Bill Text: NJ S2218 | 2016-2017 | Regular Session | Introduced
Bill Title: Provides credit against corporation business and gross income taxes for urban area employers that rehabilitate urban housing for employees.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2017-02-27 - Referred to Senate Budget and Appropriations Committee [S2218 Detail]
Download: New_Jersey-2016-S2218-Introduced.html
Sponsored by:
Senator CHRISTOPHER "KIP" BATEMAN
District 16 (Hunterdon, Mercer, Middlesex and Somerset)
SYNOPSIS
Provides credits against corporation business and gross income taxes for urban area employers that rehabilitate urban housing for employees.
CURRENT VERSION OF TEXT
As introduced.
An Act providing credits against corporation business and gross income taxes for urban area employers that rehabilitate urban housing for their employees, supplementing P.L.1945, c.162 (C.54:10A-1 et seq.) and Title 54A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. For privilege periods beginning on or after the effective date of this act, a taxpayer that is a qualified urban area employer shall be allowed a credit against the tax due pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) in an amount equal to 50 percent of the qualified costs paid or incurred by the taxpayer to acquire, construct, and install rehabilitated urban area housing in a qualified urban area in the State for at least five percent of the employees of the taxpayer, provided, however, that the qualified costs paid or incurred by the taxpayer do not exceed the estimate of qualified costs approved by the Executive Director of the New Jersey Housing and Mortgage Finance Agency, in consultation with the Director of the Division of Taxation in the Department of the Treasury.
b. To be eligible for a tax credit pursuant to this section, a taxpayer shall submit an application, in writing, prior to completion of the rehabilitated urban area housing, to the Executive Director of the New Jersey Housing and Mortgage Finance Agency for review and approval of the estimate of qualified costs of the rehabilitated urban area housing. The executive director shall review the application, and shall approve or deny the estimate of qualified costs on a timely basis.
c. Following approval of the estimate of qualified costs for the rehabilitated urban housing, a taxpayer may claim a portion of the available credit for the privilege period in which the construction, installation, acquisition, or rehabilitation of the rehabilitated urban area housing is completed, provided, however, that no more than 20 percent of the total credit shall be claimed in any one privilege period. Unused credit may be carried forward if necessary to any of the nine following privilege periods, provided that the rehabilitated urban housing continues to operate as such during the privilege period for which the credit is claimed.
d. The order of priority of the application of the credit allowed pursuant to this section and any other credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for a privilege period shall be as prescribed by the director.
The amount of the credit applied pursuant to this section against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), shall not reduce a taxpayer's tax liability for a privilege period to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5).
e. If the director determines that a taxpayer has obtained a credit pursuant to this section by fraud or misrepresentation or has failed to comply with the provisions of this section, the director shall deny the taxpayer the credit and shall issue a tax assessment for the recapture of credit previously allowed to the taxpayer pursuant to this section.
f. As used in this section:
"Completed," with respect to a parcel of rehabilitated urban area housing means property that is substantially ready for the use for which it is intended and its occupancy as a principal residence;
"Condominium" means the form of real property ownership provided for under the "Condominium Act," P.L.1969, c.257 (C.46:8B-1 et seq.);
"Cooperative" means a housing corporation or association, wherein the holder of a share or membership interest thereof is entitled to possess and occupy for dwelling purposes a house, apartment, or other unit of housing owned by the corporation or association, or to purchase a unit of housing constructed or erected by the corporation or association;
"Qualified costs" means costs of acquisition and finance, and with respect to construction, improvement, conversion, alteration or rehabilitation, means the cost or fair market value of labor, materials, and capital improvements for constructing, improving, altering or rehabilitating rehabilitated urban area housing, or in converting another building or structure to rehabilitated urban area housing, including any architectural, engineering, and contractors permit fees associated with the construction, improvement, conversion or rehabilitation, as the taxpayer shall cause to be certified to the executive director by an independent and qualified architect, following the completion of the rehabilitated urban area housing property;
"Employee" or "employees" means one of more individual or individuals residing and domiciled in this State, employed by the taxpayer to fill a position or a job in this State in the taxpayer's business enterprise in this State in a qualified urban area provided that the individual's duties in connection with the operation of the business enterprise are on a regular, full-time and permanent basis and are performed substantially within the qualified urban area, but shall not include 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 an individual who owns 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;
"Horizontal property regime" means the form of real property ownership provided for under the "Horizontal Property Act," P.L.1963, c.168 (C.46:8A-1 et seq.);
"Qualified urban area" means a municipality in which an urban enterprise zone or part of an urban enterprise zone has been designated pursuant to the "New Jersey Urban Enterprise Zones Act," P.L.1983, c.303 (C.52:27H-60 et seq.), and shall include the entire area within the corporate boundaries of that municipality, whether or not that area is included within an urban enterprise zone;
"Qualified urban area employer" means a taxpayer that owns or operates a business enterprise in this State in a qualified urban area;
"Rehabilitated urban area housing " means any building used or to be used or held for use as a home or residence, occupied, on a permanent basis, predominantly by employees and their immediate families, as a principal residence, located in the qualified urban area in which the employees are employed, including accessory buildings located on the same premises and including condominiums, cooperatives and horizontal property regimes, provided that the building is in compliance with all applicable laws, regulations, requirements, and standards.. No building shall be considered rehabilitated urban area housing if the certificate of occupancy for the construction, conversion, rehabilitation or renovation was issued on or before the effective date of this act.
