of prior to expiration of its recovery period, as determined under section 5 of this act; and
(4) that the new jobs are directly attributable to the qualified investment, are filled by individuals who meet the definition of new employee, and the median annual compensation of all new employees is equal to or greater than the minimum median annual compensation required by section 3 of this act.
e. With the annual return for the corporation business tax imposed under P.L.1945, c.162, filed for the tax year in which the qualified investment is first placed in service or use in this State, the taxpayer shall estimate and certify the number of new jobs reasonably projected to be created by it in this State within the period prescribed in subsection g. of this section, that are, or will be directly attributable to the qualified investment of the taxpayer.
f. The hours of part-time employees shall be aggregated to determine the number of equivalent full-time employees for the purpose of determining the new jobs factor pursuant to subsection b. of this section but shall not be so aggregated for the purposes of subsection c. of this section.
g. With the annual return for the tax imposed under P.L.1945, c.162, filed for the third tax year in which the qualified investment is in service or use in this State, the taxpayer shall certify the actual number of new jobs created by it in this State, that are directly attributable to the qualified investment of the taxpayer.
(1) If the actual number of jobs created would result in a higher new jobs factor, the credit allowed under this act shall be redetermined and amended returns filed for the first and second tax years that the qualified investment was in service or use in this State.
(2) If the actual number of jobs created would result in a lower new jobs factor, the credit previously allowed under this act shall be redetermined and amended returns filed for the first and second tax years. Any additional taxes due under P.L.1945, c.162, shall be remitted with the amended returns filed with the director, together with any penalty and interest, for failure to pay any such tax when due as provided in the State Uniform Tax Procedure Law, R.S.54:48-1 et seq.
L.1993,c.170,s.6; amended 2002, c.40, s.20.
54:10A-5.10. Changes affecting tax credit
7. a. If during any tax year, property with respect to which a tax credit has been allowed under this act:
(1) is disposed of prior to the end of its recovery period, as determined under section 5 of this act; or
(2) ceases to be used in a new or expanded business facility of the taxpayer in this State prior to the end of its recovery period, as determined under section 5 of this act, then the unused portion of the credit allowed for such property shall be forfeited for the tax year and all ensuing years. Additionally, except when the property is damaged or destroyed by fire, flood, storm or other casualty, or is stolen, the taxpayer shall redetermine the amount of credit allowed in all earlier years by reducing the applicable percentage of cost of such property allowed under section 5 of this act, to correspond with the percentage of cost allowable for the period of time that the property was actually used in this State in the new or expanded business facility of the taxpayer. The taxpayer shall then file a reconciliation statement with its annual corporation business tax return for the year in which the forfeiture occurs and pay any additional tax owed due to reduction of the amount of credit allowable for such earlier years, together with any penalty and interest for failure to pay any such tax as provided in the State Tax Uniform Procedure Law, R.S.54:48-1 et seq.
b. If during any tax year the taxpayer ceases operation of a new or expanded business facility in this State for which a credit was allowed under this act, before expiration of the recovery period of the property with respect to which a tax credit has been allowed under this act, then the unused portion of the allowed credit shall be forfeited for the tax year and all ensuing years. Additionally, except when the cessation is due to fire, flood, storm or other casualty, the taxpayer shall redetermine the amount of credit allowed in earlier years by reducing the applicable percentage of cost of such property allowed under section 5 of this act, to correspond with the percentage of cost allowable for the period of time that the property was actually used in this State in a new or expanded business facility of the taxpayer that is subject to tax under P.L.1945, c.162. The taxpayer shall then file a reconciliation statement with its annual corporation business tax return for the year in which the forfeiture occurs, and pay any additional taxes owed due to reduction of the amount of credit allowable for such earlier years, together with any penalty and interest for failure to pay any such tax as provided in the State Tax Uniform Procedure Law, R.S.54:48-1 et seq.
c. If during any tax year subsequent to the tax year in which the new jobs factor is redetermined as provided in section 6 of this act, the average number of employees of the taxpayer, for the then current tax year, employed in positions created because of and directly attributable to the qualified investment falls below the minimum number of new jobs created upon which the taxpayer@s annual credit allowance is based, the taxpayer shall calculate what the taxpayer@s annual credit allowance would have been had the taxpayer@s new jobs factor been determined based upon the average number of employees, for the then current tax year, employed in positions created because of and directly attributable to the qualified investment. The difference between the result of this calculation and the taxpayer@s annual credit allowance for the qualified investment as determined under section 3 of this act, shall be forfeited for the then current tax year, and for each succeeding tax year unless for a succeeding tax year the taxpayer@s average employment in positions directly attributable to the qualified investment once again meets the level required to enable the taxpayer to utilize its full annual credit allowance for that tax year.
L.1993,c.170,s.7.
54:10A-5.11 Disposal of property; treatment under act.
8. a. (1) Property of a small or mid-size business taxpayer shall not be treated as disposed of under section 7 of this act by reason of a mere change in the form of conducting the business as long as the property is retained in a business of a small or mid-size business taxpayer in this State, and the taxpayer retains a controlling interest in the successor business. In this event, the successor business shall be allowed to claim the amount of credit still available with respect to the new or expanded business facility or facilities transferred, and the small or mid-size business taxpayer-transferor shall not be required to redetermine the amount of credit allowed in earlier tax years.
(2) Property of a taxpayer that is not a small or mid-size business taxpayer shall not be treated as disposed of under section 7 of this act by reason of a mere change in the form of conducting the business as long as the property is retained in a business of a taxpayer in this State, and the taxpayer retains a controlling interest in the successor business. In this event, the successor business shall be allowed to claim the amount of credit still available with respect to the new or expanded business facility or facilities transferred, and the taxpayer-transferor shall not be required to redetermine the amount of credit allowed in earlier tax years.
b. (1) Property of a small or mid-size business taxpayer shall be treated as disposed of under section 7 of this act by reason of a change in the form of conducting the business if the property is not retained in a business of a small or mid-size business taxpayer in this State in which the small or mid-size business taxpayer retains a controlling interest.
(2) Property of a small or mid-size business taxpayer shall not be treated as disposed of under section 7 of this act by reason of any transfer or sale to a successor small or mid-size business taxpayer which continues to operate the new or expanded business facility in this State. Upon transfer or sale, the successor shall acquire the amount of credit that remains available under this act for each subsequent tax year and the taxpayer-transferor shall not be required to redetermine the amount of credit allowed in earlier years.
(3) Property of a business that is not a small or mid-size business taxpayer shall not be treated as disposed of under section 7 of this act by reason of any transfer or sale to a successor taxpayer which continues to operate the new or expanded business facility in this State. Upon transfer or sale, the successor shall acquire the amount of credit that remains available under this act for each subsequent tax year and the taxpayer-transferor shall not be required to redetermine the amount of credit allowed in earlier years.
(4) Property of a small or mid-size business taxpayer shall be treated as disposed of under section 7 by reason of any transfer or sale to a successor that is not a small or mid-size business taxpayer, whether or not the successor continues to operate the business in this State. Upon such transfer or sale, the successor shall not acquire any amount of credit under this act and the taxpayer-transferor shall redetermine, as required by this act, the amount of credit allowed in earlier years.
L.1993,c.170,s.8; amended 2002, c.40, s.21.
54:10A-5.12. Maintenance of records
9. a. A taxpayer that claims credit under this act shall maintain sufficient records to establish the following facts for each item of qualified property:
(1) its identity;
(2) its actual or reasonably determined cost;
(3) its straight-line depreciation life;
(4) the month and tax year in which it was placed in service;
(5) the amount of credit taken; and
(6) the date it was disposed of or otherwise ceased to be qualified property.
b. A taxpayer that does not keep records required for identification of investment credit property shall be treated as having disposed of, during the tax year, any investment credit property which the taxpayer cannot establish was still on hand in this State at the end of that year.
c. If a taxpayer cannot establish when investment credit property reported for purposes of claiming this credit during a tax year was placed in service, the taxpayer shall be treated as having placed it in service in the most recent prior year in which similar property was placed in service unless the taxpayer can establish that the property placed in service in the most recent year is still on hand. In that event, the taxpayer shall be treated as having placed the property in service in the next most recent year.
L.1993,c.170,s.9.
54:10A-5.13. Entitlement to credit established by taxpayer
10. a. The burden of proof shall be on a taxpayer to establish by clear and convincing evidence that the taxpayer is entitled to the credit allowed pursuant to this act.
b. Notwithstanding any provision of this act to the contrary, no credit shall be allowed or applied under this act for any qualified investment property placed in service or use until the person asserting a claim for the allowance of credit under this act makes written application to the director for allowance of the credit as provided in this subsection and receives written acknowledgement of its receipt from the director. An application for credit is timely made if filed no later than the last day of the due date without extensions, for filing the tax return required under section 15 of P.L.1945, c.162 (C.54:10A-15), for the tax year in which the property to which the credit relates is placed in service or use and all information required by the director is provided as part of the application.
c. The failure to timely apply for the credit shall result in the forfeiture of 50% of the annual credit allowance otherwise allowable under this act. This penalty shall apply annually until such application is filed.
