A4634 —

A4634 1R FISCAL ESTIMATE   LEGISLATIVE FISCAL ESTIMATE [First Reprint] ASSEMBLY, No.

4634 STATE OF NEW JERSEY 219th LEGISLATURE   DATED:INTRODUCED SEPTEMBER 14, 2020     Sponsored by:

MARCHAssemblyman  17,GARY 2021S.     SUMMARY   Synopsis:

AllowsSCHAER corporationDistrict business36 tax(Bergen creditand forPassaic) subcontractingAssemblyman  workGORDON toM. NJ small businesses.

TypeJOHNSON ofDistrict Impact:37 (Bergen) Assemblywoman  ANGELA V.

AnnualMCKNIGHT StateDistrict revenue31 loss(Hudson) to  theCo-Sponsored Generalby: Fund.

AgenciesAssemblymen Affected:Space, Wirths, McGuckin, Catalano, Dancer, Mazzeo, Assemblywoman Reynolds-Jackson, Assemblyman DiMaio, Assemblywomen Dunn, Stanfield and N.Munoz         SYNOPSIS      Allows corporation business tax credit for subcontracting work to NJ small businesses.

Department  ofCURRENT VERSION OF TEXT      As reported by the Treasury.Assembly Commerce and Economic Development Committee on March 8, 2021, with amendments.

     An OfficeAct ofallowing Legislativea Servicescorporation Estimatebusiness Fiscal Impact FY 2022 and Thereafter   Annual State Revenue Loss Indeterminate         ·         The Office of Legislative Services (OLS) notes that the bill’s tax credit willfor reducesubcontracting annualwork State General Fund revenues by an indeterminate amount.  The OLS lacks necessary data to determineNJ the amounts paid by eligible taxpayers to New Jersey small businessesbusinesses, forsupplementing subcontractedP.L.1945, workc.162 in(C.54:10A-1 thiset State;seq.).

thus, the OLS cannot quantify the magnitude of the bill’s impact.    ·             TheBe OLSIt furtherEnacted notes that the tax credit provided by the billSenate is non-refundable and doesGeneral notAssembly allowof forthe carryforward. State Someof taxpayersNew thereforeJersey: may not be able to claim their entire credit amounts.

        BILL1.    DESCRIPTIONa.    A      taxpayer Thisshall billbe allowsallowed a corporationcredit businessagainst taxthe taxpayer1tax1 imposed pursuant to claimsection a5 creditof againstP.L.1945, thec.162 tax(C.54:10A-5) in an amount equal to one percent of the amount the taxpayer paid to a New Jersey small businessesbusiness for subcontracted work.work performed in New Jersey during the privilege period.

          ForAs purposesused ofin thethis credit,section: subcontracted work is that work which the taxpayer subcontracts to New Jersey small businesses for performance of all or an element of the taxpayer’s own contracted duties.

 In     addition,“New theJersey subcontractedsmall workbusiness” mustmeans bea performedbusiness inentity Newor Jerseyperson andlocated thein subcontractorNew mustJersey, havewith lessfewer than 50 total employees.

FISCALA ANALYSIS“New  Jersey EXECUTIVEsmall BRANCHbusiness”  shall      not Noneinclude received.any business entity or person that is an affiliate, subsidiary, or under the control of the taxpayer.

      OFFICE“Subcontracted OFwork” LEGISLATIVEmeans SERVICESthe  work       The OLS notes that the bill’staxpayer taxsubcontracts creditto willa reduceNew annualJersey Statesmall Generalbusiness Fundfor revenuesperformance byof anall indeterminateor amount. an Theelement OLSof lacks necessary data to determine the amountstaxpayer’s paidown bycontracted eligibleduties. taxpayers to New Jersey small businesses for subcontracted work in this State;

thus,     b.    The director shall prescribe the OLSorder cannotof quantifypriority of the magnitudeapplication of the bill’scredit impact. allowed Thepursuant OLSto furtherthis notessection thatand theany taxother creditcredits providedallowed byagainst the billtax isimposed non-refundablepursuant andto doessection not5 allowof forP.L.1945, carryforward.c.162 (C.54:10A-5).

 SomeThe taxpayersamount thereforeof maythe credit allowed pursuant to this section, when taken together with any other credits allowed, shall not beexceed able50 percent of the tax liability otherwise due and shall not reduce the tax liability to claiman theiramount entireless creditthan amounts.the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5).

       c.     Section:The director shall promulgate procedures by which a taxpayer may certify that the taxpayer qualifies for the credit allowed pursuant to this section.

Revenue,  Finance     2.    This act shall take effect immediately and Appropriationsapply Analyst:to privilege periods beginning after enactment.

Jordan M.

DiGiovanni Revenue Analyst Approved:

Thomas Koenig Legislative Budget and Finance Officer     This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

  This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).