g. The Executive Director of the New Jersey Housing and Mortgage Finance Agency, in consultation with the Director of the Division of Taxation, 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 effectuate the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).
2. a. For taxable years beginning on or after the effective date of this act, a taxpayer that is a qualified urban area employer shall be allowed a credit against the New Jersey gross income tax due pursuant to N.J.S.54A:1-1 et seq. in an amount equal to 50 percent of the qualified costs paid or incurred by the taxpayer to acquire, construct, and install rehabilitated urban area housing in a qualified urban area in the State for at least five percent of the employees of the taxpayer, provided, however, that the qualified costs paid or incurred by the taxpayer do not exceed the estimate of qualified costs approved by the Executive Director of the New Jersey Housing and Mortgage Finance Agency, in consultation with the Director of the Division of Taxation in the Department of the Treasury.
b. To be eligible for a tax credit pursuant to this section, a taxpayer shall submit an application, in writing, prior to completion of the rehabilitated urban area housing, to the Executive Director of the New Jersey Housing and Mortgage Finance Agency for review and approval of the estimate of qualified costs of the rehabilitated urban area housing. The executive director shall review the application, and shall approve or deny the estimate of qualified costs on a timely basis.
c. Following approval of the estimate of qualified costs for the rehabilitated urban housing, a taxpayer may claim a portion of the available credit for the taxable year in which the construction, installation, acquisition, or rehabilitation of the rehabilitated urban area housing is completed, provided, however, that no more than 20 percent of the total credit shall be claimed in any one taxable year. Unused credit may be carried forward if necessary to any of the nine following taxable years, provided that the rehabilitated urban housing continues to operate as such during the taxable year for which the credit is claimed.
d. The order of priority of the application of the credit allowed pursuant to this section and any other credits allowed against the New Jersey gross income tax due pursuant to N.J.S.54A:1-1 et seq. in a taxable year shall be as prescribed by the director. A credit allowed pursuant to this section shall not reduce the tax liability otherwise due pursuant to N.J.S.54A:1-1 et seq., for a taxable year to an amount less than zero.
e. A business entity that is classified as a partnership for federal income tax purposes shall not be allowed a credit directly, but the amount of credit of a taxpayer in respect of a distributive share of entity income, shall be determined by allocating to the taxpayer that proportion of the credit acquired by the entity that is equal to the taxpayer's share, whether or not distributed, of the total distributive income or gain of the entity for its taxable year ending within or with the taxpayer's taxable year.
A New Jersey S Corporation shall not be allowed a credit directly under the gross income tax, but the amount of credit of a taxpayer in respect of a pro rata share of S Corporation income, shall be determined by allocating to the taxpayer that proportion of the credit acquired by the New Jersey S Corporation that is equal to the taxpayer's share, whether or not distributed, of the total pro rata share of S Corporation income of the New Jersey S Corporation for its privilege period ending within or with the taxpayer's taxable year.
f. If the director determines that a taxpayer has obtained a credit pursuant to this section by fraud or misrepresentation or has failed to comply with the provisions of this section, the director shall deny the taxpayer the credit and shall issue a tax assessment for the recapture of credit previously allowed to the taxpayer pursuant to this section.