L.1993,c.170,s.10.
54:10A-5.14. Report to Governor, Legislature
11. The Director of the Division of Taxation shall prepare and transmit to the Governor and the Legislature, on or before the second March 1 following the operative date of this section and annually thereafter, a report concerning the revenue cost and distributional impact of this act in such a manner as to facilitate an evaluation of its costs in State tax revenue forgone and its benefits in new job creation. To facilitate an understanding of the gross amount and percentage of credits claimed in relation to the size, number and income of corporations and the number of jobs created, the report shall include statistical analyses of the number and value of applications for credits, credits granted and anticipated to be granted, and the number of new jobs created and anticipated to be created. To facilitate an understanding of the distribution of the use of the credit, or any concentration of such use in a particular industry or by a particular taxpayer, and the creation of new jobs among corporations, the report shall include statistics of credit use and new jobs creation segregated by specific industry, displayed in a manner that facilitates an understanding of the relative distribution of credit claims and uses and the relative distribution of new jobs created. To facilitate an understanding of the distinction between the new jobs created as a result of the credit and the new jobs not resulting from the credit, the report shall include statistics concerning the mean cost in State tax revenue forgone of creating a new job in specific industries, the relative new job creation rates between corporations using the credit and those not using the credit, and increases in employment in the State and the region. The director shall include in the report such further observations and recommendations about the use or administration of the credit as the director deems appropriate.
L.1993,c.170,s.11.
54:10A-5.15. Provision of quarterly employment reports
12. Notwithstanding the provisions of subsection (g) of R.S.43:21-11 to the contrary, the Commissioner of the Department of Labor shall provide the Director of the Division of Taxation such copies of the quarterly reports filed by taxpayers with the Department of Labor pursuant to subparagraph (A) of paragraph (2) of subsection (a) of R.S.43:21-14 as the director may request to verify the qualifications of the taxpayers to the credits allowed under this act. The director shall not use the reports provided for any purpose other than the administration of the credits allowed under this act, and reports so provided shall be deemed files and records of the director pursuant to R.S.54:50-8.
L.1993,c.170,s.12.
54:10A-5.16. Short title
1. This act shall be known and may be cited as the ~Manufacturing Equipment and Employment Investment Tax Credit Act.~
L.1993,c.171,s.1.
54:10A-5.17 Definitions.
2. For the purposes of this act:
~Control,~ with respect to a corporation, means ownership, directly or indirectly, of stock possessing 50% or more of the total combined voting power of all classes of the stock of the corporation entitled to vote; ~control,~ with respect to a trust, means ownership, directly or indirectly, of 50% or more of the beneficial interest in the principal or income of the trust. The ownership of stock in a corporation, of a capital or profits interest in a partnership or association or of a beneficial interest in a trust shall be determined in accordance with the rules for constructive ownership of stock provided in subsection (c) of section 267 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.267, other than paragraph (3) of subsection (c) of that section.
~Controlled group~ means one or more chains of corporations connected through stock ownership with a common parent corporation if stock possessing at least 50% of the voting power of all classes of stock of each of the corporations is owned directly or indirectly by one or more of the corporations; and the common parent owns directly stock possessing at least 50% of the voting power of all classes of stock of at least one of the other corporations.
~Director~ means the Director of the Division of Taxation in the Department of the Treasury.
~Full-time employee~ means an employee working for the taxpayer for at least 140 hours per month at a wage not less than the State or federal minimum wage, if either minimum wage provision is applicable to the business, on a permanent basis, which does not include employment that is temporary or seasonal.
~Investment credit base~ means the cost of qualified equipment. The cost of qualified equipment shall not include the value of equipment given in trade or exchange for the equipment purchased for business relocation or expansion. If equipment is damaged or destroyed by fire, flood, storm or other casualty, or is stolen, the cost of replacement equipment shall not include any insurance proceeds received in compensation for the loss. In the case of self-constructed equipment, the cost thereof shall be the amount properly charged to the capital account for depreciation in accordance with federal income tax law. The cost of equipment acquired by written lease is the minimum amount required by the agreement, agreements, contract or contracts to be paid over the term of the lease, provided however, that the minimum amount shall not include any amount required to be paid, as determined by the director, after the expiration of the useful life of the equipment.
~Number of new employees~ means the increase in the average number of full-time employees and full-time employee equivalents residing and domiciled in this State employed at work locations in this State from the employment base year to the employment measurement year. The employment base year is the tax year immediately preceding the tax year for which the credit pursuant to section 3 of P.L.1993, c.171 (C.54:10A-5.18), is allowed, provided that if the taxpayer was not subject to tax and did not have a tax year immediately precede the tax year for which a credit pursuant to section 3 of P.L.1993, c.171 (C.54:10A-5.18), was allowed the employment base year is the tax year in which the credit pursuant to section 3 of P.L.1993, c.171 (C.54:10A-5.18), was allowed. The measurement year is the tax year immediately following the tax year in which the credit pursuant to section 3 of P.L.1993, c.171 (C.54:10A-5.18), was allowed. The hours of part-time employees shall be aggregated to determine the number of full-time employee equivalents.
~Part-time employee~ means an employee working for the taxpayer for at least 20 hours per week for at least six months during the tax year.
~Purchase~ means any acquisition of property, including an acquisition pursuant to a lease, but only if:
a. the property is not acquired from a person whose relationship to the person acquiring it would result in the disallowance of deductions under section 267 or subsection (b) of section 707 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.267 or s.707;
b. the property is not acquired by one member of a controlled group from another member of the same controlled group. The director may waive this requirement if the property was acquired from a related person for its then fair market value; and
c. the basis of the property for federal income tax purposes, in the hands of the person acquiring it, is not determined:
(1) in whole or in part by reference to the federal adjusted basis of such property in the hands of the person from whom it was acquired; or
(2) under subsection (e) of section 1014 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.1014.
~Qualified equipment~ means machinery, apparatus or equipment acquired by purchase for use or consumption by the taxpayer directly and primarily in the production of tangible personal property by manufacturing, processing, assembling or refining, as defined pursuant to subsection a. of section 25 of P.L.1980, c.105 (C.54:32B-8.13), having a useful life of four or more years, placed in service in this State and machinery, apparatus or equipment acquired by purchase for use or consumption directly and primarily in the generation of electricity as defined pursuant to subsection b. of section 25 of P.L.1980, c.105 (C.54:32B-8.13) to the point of connection to the grid, or in the generation of thermal energy, having a useful life of four or more years, placed in service in this State. Qualified equipment does not include tangible personal property which the taxpayer contracts or agrees to lease or rent to another person or licenses another person to use.
~Related person~ means:
a. a corporation, partnership, association or trust controlled by the taxpayer;
b. an individual, corporation, partnership, association or trust that is in control of the taxpayer;
c. a corporation, partnership, association or trust controlled by an individual, corporation, partnership, association or trust that is in control of the taxpayer; or
d. a member of the same controlled group as the taxpayer.
~Tax year~ means the fiscal or calendar accounting year of a taxpayer.
L.1993,c.171,s.2; amended 2001, c.399.
54:10A-5.18 Taxpayer credit.
