N.J. Admin. Code § 19:31T-1.6

Current through Register Vol. 56, No. 12, June 17, 2024

Section 19:31T-1.6 - Tax credit amounts; bonus amount; carryforward of tax credits

(a) An approved applicant, upon final approval of an application to the Authority and the Director for film tax credits pursuant to N.J.A.C. 19:31T-1.7(e), shall be allowed a credit against the tax imposed pursuant to N.J.S.A. 54:10A-5 or the tax otherwise due for the taxable year pursuant to N.J.S.A. 54A:1-1 et seq., corresponding to the tax credit vintage year, in an amount equal to:

1. For applications received prior to July 2, 2021, 35 percent of the qualified film production expenses of the approved applicant during a privilege period or taxable year that are incurred for services performed and tangible personal property purchased through vendors whose primary place of business is located in Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Mercer, or Salem County.

2. For applications received prior to January 7, 2021, 30 percent of the qualified film production expenses not included at (a)1 above.

3. For applications received on or after January 7, 2021, and prior to July 2, 2021, 35 percent of the qualified film production expenses of the approved applicant during a privilege period or taxable year.

4. For applications received on or after July 2, 2021, the following percent of the qualified film production expenses of the approved applicant during a privilege period or taxable year:

i. For such expenses that are incurred for services performed and tangible personal property purchased for use at a sound stage or other location that is located in the State within a 30-mile radius of the intersection of Eighth Avenue/Central Park West, Broadway, and West 59th Street/Central Park South, New York, New York:

(1) For applications received after July 6, 2023, 35 percent for applications from film-lease production companies and studio partners; and

(2) For all other applications, 30 percent.

ii. For all other expenses:

(1) For applications received after July 6, 2023, 40 percent for applications from film-lease production companies and studio partners; and

(2) For all other applications, 35 percent.

5. For purposes of this subsection, wages, salaries, and other compensation shall be considered Statewide expenses.

(b) An approved applicant, upon final approval of an application to the Authority and the Director for digital media tax credits pursuant to N.J.A.C. 19:31T-1.7(e), shall be allowed a credit against the tax imposed pursuant to N.J.S.A. 54:10A-5 or the tax otherwise due for the taxable year pursuant to N.J.S.A. 54A:1-1 et seq., corresponding to the tax credit vintage year in an amount equal to:

1. For applications received prior to January 12, 2022:

i. Twenty-five percent of the qualified digital media content production expenses of the approved applicant during a privilege period or taxable year that are incurred for services performed and tangible personal property purchased through vendors whose primary place of business is located in Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Mercer, or Salem County.

ii. Twenty percent of the qualified digital media content production expenses during a privilege period or taxable year of the approved applicant not included at (b)1i above.

2. For applications received on or after January 12, 2022:

i. Thirty-five percent of the qualified digital media content production expenses of the approved applicant during a privilege period or taxable year that are incurred for services performed and tangible personal property purchased through vendors whose primary place of business is located in Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Mercer, or Salem County.

ii. Thirty percent of the qualified digital media content production expenses during a privilege period or taxable year of the approved applicant not included at (b)2i above.

3. For purposes of this subsection, wages, salaries, and other compensation shall be considered Statewide expenses pursuant to (b)1ii and 2ii above.

(c) No tax credit shall be allowed pursuant to this subchapter for any costs or expenses included in the calculation of any other tax credit or exemption granted pursuant to a claim made on a tax return filed with the Director, or included in the calculation of an award of business assistance or incentive, for a period of time that coincides with the privilege period or taxable year for which a tax credit authorized pursuant to this subchapter is allowed. No tax credit shall be allowed for expenses in an application if it has already been included in the calculation of an award pursuant to (a) or (b) above.

(d) A business that is not a "taxpayer" as defined and used in the Corporation Business Tax Act, N.J.S.A. 54:10A-1 et seq., and, therefore, is not directly allowed a credit pursuant to this subchapter, but is a business entity that is classified as a partnership for Federal income tax purposes and is ultimately owned by a business entity that is a "corporation" as defined at N.J.S.A. 54:10A-4c, or a limited liability company formed pursuant to the Revised Uniform Limited Liability Company Act, N.J.S.A. 42:2C-1 et seq., or qualified to do business in this State as a foreign limited liability company, with one member, and is wholly owned by the business entity that is a "corporation" as defined at N.J.S.A. 54:10A-4c, but otherwise meets all other requirements of this subchapter, shall be considered an eligible applicant pursuant to this program.

