Bill Text: NJ S2350 | 2014-2015 | Regular Session | Introduced
Bill Title: Establishes a small business job creation and preservation account program to incentivize small business workforce expansion in New Jersey with income tax exclusions for interest.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2014-12-11 - Reported from Senate Committee with Amendments, 2nd Reading [S2350 Detail]
Download: New_Jersey-2014-S2350-Introduced.html
Sponsored by:
Senator PETER J. BARNES, III
District 18 (Middlesex)
Senator LINDA R. GREENSTEIN
District 14 (Mercer and Middlesex)
SYNOPSIS
Establishes a small business job creation and preservation account program to incentivize small business workforce expansion in New Jersey with income tax exclusions for interest.
CURRENT VERSION OF TEXT
As introduced.
An Act establishing a small business job creation and preservation account program, supplementing Title 54 of the Revised Statutes 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. The entire net income of a qualified small business shall not include the interest accrued on the balances of a small business job creation and preservation account.
b. To qualify for the exclusion allowed pursuant to this section a taxpayer shall comply with the qualifications for a qualified small business and use all small business job creation and preservation account balances for creating or preserving full-time jobs in this State. The exclusion shall be limited to one small business job creation and preservation account per qualified small business per privilege period.
c. To the extent small business job creation and preservation account balances are not withdrawn and expended on the creation or preservation of full-time jobs in this State before the end of the third full privilege period after an account's first receipt of deposit or are withdrawn for purposes other than creating or preserving full-time jobs in this State, the exclusion provided by this section shall be disallowed and all previously excluded interest amounts shall be included in the entire net income for the third full privilege period after an account's first receipt of deposit or for the privilege period of the disqualified withdrawal.
d. The Director of the Division of Taxation in the Department of the Treasury, in consultation with the Executive Director of the New Jersey Economic Development Authority, shall, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt any rules and regulations as the director deems necessary to carry out the provisions of this section.
e. As used in this section:
"Small business job creation and preservation account" means a New Jersey bank interest bearing account that only accepts cash deposits from the qualified small business.
"New Jersey bank" means a financial institution located and authorized to conduct business, by the New Jersey Department of Banking and Insurance, in New Jersey.
"Creating or preserving full-time jobs in this State" means expenditures that directly support the compensation of new full-time workforce positions in this State or that directly support the compensation of existing full-time workforce positions in this State, in the presence of significant financial challenges.
"Qualified small business" means a taxpayer that is independently owned and operated, not dominant in its field, an employer of no more than 100 employees, and without a State tax assessment associated with fraud or negligence, as determined by the director.
2. a. The gross income of a qualified small business shall not include the interest accrued on the balances of a small business job creation and preservation account.
b. To qualify for the exclusion allowed pursuant to this section a taxpayer shall comply with the qualifications for a qualified small business and use all small business job creation and preservation account balances for creating or preserving full-time jobs in this State. The exclusion shall be limited to one small business job creation and preservation account per qualified small business per taxable year.
c. To the extent small business job creation and preservation account balances are not withdrawn and expended on the creation or preservation of full-time jobs in this State before the end of the second full taxable year after an account's first receipt of deposit or are withdrawn for purposes other than creating or preserving full-time jobs in this State, the exclusion provided by this section shall be disallowed and all previously excluded interest amounts shall be included in the gross income for the second full taxable year after an account's first receipt of deposit or for the taxable year of the disqualified withdrawal.
d. The Director of the Division of Taxation in the Department of the Treasury, in consultation with the Executive Director of the New Jersey Economic Development Authority, shall, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt any rules and regulations as the director deems necessary to carry out the provisions of this section.
e. As used in this section:
"Small business job creation and preservation account" means a New Jersey bank interest bearing account that only accepts cash deposits from the qualified small business.
"New Jersey bank" means a financial institution located and authorized to conduct business, by the New Jersey Department of Banking and Insurance, in New Jersey.
"Creating or preserving full-time jobs in this State" means expenditures that directly support the compensation of new full-time workforce positions in this State or that directly support the compensation of existing full-time workforce positions in this State, in the presence of significant financial challenges.
"Qualified small business" means a taxpayer that is independently owned and operated, not dominant in its field, an employer of no more than 100 employees, and without a State tax assessment associated with fraud or negligence, as determined by the director.
3. This act shall take effect immediately and apply to privilege periods and taxable years beginning on or after the date of enactment.
STATEMENT
This bill establishes a small business job creation and preservation account program to incentivize small business workforce expansion in New Jersey using income tax exclusions for interest under the corporation business tax (CBT) and gross income tax (GIT).
The bill's small business job creation and preservation account program allows taxpayers to earn tax-free interest on account balances subsequently used to create or preserve full-time jobs in New Jersey. The bill limits the availability of the program to small businesses independently owned and operated, not dominant in their field, employing no more than 100 employees, and without a State tax assessment associated with fraud or negligence.
To qualify for the bill's exclusion, small business job creation and preservation account balances must be used for business expenditures directly supporting the compensation of either:
· new full-time workforce positions in this State; or
· existing full-time workforce positions in this State, in the presence of significant financial challenges.
Additionally, fund balances must be expended before the end of the third full tax period following the account's initial deposit for CBT taxpayers and the second full tax period for GIT taxpayers. The variance owes to the underlying taxes differing administrative requirements. Noncompliance with the expenditure requirements, result in inclusion of all previously excluded interest amounts for the tax year of noncompliance.
The bill empowers the Director of the Division of Taxation, in consultation with the Executive Director of the New Jersey Economic Development Authority, to adopt regulations to implement the bill.
The bill's exclusion is scheduled to apply to tax years beginning on or after the date of enactment.