3. 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 2% of the investment credit base of qualified equipment placed in service in the tax year, up to a maximum allowed credit for the tax year of $1,000,000; provided however, that if a taxpayer has 50 or fewer employees (an average number of full-time employees and full-time employee equivalents of 50 or less) and entire net income to be used as a measure of the tax determined pursuant to section 6 of P.L.1945, c.162 (C.54:10A-6) of less than $5,000,000 for the tax year, the 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 4% of the investment credit base of qualified equipment placed in service in the tax year, up to a maximum allowed credit for the tax year of $1,000,000.
b. The tax imposed for the tax year pursuant to section 5 of P.L.1945, c.162, shall first be reduced by the amount of any credit allowed pursuant to section 19 of P.L.1983, c.303 (C.52:27H-78), then by any credit allowed pursuant to section 12 of P.L.1985, c.227 (C.55:19-13), then by any credit allowed pursuant to section 42 of P.L.1987, c.102 (C.54:10A-5.3), prior to applying any credits allowable pursuant to this section. Credits allowable pursuant to this section shall be applied in the order of the credits@ tax years. The amount of the credits applied under this section and section 4 of P.L.1993, c.171 (C.54:10A-5.19), against the tax imposed pursuant to section 5 of P.L.1945, c.162, for a tax year shall not exceed 50% 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. The amount of tax year credit otherwise allowable under subsection a. of this section which cannot be applied for the tax year due to the limitations of subsection b. of this section may be carried over, if necessary, to the seven tax years following a credit@s tax year. Provided however, that a taxpayer may not carry over any amount of credit or credits allowed under subsection a. of this section to a tax year during which a corporate acquisition with respect to which the taxpayer was a target corporation occurred or during which the taxpayer was a party to a merger or a consolidation, or to any subsequent tax year, if the credit was allowed for a tax year prior to the year of acquisition, merger or consolidation; provided further, however, that if in the case of a corporate merger or corporate consolidation the taxpayer can demonstrate, through the submission of a copy of the plan of merger or consolidation and such other evidence as may be required by the director, the identity of the constituent corporation which was the acquiring person, a credit allowed to the acquiring person may be carried over by the taxpayer. ~Acquiring person~ means the constituent corporation the stockholders of which own the largest proportion of the total voting power in the surviving or consolidated corporation after the merger or consolidation.
d. (1) With respect to equipment that is three-year property, as described in subsection (e) of section 168 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.168, which is disposed of or ceases to be qualified equipment prior to the end of the 36-month period following being placed in service in this State, the amount of credit allowed shall be that portion of the credit provided for in subsection a. of this section which represents the ratio which the months of qualified use bear to 36, and the difference between the credit taken and the credit allowed for actual use shall be forfeited. Additionally, except when the property is damaged or destroyed by fire, flood, storm or other casualty, or is stolen, the taxpayer shall redetermine the amount of credit allowed for the tax year of the credit by reducing the investment credit base by the cost of the amount of the disposed or disqualified equipment. If the redetermination of the credit results in an increase in final liability for any tax year in which the credit was applied, then, notwithstanding the four year limitation of subsection b. of R.S.54:49-6 to the contrary, the amount of unpaid liability, if any, shall be considered a deficiency for the purposes of the State Tax Uniform Procedure Law, R.S.54:48-1 et seq. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to 36.
(2) With respect to property other than that described in subparagraph (1) of this subsection which is disposed of or ceases to be qualified equipment prior to the end of the 60-month period following being placed in service in this State, the amount of credit allowed shall be that portion of the credit provided for in subsection a. of this section which represents the ratio which the months of qualified use bear to 60, and the difference between the credit taken and the credit allowed for actual use shall be forfeited. Additionally, except when the property is damaged or destroyed by fire, flood, storm or other casualty, or is stolen, the taxpayer shall redetermine the amount of credit allowed for the tax year of the credit by reducing the investment credit base by the cost of the amount of the disposed or disqualified equipment. If the redetermination of the credit results in an increase in final liability for any tax year in which the credit was applied, then, notwithstanding the four year limitation of subsection b. of R.S.54:49-6 to the contrary, the amount of unpaid liability, if any, shall be considered a deficiency for the purposes of the State Tax Uniform Procedure Law, R.S.54:48-1 et seq. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to 60.
L.1993,c.171,s.3; amended 2004, c.65, s.25.
54:10A-5.19. Computation of tax credit
4. a. A taxpayer allowed a credit under section 3 of P.L.1993, c.171 (C.54:10A-5.18), with respect to the investment credit base, shall be allowed a credit for the increase in employment by the taxpayer determined by the number of new employees for each of the two tax years next succeeding the tax year for which the credit under section 3 of P.L.1993, c.171 (C.54:10A-5.18), is allowed, in an amount equal to 3% of the investment credit base, not to exceed a maximum allowed amount for each of the two tax years of $1,000 multiplied by the number of new employees.
b. The tax imposed for the tax year pursuant to section 5 of P.L.1945, c.162, shall first be reduced by the amount of any credit allowed pursuant to section 19 of P.L.1983, c.303 (C.52:27H-78), then by any credit allowed pursuant to section 12 of P.L.1985, c.227 (C.55:19-13), then by any credit allowed pursuant to section 42 of P.L.1987, c.102 (C.54:10A-5.3), and then by any credit allowed pursuant to section 3 of P.L.1993, c.171 (C.54:10A-5.18), prior to applying any credits allowable pursuant to this section. Credits allowable pursuant to this section shall be applied in the order of the tax year of the credit allowed pursuant to section 3 of P.L.1993, c.171 (C.54:10A-5.18), to which the credit under this section relates and then by the order of the credits@ tax years. The amount of the credits applied under this section and section 3 of P.L.1993, c.171 (C.54:10A-5.18), against the tax imposed pursuant to section 5 of P.L.1945, c.162, for a tax year shall not exceed 50% 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. The amount of tax year credit otherwise allowable under subsection a. of this section which cannot be applied for the tax year due to the limitations of subsection b. of this section may be carried over, if necessary, to the seven tax years following a credit@s tax year. Provided however, that a taxpayer may not carry over any amount of credit or credits allowed under subsection a. of this section to a tax year during which a corporate acquisition with respect to which the taxpayer was a target corporation occurred or during which the taxpayer was a party to a merger or a consolidation, or to any subsequent tax year, if the credit was allowed for a tax year prior to the year of acquisition, merger or consolidation; provided further, however, that if in the case of a corporate merger or corporate consolidation the taxpayer can demonstrate, through the submission of a copy of the plan of merger or consolidation and such other evidence as may be required by the director, the identity of the constituent corporation which was the acquiring person, a credit allowed to the acquiring person may be carried over by the taxpayer. ~Acquiring person~ means the constituent corporation the stockholders of which own the largest proportion of the total voting power in the surviving or consolidated corporation after the merger or consolidation.
d. (1) With respect to equipment that is three-year property, as described in subsection (e) of section 168 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.168, which is disposed of or ceases to be qualified equipment prior to the end of the 36 month period following being placed in service in this State, the amount of credit allowed shall be that portion of the credit provided for in subsection a. of this section which represents the ratio which the months of qualified use bear to 36, and the difference between the credit taken and the credit allowed for actual use shall be forfeited. Additionally, except when the property is damaged or destroyed by fire, flood, storm or other casualty, or is stolen, the taxpayer shall redetermine the amount of credit allowed for the tax year of the credit by reducing the investment credit base by the cost of the amount of the disposed or disqualified equipment. If the redetermination of the credit results in an increase in final liability for any tax year in which the credit was applied, then, notwithstanding the four year limitation of subsection b. of R.S.54:49-6 to the contrary, the amount of unpaid liability, if any, shall be considered a deficiency for the purposes of the State Tax Uniform Procedure Law, R.S.54:48-1 et seq. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to 36.
(2) With respect to property other than that described in subparagraph (1) of this subsection which is disposed of or ceases to be qualified equipment prior to the end of the 60 month period following being placed in service in this State, the amount of credit allowed shall be that portion of the credit provided for in subsection a. of this section which represents the ratio which the months of qualified use bear to 60, and the difference between the credit taken and the credit allowed for actual use shall be forfeited. Additionally, except when the property is damaged or destroyed by fire, flood, storm or other casualty, or is stolen, the taxpayer shall redetermine the amount of credit allowed for the tax year of the credit by reducing the investment credit base by the cost of the amount of the disposed or disqualified equipment. If the redetermination of the credit results in an increase in final liability for any tax year in which the credit was applied, then, notwithstanding the four year limitation of subsection b. of R.S.54:49-6 to the contrary, the amount of unpaid liability, if any, shall be considered a deficiency for the purposes of the State Tax Uniform Procedure Law, R.S.54:48-1 et seq. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to 60.
L.1993,c.171,s.4.
54:10A-5.20. Maintenance of records
5. a. A taxpayer that claims credit under this act shall maintain sufficient records to establish the following facts for each item of qualified equipment:
(1) its identity;
(2) its actual or reasonably determined cost;
(3) its useful depreciation life;
(4) the month and tax year in which it was placed in service;
(5) the amount of credit taken; and
(6) the date it was disposed of or otherwise ceased to be qualified equipment.
b. A taxpayer that does not keep records required for identification of qualified equipment shall be treated as having disposed of, during the tax year, any qualified equipment which the taxpayer cannot establish was still on hand in this State at the end of that year.
c. If a taxpayer cannot establish when qualified equipment reported for purposes of claiming this credit during a tax year was placed in service, the taxpayer shall be treated as having placed it in service in the most recent prior year in which similar property was placed in service unless the taxpayer can establish that the property placed in service in the most recent year is still on hand. In that event, the taxpayer shall be treated as having placed the property in service in the next most recent year.
d. The burden of proof shall be on a taxpayer to establish by a preponderance of the evidence that the taxpayer is entitled to the credit allowed pursuant to this act.
L.1993,c.171,s.5.