(e) A business entity that is not a gross income "taxpayer" as defined and used at N.J.S.A. 54A:1-1 et seq., and, therefore, is not directly allowed a credit pursuant to this subchapter, but otherwise meets all the other requirements of this subchapter, shall be considered an eligible applicant pursuant to this program, and the application of an otherwise allowed credit amount shall be distributed to appropriate gross income taxpayers pursuant to the other requirements of this subchapter.

(f) A business entity that is classified as a partnership for Federal income tax purpose shall not be allowed a tax credit pursuant to this section directly, but the amount of the tax credit of a gross income taxpayer in respect of a distributive share of entity income shall be determined by allocating to the gross income taxpayer that proportion of the tax credit acquired by the entity that is equal to the gross income 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 gross income taxpayer's taxable year.

(g) A New Jersey S Corporation shall not be allowed a tax credit pursuant to this subchapter directly, but the amount of tax credit of a gross income taxpayer in respect of a pro rata share of S Corporation income, shall be determined by allocating to the gross income taxpayer that proportion of the tax credit acquired by the New Jersey S Corporation that is equal to the gross income 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 with the gross income taxpayer's taxable year.

(h) The order of priority in which the tax credit allowed by this section and any other credits allowed by law may be taken, shall be as prescribed by the Director.

(i) The amount of the tax credit applied pursuant to this section against the tax imposed pursuant to N.J.S.A. 54:10A-5, for a privilege period, when taken together with any other payments, credits, deductions, and adjustments allowed by law shall not reduce the tax liability of the corporate business taxpayer to an amount less than the statutory minimum provided at N.J.S.A. 54:10A-5.

(j) The amount of the tax credit applied pursuant to this section against the tax otherwise due pursuant to N.J.S.A. 54A:1-1 et seq., for a taxable year, when taken together with any other payments, credits, deductions, and adjustments allowed by law shall not reduce the tax liability of the gross income taxpayer to an amount less than zero.

(k) The amount of tax credit otherwise allowable pursuant to this section that cannot be applied for the taxable year due to the limitations of this subsection or pursuant to other provisions at N.J.S.A. 54:10A-1 et seq., or 54A:1-1 et seq., may be carried forward, if necessary, to the seven privilege periods or taxable years following the privilege period or taxable year for which the credit was allowed.

(l) Notwithstanding any limit at (a) or (b) above, the tax credits awarded may be increased pursuant to the following:

1. An applicant shall be allowed an increase in the tax credit against the tax imposed pursuant to N.J.S.A. 54:10A-5, or pursuant to the New Jersey Gross Income Tax Act, N.J.S.A. 54A:1-1 et seq., in an amount equal to two percent of the qualified film or digital media content production expenses, provided that the application is accompanied by a diversity plan, outlining:

i. The intention to prioritize the hiring of minority persons and women in an amount of not less than 15 percent for applications approved prior to February 26, 2024, and 25 percent for applications approved thereafter of the total hired for the qualified film or digital medial production;

ii. The efforts made, or to be made, in the recruitment, selection, appointment, promotion, training, and related employment areas to ensure equal employment opportunities for minority persons and women;

iii. The specific goals, which may include advertising and recruitment actions, for hiring minority persons and women, including full-time jobs for full-time or full-time equivalent employees in New Jersey for production staff and crew, entry level positions, management positions, and talent-related positions; and

iv. Whether the applicant intends to participate, or has participated, in training, education, and recruitment programs that are organized in cooperation with State colleges and universities, labor organizations, and the motion picture industry and are designed to promote and encourage the training and hiring of minority persons and women.

2. The amount of the increase to a tax credit allowed pursuant to (l)1 above shall increase to four percent of the qualified film or digital media content production expenses of the approved applicant if the diversity plan, in addition to meeting the requirements at (l)1 above, outlines specific goals that include hiring no less than 25 percent of persons as performers in the film or digital media production who:

i. Are women or members of a minority group;

ii. Have been residents of New Jersey for at least 12 months preceding the beginning of filming or recording; and

iii. Are members of a bona fide labor union representing film and television performers.

N.J. Admin. Code § 19:31T-1.6

Amended by R.2020 d.007, effective 1/6/2020.
See: 51 N.J.R. 1256(a), 52 N.J.R. 58(b).
Rewrote (l)1ii and (l)1iv.
Special amendment, R.2024 d.022, effective 2/26/2024 (to expire 2/22/2025).
See: 56 N.J.R. 491(a),.
Rewrote the section.

Recodified from 19:31-21.6 56 N.J.R. 807(a), effective 5/6/2024