N.J. Admin. Code § 19:31R-1.6

Current through Register Vol. 56, No. 21, November 4, 2024

Section 19:31R-1.6 - Tax credit amount; overpayment and carryforward of tax credits

(a) A taxpayer, upon eligibility review and approval of the investor's application by the Authority, in consultation with the Director, and upon issuance of a tax credit certificate by the Division of Taxation, shall be allowed a credit against the tax imposed under the Corporation Business Tax, section 5 at P.L. 1945, c. 162 (N.J.S.A. 54:10A-5) or New Jersey Gross Income Tax Act, N.J.S.A. 54A:1-1 et seq., in an amount equal to 20 percent of the qualified investment made by the investor in a New Jersey emerging technology business, in a New Jersey emerging technology business holding company that makes a verified transfer of funds to a New Jersey emerging technology business, or in a qualified venture fund. The Authority, in consultation with the Director, shall increase the amount of a tax credit allowed pursuant to the section by five percent if:

1. The taxpayer makes a qualified investment in a New Jersey emerging technology business or in a New Jersey emerging technology holding company that makes a verified transfer of funds to a New Jersey emerging technology business if the New Jersey emerging technology business is:

i. Either located in a qualified opportunity zone pursuant to 26 U.S.C. § 1400Z-1, or a low-income community as defined at 26 U.S.C. § 45D; or

ii. Certified by the State as a minority-owned business or a women-owned business pursuant to P.L. 1986, c. 195 (N.J.S.A. 52:27H-21.17 et seq.); or

2. In the case of a qualified investment involving a qualified venture fund, if the qualified venture fund commits in the commitment agreement to invest 50 percent of its funds in diverse entrepreneurs for the relevant fund that is part of the irrevocable contractual agreement with the Authority.

(b) The maximum allowed credit shall be $ 500,000 for the tax credit vintage year for each qualified investment made by the investor. The maximum allowed credit shall include awards to a related person of the investor in the same New Jersey emerging technology business, New Jersey emerging technology business holding company, or qualified venture fund during the investor's tax credit vintage year if the investor has control over the qualified investment.

(c) An investor that is a partnership or an entity treated as a partnership for tax purposes, upon eligibility review and approval, shall not be allowed a credit under this section directly, but the amount of credit of each member or partner taxpayer in respect to a distributive share of partnership income under the New Jersey Gross Income Tax Act, N.J.S.A. 54A:1-1 et seq., or under the Corporation Business Tax, section 5 at P.L. 1945, c. 162 (N.J.S.A. 54:10A-5), shall be determined by allocating to each taxpayer, that proportion of the credit acquired by the partnership or entity that is equal to the taxpayer's share, whether or not distributed, of the total distributive income or gain of the partnership or entity for its taxable year ending within or with the taxpayer's tax credit vintage year. For the purposes of (c) and (d) below, the amount of tax liability that would be otherwise due of a taxpayer is that proportion of the total liability of the taxpayer that the taxpayer's share of the partnership income or gain included in gross income bears to the total gross income of the taxpayer.

(d) The credit for a corporation that has made a valid election as a New Jersey S corporation pursuant to section 3 at P.L. 1993, c. 173 (N.J.S.A. 54:10A-5.22) may be applied by the shareholders of the S corporation against the tax liability otherwise due pursuant to the New Jersey Gross Income Tax Act, N.J.S.A. 54A:1-1 et seq., provided that the amount of credit that may be used by a shareholder of the S corporation shall be determined by allocating to each shareholder of the S corporation that proportion of the tax credit of the S corporation that is equal to the shareholder's proportionate share of the S corporation, whether or not distributed, of the total distributive income or gain of the S corporation for its tax period ending with or within the shareholder's tax period, and the credit may be applied by the shareholders against the tax liability otherwise due pursuant to the New Jersey Gross Income Tax Act, N.J.S.A. 54A:1-1 et seq.

(e) The amount of the credit allowed shall be applied against the tax otherwise due pursuant to the New Jersey Gross Income Tax Act, N.J.S.A. 54A:1-1 et seq., for the tax credit approval year after all other credits and payments. If the credit exceeds the amount of tax liability otherwise due, that amount of excess shall be an overpayment for the purposes of N.J.S.A. 54A:9-7, provided, however, that N.J.S.A. 54A:9-7.f shall not apply. The 15-year carryforward at (f) below is not applicable to a credit claimed under the New Jersey Gross Income Tax Act.

(f) The order of priority in which the credit allowed by this section against the tax imposed pursuant to the Corporation Business Tax, section 5 at P.L. 1945, c. 162 (N.J.S.A. 54:10A-5) and any other credits allowed by law may be taken, shall be as prescribed by the Director.

(g) Except as provided at (g) below, the amount of tax credit otherwise allowable against the tax imposed pursuant to the Corporation Business Tax, section 5 at P.L. 1945, c. 162 (N.J.S.A. 54:10A-5), which cannot be applied for the tax credit approval year against tax liability otherwise due for that tax credit approval year may either be carried over, if necessary, to the 15-tax years following the tax credit approval year or, at the election of the taxpayer, be claimed as and treated as an overpayment for the purposes at N.J.S.A. 54:49-15, provided, however, that section 7 at P.L. 1992, c. 175 (N.J.S.A. 54:49-15.1) shall not apply.

(h) A taxpayer may not carry over any amount of credit allowed against the tax imposed pursuant to the Corporation Business Tax, section 5 at P.L. 1945, c. 162 (N.J.S.A. 54:10A-5) 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 tax credit approval year was 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.

(i) In the event that any certification or application information required from the investor is found to be willfully false or that the investor submitted false or misleading information or failed to submit relevant information in the application or any other submission to the Authority, the Authority may, at its sole discretion and in addition to any other remedies available, revoke and/or terminate any award of tax credits in their entirety and may require recapture of some or all tax credits received by the taxpayer. Such recapture may include interest on the recapture amount, at a rate equal to the statutory rate for tax deficiencies, plus any statutory penalties, and all costs incurred by the Authority and the Division of Taxation in the Department of the Treasury in connection with the pursuit of the recapture, including, but not limited to, counsel fees, court costs, and other costs of collection. The Authority shall confer with the Division of Taxation to determine the recapture amount. Any funds recaptured pursuant to this subsection, including penalties and interest, shall be deposited into the General Fund of the State.

N.J. Admin. Code § 19:31R-1.6

Amended by R.2018 d.122, effective 6/4/2018.
See: 49 N.J.R. 3576(a), 50 N.J.R. 1374(a).
Rewrote the section.
Amended by R.2021 d.139, effective 12/6/2021.
See: 53 N.J.R. 1481(a), 53 N.J.R. 2072(c).
Rewrote the section.

Recodified from 19:31-19.6 56 N.J.R. 807(a), effective 5/6/2024