54:10A-5.21. Required reports
6. The Director of the Division of Taxation shall prepare and transmit to the Governor, the Legislature, and the State Revenue Forecasting Advisory Commission on or before the September 1 next following the January 1 next following enactment of this section and annually on or before each September 1 thereafter, a report concerning the revenue cost and distributional impact of this act in such a manner as to facilitate an evaluation of its costs in State tax revenue forgone and its benefits in new job creation. To facilitate an understanding of the gross amount and percentage of credits claimed in relation to the size, number and income of corporations and the number of new employees, the report shall include statistical analyses of the number and value of credits granted and anticipated to be granted, and the number of new employees. To facilitate an understanding of the distinction between the number of new employees resulting from the availability of the credits and the number of new employees not resulting from availability of the credits, the report shall include statistics concerning the mean cost, in State tax revenue forgone, of providing the credits resulting in employment of a single full-time employee in specific industries, the relative rate of increase in the number of new employees between corporations using the credit and those not using the credit, and increases in employment in the State and the region. The director shall include in the report such further observations and recommendations about the use or administration of the credit as the director deems appropriate.
The State Revenue Forecasting Advisory Commission shall prepare and transmit to the Governor and Legislature, on or before the November 1 next following the January 1 next following the enactment of this section and biennially on or before each second November 1 thereafter, a report providing a cost-benefit analysis of the credits provided under this act and the retention and stimulation of employment in the manufacturing sector, together with its recommendations as to whether the credits provided under this act should remain permanent.
L.1993,c.171,s.6.
54:10A-5.22. Election as a New Jersey S corporation
3. a. A corporation may elect, in accordance with the provisions of this section, to be a New Jersey S corporation. In order for an election to be valid, the corporation and each of its shareholders on the day on which the election is made (hereinafter ~initial shareholders~) must consent to such election and the jurisdictional requirements of becoming a New Jersey S corporation. The form of the election and consent to jurisdictional requirements and the place for filing shall be as prescribed by the Director of the Division of Taxation.
b. Each initial shareholder and the corporation shall consent to the following jurisdictional requirements:
(1) That this State shall have the right and jurisdiction to tax and collect the tax on each shareholder@s S corporation income as defined pursuant to section 12 of P.L.1993, c.173 (C.54A:5-10);
(2) That New Jersey@s right and jurisdiction to tax the income as set forth in paragraph (1) of this subsection shall not be affected by a change of a shareholder@s residency, except as provided by the ~New Jersey Gross Income Tax Act,~ N.J.S.54A:1-1 et seq.; and
(3) If shareholders that are not initial shareholders of the corporation, while the corporation is a New Jersey S corporation, fail to consent to New Jersey@s jurisdiction to tax S corporation income to such shareholders, this State shall have the right and jurisdiction to collect a payment of tax each year directly from the corporation equal to the S corporation income allocated to this State, as defined pursuant to section 12 of P.L.1993, c.173 (C.54A:5-10), of the nonconsenting shareholders for the accounting or privilege period multiplied by the maximum tax bracket rate provided under N.J.S.54A:2-1 for the accounting or privilege period. In such case, the corporation shall have the right, but not the obligation, to recover payments made by the corporation pursuant to this paragraph from each nonconsenting shareholder.
c. A corporation may make an election to become a New Jersey S corporation with respect to an accounting or privilege period for which the corporation is or will be an S corporation. The election for an accounting or privilege period, along with the consents to jurisdictional requirements, shall be filed within one calendar month of the time at which a federal S corporation election would be required if such accounting or privilege period were a ~taxable year~ for which a federal S corporation election were to be made pursuant to section 1362 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.1362. Such elections may only be revoked pursuant to subsection d. of this section. Such election shall terminate immediately upon the corporation@s failure to satisfy the definition of a New Jersey S corporation pursuant to paragraph (p) of section 4 of P.L.1945, c.162 (C.54:10A-4).
d. A corporation may revoke an election pursuant to this section on or before the last day of the first accounting or privilege period to which the election would otherwise apply.
L.1993,c.173,s.3.
54:10A-5.23. Requirements for New Jersey S corporation
4. a. With respect to each of its shareholders that is not an initial shareholder, a New Jersey S corporation shall satisfy the requirements of either paragraph b. or c. of this section.
b. Deliver a consent to the jurisdictional requirements as set forth in subsection b. of section 3 of P.L.1993, c.173 (C.54:10A-5.22).
c. Make payments to the Director of the Division of Taxation on behalf of each nonconsenting shareholder in an amount equal to the shareholder@s pro rata share of S corporation income allocated to this State, as defined pursuant to section 12 of P.L.1993, c.173 (C.54A:5-10), reflected on the corporation@s return for the accounting or privilege period, multiplied by the maximum tax bracket rate provided under N.J.S.54A:2-1 in effect at the end of the accounting or privilege period. The payments shall be made no later than the time for filing of the return for the accounting or privilege period. The director may, by regulation, require that amounts estimated to be equal to the liability expected to be due pursuant to this subsection be withheld from any distribution made to a nonconsenting shareholder.
d. If a shareholder that is not an initial shareholder of a New Jersey S corporation fails to deliver a consent to the jurisdictional requirements set forth in subsection b. of section 3 of P.L.1993, c.173 (C.54:10A-5.22), and objects to New Jersey@s jurisdiction to withhold payments pursuant to subsection c. of this section, then this State shall have the right and jurisdiction to collect a tax each year directly from the corporation equal to the pro rata share of the S corporation income allocated to this State, as defined pursuant to section 12 of P.L.1993, c.173 (C.54A:5-10), of the nonconsenting shareholder times the maximum tax bracket rate provided under N.J.S.54A:2-1 for the appropriate accounting or privilege period. In such case, the corporation shall have the right, but not the obligation, to recover payments made by the corporation pursuant to this subsection from each nonconsenting shareholder.
L.1993,c.173,s.4.
54:10A-5.24. Taxpayer credit for certain research activities
1. a. A taxpayer shall be allowed a credit, subject to the provisions of subsection b. of this section, against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), in an amount equal to
(1) 10% of the excess of the qualified research expenses for the fiscal or calendar accounting year (referred to hereafter in this section as the ~tax year~) over the base amount; and
(2) 10% of the basic research payments determined in accordance with section 41 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.41, as in effect on June 30, 1992, and provided that subsection (h) of 26 U.S.C. s.41 relating to termination shall not apply. Provided however, that the terms ~qualified research expenses,~ ~base amount,~ ~qualified organization base amount period,~ ~basic research~ and any other terms determined by the Director of the Division of Taxation to affect the calculation of the credit shall include only expenditures for research conducted in this State.
b. No credit shall be allowed under section 42 of P.L.1987, c.102 (C.54:10A-5.3), or under the ~Manufacturing Equipment and Employment Investment Tax Credit Act,~ P.L.1993, c.171 (C.54:10A-5.16 et al.), or under P.L.1993, c.170 (C.54:10A-5.4 et seq.), for property or expenditures for which a credit is allowed, or which are includable in the calculation of a credit allowed, under this section.
The tax imposed for a fiscal or calendar accounting year pursuant to section 5 of P.L.1945, c.162, shall first be reduced by the amount of any credit allowed pursuant to section 19 of P.L.1983, c.303 (C.52:27H-78), then by any credit allowed pursuant to section 12 of P.L.1985, c.227 (C.55:19-13), then by any credit allowed pursuant to section 42 of P.L.1987, c.102 (C.54:10A-5.3), then by any credit allowed under section 3 of P.L.1993, c.170 (C.54:10A-5.6), and then by any credit allowed under section 3 or 4 of P.L.1993, c.171 (C.54:10A-5.18 or C.54:10A-5.19), prior to applying any credits allowable pursuant to this section. Credits allowable pursuant to this section shall be applied in the order of the credits@ tax years. The amount of the credits applied under this section against the tax imposed pursuant to section 5 of P.L.1945, c.162, for an accounting year shall not exceed 50% 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. The amount of tax year credit otherwise allowable under this section which cannot be applied for the tax year due to the limitations of this subsection may be carried over, if necessary, to the seven accounting years following a credit@s tax year.
L.1993,c.175,s.1.
54:10A-5.24a Attachment of certificate to return for research and development tax credit carryover.
