New NJ Law Provides Corporate Tax Credits To Foster Job Creation

January 17, 2012 | Comments Off on New NJ Law Provides Corporate Tax Credits To Foster Job Creation
Posted by Patrick Convery

Legislation signed into law earlier this month by New Jersey Governor Chris Christie promises to provide corporate income tax credits to companies seeking to move to New Jersey or expand New Jersey-based operations based on capital investments and job creation and/or retention.  The legislation creates the GrowNJ Assistance Program, a $200 million tax credit incentive program which is administered by the New Jersey Economic Development Authority (NJEDA).

The GrowNJ Assistance Program is intended to provide property owners, tenants and utilities located in certain geographic areas of New Jersey not currently eligible for the Urban Transit Hub Tax Credit with a similar business incentive program.  Businesses will generally be eligible for a GrowNJ tax credit if they retain 100 full-time jobs (which full-time jobs are at risk of being lost to another state or country due to a potential relocation of the business) or create at least 100 full-time jobs in an NJEDA designated industry and also make a capital investment of at least $20 million in a Qualified Incentive Area.  Eligible businesses will receive an annual tax credit of $5,000 to $8,000 for up to ten (10) years for each full time job created or retained.

Business must apply for the tax credit prior to July 1, 2014 and must submit documentation evidencing their satisfaction of the employment and investment requirements specified in a Project Agreement to be entered into with the NJEDA for certification of its credit amount by no later than July 28, 2017.  Any permitted tax credit may be applied against a corporate tax payer’s tax liability under the corporate business tax (CBT), the employer payroll tax and insurance premium tax.

Certain businesses that will not be permitted to obtain tax credits under the GrowNJ Assistance Program include any business that has taken an Urban Transit Hub Credit or credit under the NJ Business Employment Incentive Program Act for the same capital and employees that qualify the business for a GrowNJ tax credit, any business that has received incentives authorized under the Municipal Rehabilitation and Economic Recovery Act and final retail purchase facilities.

Once an applicant has fulfilled the capital investment and employment requirements described above, the business’ chief executive officer or equivalent officer must submit a certification to the NJEDA indicating that existing jobs are at risk of leaving the state, that any projected creation of new full-time jobs would not occur but for the provision of tax credits under the program, and that the information submitted to the NJEDA and the representations contained therein are accurate.  Based on materials submitted, the State will review an applicant’s application and determine whether the capital investment resulting from the award of tax credits and the resulting retention and/or creation of eligible full-time positions will yield a net positive benefit to the State.

The enacted law also makes certain changes to eligibility requirements under the Urban Transit Hub Tax Credit program, including the addition of medical facility sites, vacant hospital sites and federally-designated CHOICE neighborhoods within one (1) mile of a rail station in an Urban Transit Hub Tax Credit city.

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