Bill Text: NJ S1104 | 2010-2011 | Regular Session | Introduced
Bill Title: Allows certain taxpayers a one-time refundable gross income tax credit for gross income tax paid at highest rate of tax upon the gain from sale of small businesses.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2010-02-04 - Introduced in the Senate, Referred to Senate Budget and Appropriations Committee [S1104 Detail]
Download: New_Jersey-2010-S1104-Introduced.html
Sponsored by:
Senator ANTHONY R. BUCCO
District 25 (Morris)
SYNOPSIS
Allows certain taxpayers a one-time refundable gross income tax credit for gross income tax paid at highest rate of tax upon the gain from sale of small businesses.
CURRENT VERSION OF TEXT
As introduced.
An Act allowing a one-time refundable gross income tax credit for gross income tax paid at the highest rate of tax upon the gain from the sale of a small business, supplementing Title 54A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. A taxpayer who has taxable income in excess of $500,000 in a taxable year, who includes in the taxpayer's taxable income for that taxable year the net gain derived from the sale of a small business owned by the taxpayer, and who does not have taxable income in excess of $500,000 in any of the next three taxable years, shall be allowed for the taxable year in which the net gain is realized, a refundable credit against the tax otherwise due under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. A taxpayer who claims a credit under this section shall not claim a credit under this section for any other taxable year. The credit shall only be claimed in the taxpayer's fourth taxable year following the year for which the credit is allowed. The credit amount shall be equal to the product of the amount by which the taxpayer's taxable income was in excess of $500,000 in the taxable year in which the gain was realized, but not more than the amount of the gain, multiplied by 2.6 percent.
As used in this section "small business" means any business which is organized under the laws of this State or under the laws of any other state or foreign jurisdiction, independently owned and operated and not dominant in its field, and which employs fewer than 100 full-time employees.
b. The amount of the credit allowed pursuant to this section shall be applied against the tax otherwise due under N.J.S.54A:1-1 et seq., after all other credits and payments. If the credit exceeds the amount of tax otherwise due, that amount of excess shall be an overpayment for the purposes of N.J.S.54A:9-7.
2. This act shall take effect immediately and shall apply retroactively to taxable years beginning on or after January 1, 2004.
STATEMENT
This bill allows a one-time only refundable gross income tax refund to taxpayers who have paid New Jersey gross income tax at the highest marginal rate of tax upon the gain from the sale of a small business. A taxpayer may only claim this refundable tax credit after the third taxable year after the gain is taxed and only if the taxpayer did not have taxable income in excess of $500,000 during any of those three taxable years. This bill is retroactive to January 1, 2004. It will allow for tax refunds to those taxpayers who experienced a taxable income spike because of the sale of a small business beginning with the 2004 taxable year, the taxable year in which the highest marginal income tax rate was retroactively increased.