3. a. Notwithstanding the provisions of section 1 of P.L.1993, c.175 (C.54:10A-5.24) to the contrary, a taxpayer that has acquired a corporation business tax benefit certificate pursuant to the provisions of section 1 of P.L.1997, c.334 (C.34:1B-7.42a), that includes the right to a research and development tax credit carryover shall attach that certificate to any return the taxpayer is required to file under P.L.1945, c.162 (C.54:10A-1 et seq.), and shall otherwise apply the credit carryover as evidenced by the certificate according to the provisions of section 1 of P.L.1993, c.175 (C.54:10A-5.24) and any rules or regulations the director may adopt to carry out the provisions of this section.
b. A new or expanding emerging technology or biotechnology company that has surrendered an unused research and development tax credit carryover pursuant to the provisions of section 1 of P.L.1997, c.334 (C.34:1B-7.42a), shall not be allowed a research and development tax credit carryover based upon the right to such a credit carryover as evidenced by the corporation business tax benefit certificate and shall attach a copy of the certificate to any return the taxpayer is required to file under P.L.1945, c.162 (C.54:10A-1 et seq.).
L.1997,c.334,s.3.
54:10A-5.24b Carryover of R & D tax credit for certain taxpayers.
1. a. Notwithstanding the provisions of subsection b. of section 1 of P.L.1993, c.175 (C.54:10A-5.24) to the contrary, a taxpayer that has been allowed a credit pursuant to that section for the fiscal or calendar accounting period (referred to hereafter as the ~tax year~) in which the qualified research expenses have been incurred, and basic research payments have been made, for research conducted in this State in the fields of advanced computing, advanced materials, biotechnology, electronic device technology, environmental technology, and medical device technology, shall be allowed to carry over the amount of the tax year credit which cannot be applied for the tax year to each of the 15 tax years following the credit@s tax year.
b. As used in this section:
~Advanced computing~ means a technology used in the designing and developing of computing hardware and software, including innovations in designing the full spectrum of hardware from hand-held calculators to super computers, and peripheral equipment;
~Advanced materials~ means materials with engineered properties created through the development of specialized processing and synthesis technology, including ceramics, high value-added metals, electronic materials, composites, polymers, and biomaterials;
~Biotechnology~ means the continually expanding body of fundamental knowledge about the functioning of biological systems from the macro level to the molecular and sub-atomic levels, as well as novel products, services, technologies and sub-technologies developed as a result of insights gained from research advances which add to that body of fundamental knowledge;
~Electronic device technology~ means a technology involving microelectronics, semiconductors, electronic equipment, and instrumentation, radio frequency, microwave, and millimeter electronics, and optical and optic-electrical devices, or data and digital communications and imaging devices;
~Environmental technology~ means assessment and prevention of threats or damage to human health or the environment, environmental cleanup, or the development of alternative energy sources; and
~Medical device technology~ means a technology involving any medical equipment or product (other than a pharmaceutical product) that has therapeutic value, diagnostic value, or both, and is regulated by the federal Food and Drug Administration.
L.1997,c.351,s.1.
54:10A-5.25 Installment payments of estimated corporation business tax for certain public utilities.
3. a. Gas, electric, gas and electric and telecommunications public utilities that were subject to a public utility tax either pursuant to P.L.1940, c.4 (C.54:30A-16 et seq.) or P.L.1940, c.5 (C.54:30A-49 et seq.) as of December 31, 1996, shall be required to file and remit installment payments of estimated corporation business tax pursuant to the provisions of subsection (f) of section 15 of P.L.1945, c.162 (C.54:10A-15) during the calendar year in which those taxpayers first become subject to the corporation business tax, provided however, that the provisions of subsection d. of section 5 of P.L.1981, c.184 (C.54:10A-15.4) shall not apply to those taxpayers during that year.
b. A telecommunications public utility that makes an advance payment of its applicable gross receipts and franchise tax to the State in the final year of the existence of such tax and treated such advance payment as an asset on its books and records for that year shall be entitled to a credit against its corporation business tax liability equal to the amount of such advance payment. Any unused portion of the credit may be carried forward in full to future privilege periods, provided however, that in any one privilege period the total amount of such credit which the taxpayer may utilize to pay its corporation business tax liability shall not exceed $5,000,000. Any gas, electric, or gas and electric public utility taxpayer that has made any advance credit payment pursuant to P.L.1940, c.5 (C.54:30A-49 et seq.), shall not be eligible for a credit for such amount or any part thereof to offset any liability under P.L.1945, c.162. Under no circumstances may any portion of an unused $5,000,000 per year credit be subject to refund.
c. All amounts remitted under P.L.1945, c.162 by any gas, electric, gas and electric or telecommunication public utility shall be separately accounted for by the State Treasurer.
d. A public utility, with gas, electric or telecommunications operations or any of them shall file with the Board of Public Utilities amendments to its existing tariffs, contracts or schedules of service designating the appropriate apportionment of its corporation business tax liability in these tariffs, contracts or schedules so that rates will not be increased for any class of ratepayer as a result of the transition to this tax. The board may permit gas, electric, gas and electric or telecommunications public utilities to establish new tariffs, contracts or schedules, or to amend existing tariffs, contracts or schedules, as necessary to comply with the provisions of this act.
e. A qualified taxpayer may claim a corporation business tax credit in accordance with the provisions of section 53 of P.L.1997, c.162 (C.54:30A-117) and for local energy utility franchise taxes paid and subject to the limitations of subparagraph (C) of paragraph (2) of subsection (k) of section 4 of P.L.1945, c.162 (C. 54:10A-4).
f. A municipal electric corporation or utility that is not exempt from the corporation business tax pursuant to subsection j. of section 3 of P.L.1945, c.162 (C.54:10A-3), that is required to file a corporation business tax return but that is not required to file a federal corporation tax return, shall file with the director a pro-forma federal corporation tax return at the same time it files its corporation business tax return. The director may promulgate rules and regulations and issue guidance with respect to all issues related to the pro-forma federal corporation tax return.
L.1997,c.162,s.3; amended 1998, c.114, s.3.
54:10A-5.26 Determination of taxpayer@s liability.
4. If, in the first full privilege period commencing after the assessment under the Transitional Energy Facility Assessment Act, established in sections 36 through 49 of P.L.1997, c.162 (C.54:30A-100 through C.54:30A-113), has terminated, or in any subsequent privilege period thereafter, a taxpayer that was formerly subject to the Transitional Energy Facility Assessment Act and whose liability under the Corporation Business Tax Act (1945), P.L.1945, c.162 (C.54:10A-1 et seq.), for such privilege period after the assessment under the Transitional Energy Facility Assessment Act has terminated, is less than the taxpayer@s liability for the first full privilege period as a taxpayer under P.L.1945, c.162, then that taxpayer or corporate or noncorporate legal successor or assignee whether through any reorganization, sale, bankruptcy, consolidation, merger, or other transaction or occurrence of any kind without limitation, shall pay as its liability under P.L.1945, c.162 for any of those privilege periods after the assessment under the Transitional Energy Facility Assessment Act has terminated an amount equal to the higher of:
a. The amount of its corporation business tax liability for that privilege period as would otherwise be computed under P.L.1945, c.162; or
b. The amount of corporation business tax it would be liable to pay for such privilege period if its gas or electric operations were accounted for on a separate basis, pursuant to regulations as may be promulgated by the director.
L.1997,c.162,s.4.
54:10A-5.27 Consequences of failure to distribute required Energy Tax receipts property tax relief.
5. Notwithstanding the provisions of P.L.1945, c.162 (C.54:10A-1 et seq.) or any other law to the contrary, for a privilege period of a taxpayer, other than a taxpayer that is a gas, electric, and gas and electric, or telecommunications public utility as defined pursuant to subsection (q) of section 4 of P.L.1945, c.162 (C.54:10A-4) pursuant to the amendment to that section 4 made in section 2 of P.L.1997, c.162, in which the taxpayer would otherwise have had a tax liability or minimum tax due under P.L.1945, c.162, during which privilege period the Director of the Division of Budget and Accounting in the Department of the Treasury makes a certification that the provisions of subsection a. of section 4.of P.L.1997, c.167 (C.52:27D-441) have not been met or have been violated by an amendment or supplement to the annual appropriations act, there shall be no liability pursuant to the provisions of P.L.1945, c.162 for any such taxpayer@s current privilege period.
L.1997,c.167,s.5.
54:10A-5.28 Short title.
1. This act shall be known and may be cited as the ~Small New Jersey-based High-Technology Business Investment Tax Credit Act.~
L.1997,c.349,s.1.
54:10A-5.29 Definitions relative to small New Jersey-based high-technology businesses.