g. As used in this section:
"Completed," with respect to a parcel of rehabilitated urban area housing means property that is substantially ready for the use for which it is intended and its occupancy as a principal residence;
"Condominium" means the form of real property ownership provided for under the "Condominium Act," P.L.1969, c.257 (C.46:8B-1 et seq.);
"Cooperative" means a housing corporation or association, wherein the holder of a share or membership interest thereof is entitled to possess and occupy for dwelling purposes a house, apartment, or other unit of housing owned by the corporation or association, or to purchase a unit of housing constructed or erected by the corporation or association;
"Qualified costs" means costs of acquisition and finance, and with respect to construction, improvement, conversion, alteration or rehabilitation, means the cost or fair market value of labor, materials, and capital improvements for constructing, improving, altering or rehabilitating rehabilitated urban area housing, or in converting another building or structure to rehabilitated urban area housing, including any architectural, engineering, and contractors permit fees associated with the construction, improvement, conversion or rehabilitation, as the taxpayer shall cause to be certified to the executive director by an independent and qualified architect, following the completion of the rehabilitated urban area housing property;
"Employee" or "employees" means one of more individual or individuals residing and domiciled in this State, employed by the taxpayer to fill a position or a job in this State in the taxpayer's business enterprise in this State in a qualified urban area provided that the individual's duties in connection with the operation of the business enterprise are on a regular, full-time and permanent basis and are performed substantially within the qualified urban area, but shall not include 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 an individual who owns 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;
"Horizontal property regime" means the form of real property ownership provided for under the "Horizontal Property Act," P.L.1963, c.168 (C.46:8A-1 et seq.);
"Qualified urban area" means a municipality in which an urban enterprise zone or part of an urban enterprise zone has been designated pursuant to the "New Jersey Urban Enterprise Zones Act," P.L.1983, c.303 (C.52:27H-60 et seq.), and shall include the entire area within the corporate boundaries of that municipality, whether or not that area is included within an urban enterprise zone;
"Qualified urban area employer" means a taxpayer that owns or operates a business enterprise in this State in a qualified urban area;
"Rehabilitated urban area housing " means any building used or to be used or held for use as a home or residence, occupied, on a permanent basis, predominantly by employees and their immediate families, as a principal residence, located in the qualified urban area in which the employees are employed, including accessory buildings located on the same premises and including condominiums, cooperatives and horizontal property regimes, provided that the building is in compliance with all applicable laws, regulations, requirements, and standards.. No building shall be considered rehabilitated urban area housing if the certificate of occupancy for the construction, conversion, rehabilitation or renovation was issued on or before the effective date of this act.
h. The Executive Director of the New Jersey Housing and Mortgage Finance Agency, in consultation with the Director of the Division of Taxation, 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 effectuate the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).
3. This act shall take effect immediately.
STATEMENT
This bill establishes credits against the corporation business and gross income taxes for qualified urban area employers that rehabilitate housing in these areas to be used as the principal residences of a portion of their urban workforce. The amount of the available credit is 50 percent of the approved qualified costs incurred and paid by the taxpayer to acquire, finance, construct, improve, convert to, alter or rehabilitate urban housing.
A taxpayer intending to claim the credit must apply in advance of completion of the housing to the Executive Director of the New Jersey Housing and Mortgage Finance Agency. Following approval of an estimate of qualified costs by the executive director, a taxpayer may claim a portion of the available credit for the taxable year or privilege period in which the housing is completed, and in any of the nine subsequent taxable years or privilege periods, subject to the provisions of the bill. No more than 20 percent of the total credit may be claimed in any one taxable year or privilege period. The rehabilitated urban area housing must continue to be used as such housing during any taxable year or privilege period for which the credit is claimed.
The bill defines rehabilitated urban area housing as any building used or to be used or held for use as a home or residence, occupied, on a permanent basis, predominantly by employees and their immediate families, as a principal residence located in the qualified urban area in which the employees are employed. No residence will be considered rehabilitated urban area housing if the certificate of occupancy for the construction, conversion, rehabilitation or renovation was issued on or before the enactment of the bill.
Employees eligible for the employer established housing are required to be domiciled in this State, employed by the taxpayer to work on a regular, full-time and permanent basis in this State in the taxpayer's business enterprise in a qualified urban area provided that the individual's duties in connection with the operation of the business enterprise are performed substantially within the qualified urban area. A qualified urban area is defined as a municipality in which an urban enterprise zone or part of an urban enterprise zone has been designated and includes the entire area within the corporate boundaries of the municipality, whether or not that area is included within an urban enterprise zone. The bill also contains provisions aimed at preventing misuse of the credit and provides for disallowance, or recapture of a credit previously allowed, in certain circumstances.
Tax paying for-profit businesses can be incentivized through these credits to assist in repairing the urban communities in which they operate, while strengthening the local private sector economy, and laying a foundation for a workforce located in revitalized housing provided in nearby neighborhoods.
