State and Local Tax (SALT) | | Oct 18, 2013
Summary.On September 18, 2013, the New Jersey Opportunity Act of 2013 merged the state’s five existing tax incentive programs into two and lowered the threshold to qualify.
Background. Effective September 18, 2013, the New Jersey Opportunity Act of 2013 prohibits the Economic Development Authority from acting on new applications under the Urban Transit Hub Tax Credit Program, the Business Employment Incentive Program, and the Business Retention and Relocation Assistance Grant Program. The Authority must act on already pending applications by year end. The Act also expands the Grow New Jersey Assistance Program (GROW NJ) and the Economic Redevelopment and Growth Grant Program (ERG). These two programs sunset on July 1, 2019. For a period of up to twenty years, the revised ERG program provides a grant of tax benefits up to 75% of the annual incremental state tax or local tax revenue or 85% if the company is located in a Garden State Growth Zone. The ERG program supports real estate development projects that have a funding gap to service its project debt under a standard financing arrangement. The GROW NJ program expands the areas of the state where businesses can qualify for GROW NJ tax credits, reduces the capital investment threshold, and lowers the employment eligibility requirements for participating in the program. Additionally, the Act provides bonuses to encourage development in smart growth areas in the state, including by lowering the requirements for certain areas. Certain retailers will now also qualify under the amended act. The GROW NJ program offers transferable tax credits between $500 and $5,000 per year and bonuses per each job created or retained. The credits are available for a period of up to ten years.
The Act also creates Garden State Growth Zone Development Entities, which is authorized to redevelop, clear, re-plan property within their Zones. If certain requirements are met, an Entity that owns real property within the Zone can receive a property tax exemption.
Prager’s Take. Taxpayers who have already filed applications under the existing programs should consult with their tax advisors to see if they can increase their claims under the amended programs. Other taxpayers should check to see if they now qualify for the expanded programs. Please contact Chris Vignone, Principal at Prager Metis, if you have any questions.