2. As used in this act:
~Advanced computing~ means a technology used in the designing and developing of computing hardware and software, including innovations in designing the full spectrum of hardware from hand-held calculators to super computers, and peripheral equipment;
~Advanced materials~ means materials with engineered properties created through the development of specialized processing and synthesis technology, including ceramics, high value-added metals, electronic materials, composites, polymers, and biomaterials;
~Biotechnology~ means the continually expanding body of fundamental knowledge about the functioning of biological systems from the macro level to the molecular and sub-atomic levels, as well as novel products, services, technologies and sub-technologies developed as a result of insights gained from research advances which add to that body of fundamental knowledge;
~Control,~ with respect to a corporation, means ownership, directly or indirectly, of stock possessing 80% or more of the total combined voting power of all classes of the stock of the corporation entitled to vote; and ~control,~ with respect to a trust, means ownership, directly or indirectly, of 80% or more of the beneficial interest in the principal or income of the trust. The ownership of stock in a corporation, of a capital or profits interest in a partnership or association or of a beneficial interest in a trust shall be determined in accordance with the rules for constructive ownership of stock provided in subsection (c) of section 267 of the federal Internal Revenue Code of 1986, 26 U.S.C.s.267, other than paragraph (3) of subsection (c) of that section;
~Controlled group~ means one or more chains of corporations connected through stock ownership with a common parent corporation if stock possessing at least 80% of the voting power of all classes of stock of each of the corporations is owned directly or indirectly by one or more of the corporations and the common parent owns directly stock possessing at least 80% of the voting power of all classes of stock of at least one of the other corporations;
~Director~ means the Director of the Division of Taxation in the Department of the Treasury;
~Electronic device technology~ means a technology involving microelectronics, semiconductors, electronic equipment, and instrumentation, radio frequency, microwave, and millimeter electronics, and optical and optic-electrical devices, or data and digital communications and imaging devices;
~Environmental technology~ means assessment and prevention of threats or damage to human health or the environment, environmental cleanup, or the development of alternative energy sources;
~Medical device technology~ means a technology involving any medical equipment or product (other than a pharmaceutical product) that has therapeutic value, diagnostic value, or both, and is regulated by the federal Food and Drug Administration;
~Partnership~ means a syndicate, group, pool, joint venture or other unincorporated organization through or by means of which any business, financial operation or venture is carried on, and which is not a trust or estate, a corporation or a sole proprietorship;
~Pilot scale manufacturing~ means design, construction, and testing of preproduction prototypes and models in the fields of advanced computing, advanced materials, biotechnology, electronic device technology, environmental technology, and medical device technology, other than for commercial sale, excluding sales of prototypes or sales for market testing if total gross receipts, as calculated pursuant to section 6 of P.L.1945, c.162 (C.54:10A-6), from such sales of the product, service or process do not exceed $1,000,000;
~Qualified investment~ means the non-refundable investment, at risk in a small New Jersey-based high-technology business, of cash that is transferred to the small New Jersey-based high-technology business by a taxpayer that is not a related person of the small New Jersey-based high-technology business, the transfer of which is in connection with a transaction in exchange for stock, interests in partnerships or joint ventures, licenses (exclusive or non-exclusive), rights to use technology, marketing rights, warrants, options or any items similar to those included herein, including but not limited to options or rights to acquire any of the items included herein;
~Qualified research expenses~ means qualified research expenses as defined in section 41 of the federal Internal Revenue Code of 1986, 26 U.S.C.s.41, as in effect on June 30, 1992, in the fields of advanced computing, advanced materials, biotechnology, electronic device technology, environmental technology, or medical device technology;
~Related person~ means:
a. a corporation, partnership, association or trust controlled by the taxpayer;
b. an individual, corporation, partnership, association or trust that is in the control of the taxpayer;
c. a corporation, partnership, association or trust controlled by an individual, corporation, partnership, association or trust that is in the control of the taxpayer; or
d. a member of the same controlled group as the taxpayer;
~Small New Jersey-based high-technology business~ means a corporation doing business, employing or owning capital or property, or maintaining an office, in this State that has qualified research expenses paid or incurred for research conducted in this State or conducts pilot scale manufacturing in this State, and has fewer than 225 employees, of whom 75% are New Jersey-based employees filling a position or job in this State; and
~Tax year~ means the fiscal or calendar accounting year of a taxpayer.
L.1997,c.349,s.2.
54:10A-5.30 Taxpayer allowed credit.
3. 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 10% of the qualified investment made by the taxpayer during each of the three tax years beginning on or after January 1 next following enactment of this act, in a small New Jersey-based high-technology business, up to a maximum allowed credit of $500,000 for the tax year for each qualified investment made by the taxpayer. An unused credit may be carried forward for use in future years, subject to the $500,000 per year limitation.
b. A credit shall not be allowed pursuant to section 1 of P.L.1993, c.175 (C.54:10A-5.24), for expenses paid from funds for which a credit is allowed, or which are includable in the calculation of a credit allowed, under this section.
The tax imposed for a tax year pursuant to section 5 of P.L.1945, c.162, shall first be reduced by the amount of any credit allowed pursuant to section 19 of P.L.1983, c.303 (C.52:27H-78), then by any credit allowed pursuant to section 12 of P.L.1985, c.227 (C.55:19-13), then by any credit allowed pursuant to section 42 of P.L.1987, c.102 (C.54:10A-5.3), then by any credit allowed under section 3 of P.L.1993, c.170 (C.54:10A-5.6), then by any credit allowed under section 3 or 4 of P.L.1993, c.171 (C.54:10A-5.18 or C.54:10A-5.19), then by any credit allowed under section 1 of P.L.1993, c.175 (C.54:10A-5.24), and then by any credit allowed under section 1 of P.L.1993, c.150 (C.27:26A-15), prior to applying any credits allowable pursuant to this section. Credits allowable pursuant to this section shall be applied in the order of the credits@ tax years. The amount of the credits applied under this section against the tax imposed pursuant to section 5 of P.L.1945, c.162, for a tax year shall not exceed 50% 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. Except as provided in subsection d. of this section, the amount of tax year credit otherwise allowable under this section which cannot be applied for the tax year due to the limitations of subsection b. of this section may be carried over, if necessary, to the 15 tax years following a credit@s tax year.
d. A taxpayer may not carry over any amount of credit or credits allowed under subsection a. of this section to a tax year during which a corporate acquisition with respect to which the taxpayer was a target corporation occurred or during which the taxpayer was a party to a merger or a consolidation, or to any subsequent tax year, if the credit was allowed for a tax year prior to the year of acquisition, merger or consolidation, except that if in the case of a corporate merger or corporate consolidation the taxpayer can demonstrate, through the submission of a copy of the plan of merger or consolidation and such other evidence as may be required by the director, the identity of the constituent corporation which was the acquiring person, a credit allowed to the acquiring person may be carried over by the taxpayer. As used in this subsection, ~acquiring person~ means the constituent corporation the stockholders of which own the largest proportion of the total voting power in the surviving or consolidated corporation after the merger or consolidation.
L.1997,c.349,s.3.
54:10A-5.31 Tax credit for purchase of effluent treatment, conveyance equipment.
1. a. (1) A taxpayer who in a privilege period purchases treatment equipment or conveyance equipment for use exclusively within this State, shall be allowed a credit as provided herein against the tax imposed for that privilege period pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) in an amount equal to 50% of the cost of the treatment equipment or conveyance equipment less the amount of any loan received pursuant to section 5 of P.L.1981, c.278 (C.13:1E-96) and excluding the amount of any sales and use tax paid pursuant to P.L.1966, c.30 (C.54:32B-1 et seq.), provided that the Commissioner of the Department of Environmental Protection has issued a determination under subsection b. of this section that the operation of the system of equipment and the reuse of wastewater effluent that results therefrom are or will be beneficial to the environment. The amount of the credit claimed for the privilege period in which the purchase of treatment equipment or conveyance equipment is made, and the amount of credit claimed therefor in each privilege period thereafter, shall not exceed 20% of the amount of the total credit allowable, shall not, together with any other credits allowed by law, exceed 50% of the tax liability which would be otherwise due, and shall not reduce the amount of tax liability to less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5). An unused credit amount may be carried forward, if necessary, for use in future privilege periods. Notwithstanding any other provision of law, the order of priority in which the credit allowed under this section and any other credits allowed by law may be taken shall be as prescribed by the director.
A taxpayer who, in a privilege period, purchased treatment equipment or conveyance equipment, but who did not receive approval of an application for determination pursuant to subsection b. of this section before filing a return for that privilege period, may, in accordance with the provisions of the State Tax Uniform Procedure Law, R.S.54:48-1 et seq., and subject to the provisions of this section, file with the director a claim for the credit for that privilege period and any subsequent privilege period, as appropriate.
For the purposes of this section, ~treatment equipment~ means any equipment that is used exclusively to treat effluent from a primary wastewater treatment facility, which effluent would otherwise have been discharged into the waters of the State, for purposes of reuse in an industrial process thereafter, and ~conveyance equipment~ means any equipment that is used exclusively to transport that effluent to the facility in which the treatment equipment has been or is to be installed and to transport the product of that further treatment to the site of that reuse.
(2) If a person who purchases treatment equipment or conveyance equipment for which the Commissioner of the Department of Environmental Protection has issued a determination of environmentally beneficial operation pursuant to subsection b. of this section is a partnership, limited liability company, or other person classified as a partnership for federal tax purposes and not subject to the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), a portion of the amount of the credit otherwise allowed to the purchaser pursuant to paragraph (1) of this subsection shall be allowed to each owner of that purchaser that is subject to the tax in proportion to the owner@s share of the income of the purchaser. The purchaser shall be treated as the taxpayer for the purpose of administering the provisions of this section.
b. In order to qualify for the tax credit pursuant to subsection a. of this section, the taxpayer shall apply for a determination from the Commissioner of the Department of Environmental Protection that the equipment with respect to which the credit is sought (1)qualifies as treatment equipment or conveyance equipment as defined in subsection a. of this section, and (2) is or will be in its operation, considered in conjunction with the reuse of the further treated wastewater effluent that results from that operation, beneficial to the environment. The application shall be submitted in writing in a form as the commissioner shall prescribe and shall specifically include; the date or anticipated date of purchase of the equipment, a physical and functional description of the equipment, the cost, the name and address or location of each primary wastewater treatment facility from which effluent is or is to be received for further treatment, the name and address or location of each facility to which the effluent is or is to be conveyed after the further treatment for reuse, the nature of the reuse, the location of any site at which the wastewater that has been or is to be further treated is being or is to be discharged either prior to or after reuse, the volume of such wastewater that is or is to be reused, the portion of that volume that is or is to be consumed in that reuse and the portion thereof that is or is to be discharged thereafter, and the taxpayer@s explanation of how the operation of the system and the reuse of the wastewater effluent that has been further treated are or will be beneficial to the environment. The application shall also include the taxpayer@s affidavit that, to the best of the taxpayer@s knowledge, the equipment has not previously qualified for a credit pursuant to this section either for the taxpayer or other owner or for a previous owner.
Upon approval of the application, the Commissioner of the Department of Environmental Protection shall submit a copy of the determination of equipment qualification and environmentally beneficial operation to the taxpayer and the Director of the Division of Taxation. When filing a tax return that includes a claim for a credit pursuant to this section, the taxpayer shall include a copy of the determination and the taxpayer@s affidavit that the treatment equipment or conveyance equipment is or will be used exclusively in New Jersey. Any credit shall be initially allowed for the privilege period in which the equipment is purchased, and any unused portion thereof may be carried forward into subsequent privilege periods as provided in subsection a. of this section.
The Commissioner of the Department of Environmental Protection, in consultation with the Director of the Division of Taxation, shall adopt rules and regulations establishing technical and administrative requirements for the qualification of treatment equipment and conveyance equipment, and for the determination that the operation of a system of such equipment and the reuse of wastewater effluent that has been treated thereby are beneficial to the environment, for the purpose of establishing a taxpayer@s eligibility for a credit pursuant to this section. In the development and adoption of the rules and regulations prescribed under this act and of any procedure for making application for a credit under subsection a. of this section, the commissioner, in consultation with the director, shall to the greatest extent possible ensure that they are consolidated or consistent with any corresponding rules, regulations, and procedures established under P.L. , c. (C. ) (now pending before the Legislature as Senate Bill No. 1210 (1R) and Assembly Bill No. 2695 of 2000) and P.L.2001, c.322.
c. No amount of cost included in calculation of the credit allowed under this section shall be included in the costs for calculation of any other credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5).
d. On or before January 31 of each year, the Commissioner of the Department of Environmental Protection shall submit a report to the Governor, the State Treasurer, and the Legislature setting forth the number of taxpayer applications under subsection b. of this section that were approved during the preceding calendar year and the cost of each type of equipment which has been determined to qualify for the credit.
L.2001,c.321,s.1.
54:10A-5.32 Temporary regulations for effluent treatment tax credit.
2. Notwithstanding the provisions of P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the Commissioner of the Department of Environmental Protection may, immediately upon filing with the Office of Administrative Law, adopt such temporary regulations as the commissioner deems necessary to implement the provisions of section 1 of P.L.2001, c.321 (C.54:10A-5.31), which regulations shall be effective for a period not to exceed 270 days from the date of the filing, but in no case after one year from the effective date of that P.L.2001, c.321. The regulations may thereafter be amended, adopted or readopted by the commissioner as the commissioner deems necessary in accordance with the requirements of P.L.1968, c.410.
L.2001,c.321,s.2.
54:10A-5.33 Tax credit for remediation of contaminated site.
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 100% of the eligible costs of the remediation of a contaminated site as certified by the Department of Environmental Protection pursuant to section 2 of P.L.2003, c.296 (C.54:10A-5.34) and the Director of the Division of Taxation in the Department of the Treasury pursuant to section 3 of P.L.2003, c.296 (C.54:10A-5.35) performed during privilege periods beginning on or after January 1, 2004 and before January 1, 2007.
b. The priority for the application of credit allowed pursuant to this section against the tax imposed for a privilege period pursuant to section 5 of P.L.1945, c.162, in relation to the application of any other credit allowed against the tax shall be prescribed by the Director of the Division of Taxation in the Department of the Treasury. Credits allowable pursuant to this section shall be applied in the order of the credits@ privilege periods. The amount of the credits applied under this section against the tax imposed pursuant to section 5 of P.L.1945, c.162, for a tax year shall not exceed 50% 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. Except as provided in subsection d. of this section, the amount of tax year credit otherwise allowable under this section which cannot be applied for the tax year due to the limitations of subsection b. of this section may be carried over, if necessary, to the five privilege periods following a credit@s privilege period.
d. A taxpayer may not carry over any amount of credit or credits allowed under subsection a. of this section to a privilege period during which a corporate acquisition with respect to which the taxpayer was a target corporation occurred.
e. In no event shall the amount of the tax credit, when taken together with the property tax exemption received pursuant to the ~Environmental Opportunity Zone Act,~ P.L.1995, c.413 (C.54:4-3.151), less any in lieu of tax payments made pursuant to that act, or any other State, local, or federal tax incentive or grant to remediate a site, exceed 100% of the total cost of the remediation.
L.2003,c.296,s.1.
54:10A-5.34 Eligibility for tax credit.
2. To be eligible for a tax credit for the costs of remediation pursuant to section 1 of P.L.2003, c.296 (C.54:10A-5.33), a taxpayer shall submit an application, in writing, to the Department of Environmental Protection for review and certification of the eligible costs of the remediation for the remediation tax credit. The department shall review the request for certification upon receipt of an application therefor, and shall approve or deny the application for certification on a timely basis. The department shall certify the eligible costs of the remediation if the department finds that:
(1) the taxpayer had entered into a memorandum of agreement with the Commissioner of Environmental Protection for the remediation of a contaminated site and the taxpayer is in compliance with the memorandum of agreement;
(2) the taxpayer is not liable, pursuant to paragraph (1) of subsection c. of section 8 of P.L.1976, c.141 (C.58:10-23.11g) for the contamination at the site; and
(3) the costs of the remediation were actually and reasonably incurred.
When filing an application for certification of the eligible costs of a remediation pursuant to this section, the taxpayer shall submit to the department a certification of the total remediation costs incurred by the taxpayer for the remediation of the subject property, and such other information as the department deems necessary in order to make the certifications and findings pursuant to this section.
L.2003,c.296,s.2.
54:10A-5.35 Additional requirements for eligibility.
3. In addition to the requirements of section 2 of P.L.2003, c.296 (C.54:10A-5.34), to be eligible for a tax credit for the costs of remediation pursuant to section 1 of P.L.2003, c.296 (C.54:10A-5.33), the Director of the Division of Taxation in the Department of the Treasury shall certify that the remediation of the contaminated site has also satisfied the following:
a. the remediated site is located within an area designated as a Planning Area 1 (Metropolitan) or Planning Area 2 (Suburban) as designated pursuant to the ~State Planning Act,~ sections 1 through 12 of P.L.1985, c.398 (C.52:18A-196 et seq.);
b. the subsequent business activity at the remediated site represents new corporation business tax, or sales and use tax or gross income tax receipts;
c. there is a high probability that the estimated new tax receipts deriving from the business activity at the remediated site, within a three-year period from the inception of the business activity, will equal or exceed the value of tax credits issued; and
d. if the subsequent business activity at the remediated site is as a result of a relocation of an existing business from within the State of New Jersey, then the tax credit authorized pursuant to section 1 of P.L.2003, c.296 (C.54:10A-5.33), shall be equal to the difference in aggregate value of tax receipts from the corporation business tax pursuant to P.L.1945, c.162 (C.54:10A-1 et seq.), the sales and use tax pursuant to P.L.1966, c.30 (C.54:32B-1 et seq.) and the gross income tax pursuant to P.L.1976, c.47 (C.54A:1-1 et seq.) generated by the business activity in the privilege period immediately following the business relocation less the aggregate value of tax receipts generated in the privilege period immediately prior to relocation, up to 100% of the eligible costs, pursuant to section 1 of P.L.2003, c.296 (C.54:10A-5.33). If the difference in aggregate value is zero or less, no tax credit shall be awarded.
L.2003,c.296,s.3.
54:10A-5.36 Corporation business tax benefit certificate transfer program.
4. a. The Director of the Division of Taxation in the Department of the Treasury shall establish a corporation business tax benefit certificate transfer program to allow a person who performs a remediation in this State with remediation tax credits otherwise allowable, to surrender those tax benefits for use by other corporation business taxpayers in this State, provided that the taxpayer receiving the surrendered tax benefits is not affiliated with a corporation that is surrendering its tax benefits. For the purposes of this section, the test of affiliation is whether the same entity directly or indirectly owns or controls 5% or more of the voting rights or 5% or more of the value of all classes of stock of both the taxpayer receiving the benefits and a corporation that is surrendering the benefits. The tax benefits may be used on the corporation business tax returns to be filed by those taxpayers.
b. The director shall be authorized to approve the transfer of no more than $12,000,000 of tax benefits in each of the following State fiscal years: 2005, 2006, and 2007. The maximum value of surrendered tax benefits that a corporation shall be permitted to surrender over the three-year period pursuant to the program is $4,000,000. Applications must be received on or before February 1, 2005 and each February 1 thereafter.
c. The Director of the Division of Taxation in the Department of the Treasury, shall review and approve applications by taxpayers under the Corporation Business Tax Act (1945), P.L.1945, c.162 (C.54:10A-1 et seq.), to acquire surrendered tax benefits approved pursuant to subsection b. of this section which shall be issued in the form of corporation business tax benefit transfer certificates. No taxpayer who is liable pursuant to paragraph (1) of subsection c. of P.L.1976, c.141 (C.58:10-23.11) for contamination at any site in the State may acquire a surrendered tax benefit pursuant to this section. The applications shall be submitted and the division shall approve or disapprove the applications.
L.2003,c.296,s.4.
54:10A-5.37 Performance evaluation review committee; report.
5. On or before August 1, 2006, the State Treasurer shall form a performance evaluation review committee which shall consist of representatives of the Division of Taxation, the Commerce and Economic Growth Commission, and the New Jersey Economic Development Authority, and five members from the private sector, at least two of whom shall represent the real estate development industry. This performance evaluation review committee shall be charged with thoroughly analyzing and documenting in a report:
a. the fiscal and economic impact to the State of the tax credit for the costs of remediation granted pursuant to section 1 of P.L.2003, c.296 (C.54:10A-5.33);
b. the total number of properties redeveloped and their local economic and fiscal impact;
c. any recommendations for legislative or regulatory amendments that would enhance the effectiveness of the program; and
d. a recommendation whether the program should be continued.
The report required pursuant to this section shall be delivered to the Governor and the chairs of the Senate Budget and Appropriations Committee and the Assembly Appropriations Committee, or the chairs of the successor committees, on or before November 30, 2006.
L.2003,c.296,s.5.
54:10A-5.39 Corporation business tax credit for certain film production expenses; definitions.
1. a. A taxpayer, upon application to the Director of the Division of Taxation in the Department of the Treasury and the New Jersey Economic Development Authority, 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 20 percent of the qualified film production expenses of the taxpayer during a privilege period commencing after the effective date of P.L.2005, c.345, provided that (1) at least 60 percent of the total production expenses, exclusive of post-production costs, of the taxpayer will be incurred for services performed and goods used or consumed in New Jersey, and (2) principal photography of the film commences within 150 days after the approval of the application for the credit.
b. The amount of the credit applied under this section against the tax imposed pursuant to section 5 of P.L.1945, c.162, for a privilege period, when taken together with any other credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162, 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. The priority in which credits allowed pursuant to this section and any other credits shall be taken shall be as determined by the Director of the Division of Taxation. The amount of the 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 may be carried over, if necessary, to the seven privilege periods following the privilege period for which the credit was allowed.
c. A taxpayer may, with an application for a credit provided for in subsection a. of this section, apply to the director and the executive director of the authority for a tax credit transfer certificate in lieu of the taxpayer being allowed any amount of the credit against the tax liability of the taxpayer. The director and the executive director of the authority may consult with the New Jersey Motion Picture and Television Development Commission in consideration of any application for approval of a tax credit or tax credit transfer certificate under this section. The tax credit transfer certificate, upon receipt thereof by the taxpayer from the director and the authority, may be sold or assigned, in full or in part, to any other taxpayer that may have a tax liability under P.L.1945, c.162 or N.J.S.54A:1-1 et seq., in exchange for private financial assistance to be provided by the purchaser or assignee to the taxpayer that has applied for and been granted the credit. The certificate provided to the taxpayer shall include a statement waiving the taxpayer@s right to claim that amount of the credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) that the taxpayer has elected to sell or assign. The sale or assignment of any amount of a tax credit transfer certificate allowed under this section shall not be exchanged for consideration received by the taxpayer of less than 75% of the transferred credit amount. Any amount of a tax credit transfer certificate used by a purchaser or assignee against a tax liability under P.L.1945, c.162 shall be subject to the same limitations and conditions that apply to the use of a credit pursuant to subsection b. of this section. Any amount of a tax credit transfer certificate obtained by a purchaser or assignee under this section may be applied against the purchaser@s or assignee@s tax liability under N.J.S.54A:1-1 et seq. and shall be subject to the same limitations and conditions that apply to the use of a credit pursuant to section 2 of P.L.2005, c.345 (C.54A:4-12).
d. As used in this section:
~Film~ means a feature film, a television series or a television show of 15 minutes or more in length, intended for a national audience. ~Film~ shall not include a production featuring news, current events, weather and market reports or public programming, talk show, game show, sports event, award show or other gala event, a production that solicits funds, a production containing obscene material as defined under N.J.S.2C:34-2 and N.J.S.2C:34-3, or a production primarily for private, industrial, corporate or institutional purposes.
~Qualified film production expenses~ means an expense incurred in New Jersey for the production of a film including post-production costs incurred in New Jersey. Qualified film production expenses shall include but shall not be limited to wages and salaries of individuals employed in the production of a film on which the tax imposed by the ~New Jersey Gross Income Tax Act,~ N.J.S.54A:1-1 et seq. has been paid or are due; the costs of construction, operations, editing, photography, sound synchronization, lighting, wardrobe and accessories and the cost of rental of facilities and equipment. Qualified film production expenses shall not include expenses incurred in marketing or advertising a film.
~Total production expenses~ means costs for services performed and tangible personal property used or consumed in the production of a film.
~Post-production costs~ means the costs of the phase of production that follows principal photography, in which raw footage is cut and assembled into a finished film with sound synchronization and visual effects.
e. The Director of the Division of Taxation in the Department of the Treasury, in consultation with the New Jersey Motion Picture and Television Development Commission and the New Jersey Economic Development Authority, shall adopt rules in accordance with the ~Administrative Procedure Act,~ P.L.1968, c.410 (C.52:14B-1 et seq.), as are necessary to implement this act including examples of qualified film production expenses and the procedures and forms to apply for a credit and for a tax credit transfer certificate necessary for a taxpayer to sell or assign an amount of tax credit under this section. The value of credits, including tax credits allowed through the granting of tax credit transfer certificates, approved by the director and the authority pursuant to this section and pursuant to section 2 of P.L.2005, c.345 (C.54A:4-12) shall not exceed a cumulative total of $10,000,000 in any fiscal year to apply against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), and the tax imposed pursuant to the ~New Jersey Gross Income Tax Act,~ N.J.S.54A:1-1 et seq. If the cumulative total amount of credits and tax credit transfer certificates allowed to taxpayers for privilege periods or taxable years commencing during a single fiscal year under this section and section 2 of P.L.2005, c.345 (C.54A:4-12) exceeds the amount of credits available in that year, then taxpayers who have first applied for and have not been allowed a credit or tax credit transfer certificate amount for that reason shall be allowed, in the order in which they have submitted an application, the amount of tax credit or certificate on the first day of the next succeeding fiscal year in which tax credits and tax credit transfer certificates under this section and section 2 of P.L.2005, c.345 (C.54A:4-12) are not in excess of the amount of credits available. The Executive Director of the New Jersey Economic Development Authority, in conjunction with the Director of the Division of Taxation shall prepare and submit a report to the Governor and the Legislature on the effectiveness of the credit as an incentive for encouraging film productions to locate in New Jersey which shall be completed before the third taxable year or privilege period in which a credit may be claimed.
L.2005,c.345,s.1.
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