34:11-56a40. Tax credit program to employers of employees with impairments

6. a. There is established in the Department of Labor and Workforce Development a program, administered by the commissioner, to provide tax credits to employers of employees with impairments. The purpose of the program is to provide tax credits to employers of employees with impairments to help to offset the cost to the employer of any wage increases for those employees caused by the enactment of P.L.2019, c.32 (C.34:11-56a4.9 et al.), including the cost to the employer of corresponding increases in payroll taxes that the employer paid on those workers' wages.

b. Prior to January 1, 2025, an employer subject to the provisions of subsections a. and e. of section 5 of P.L 1966, c.113 (C.34:11-56a4) may apply to the commissioner for an award of tax credits under this section. A tax credit allowed pursuant to this section shall be in the amount provided in subsections d. and e. of this section against the corporation business tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) or the gross income tax imposed pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., whichever of the two taxes is applicable to the employer.

c. Prior to January 1, 2028, an employer subject to the provisions of subsections c. and d. of section 5 of P.L 1966, c.113 (C.34:11-56a4) may apply to the commissioner for an award of tax credits under this section. A tax credit allowed pursuant to this section shall be in the amount provided in subsections d. and e. of this section against the corporation business tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) or the gross income tax imposed pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., whichever of the two taxes is applicable to the employer.

d. (1) The final amount of the tax credit provided to an employer for employees with impairments employed by the employer during a tax year shall be a preliminary amount of the tax credit, which is the amount by which the wages and payroll taxes which the employer is required to pay each employee with an impairment the employer employs pursuant to P.L.2019, c.32 (C.34:11-56a4.9 et al.) during the tax year exceeds the amount that the employer actually paid for the employee with an impairment in wages and payroll taxes in the last preceding calendar year (as adjusted pursuant to subparagraph (c) of this paragraph), provided that:

(a) if the number of hours worked during the tax year by an employee with an impairment employed by the employer is equal to the number of hours the employee with an impairment worked for the employer during the last preceding calendar year, then the preliminary amount of the tax credit for each of the hours worked shall be in the amount that remains after the amount actually paid for the employee with an impairment in wages and payroll taxes during the last preceding calendar year (as adjusted pursuant to subparagraph (c) of this paragraph) is subtracted from the amount which is required to be paid for the employee with an impairment in payroll taxes and in wages pursuant to the minimum wage rate which applies to the tax year pursuant to P.L.2019, c.32 (C.34:11-56a4.9 et al.);

(b) if the number of hours worked during the tax year by an employee with an impairment employed by the employer is greater than the number of hours worked by the employee with an impairment employed by the employer during the last preceding calendar year, then the preliminary amount of the tax credit shall be calculated in two parts and the sum of the two parts shall be the preliminary amount of the tax credit. In the first part of the calculation, regarding the hours worked during the tax year which are equal to the number of hours worked during the last preceding calendar year, the preliminary amount of the tax credit shall be calculated in the same manner as the credit is calculated in subparagraph (a) of this paragraph. In the second part of the calculation, regarding the hours worked during the tax year which are in addition to the number of hours worked during the last preceding calendar year, the preliminary amount of the tax credit for each additional hour shall be calculated in the same manner as the credit is calculated in subparagraph (a) of this paragraph, except that it shall be presumed that the additional number of hours worked by the employee with an impairment would have been paid at the minimum wage rate in effect during the last preceding calendar year (as adjusted pursuant to subparagraph (c) of this paragraph), and the preliminary amount of the tax credit for each of those hours of work shall be calculated by subtracting that presumed rate from the actual minimum wage rate for the tax year; and

(c) In making any of the calculations in this paragraph, the actual rate of pay paid to an employee with an impairment in the preceding calendar year shall be increased by whichever is the larger of:

(i) the increase in the State minimum wage that would have occurred, for the applicable tax year, if P.L.2019, c.32 (C.34:11-56a4.9 et al.) had not been enacted; or

(ii) any increase in the federal minimum hourly wage rate set for the applicable tax year pursuant to section 6(a)(1) of the federal "Fair Labor Standards Act of 1938" (29 U.S.C. s.206(a)(1)).

(2) If the number of hours worked during the tax year by an employee with an impairment employed by the employer is less than the number of hours worked during the last preceding calendar year, then the employer shall not be eligible for a tax credit under this section for that tax year for that employee with an impairment.

e. An employer may qualify for a tax credit pursuant to sections 5 through 9 of P.L.2019, c.32 (C.34:11-56a39 to 34:11-56a41, 54:10A-5.42, and 54A:4-18) in a taxable year or privilege period beginning on or after January 1, 2019. An employer who qualifies for a tax credit pursuant to this section with respect to hours worked during a tax year may use the tax credit when determining the employer's estimated tax for the purpose of making installment payments of the tax during that tax year. The commissioner shall, upon request, provide assistance to the employer in estimating the likely amount of the tax credit to assist the employer in determining the amount of the tax credit and the installment payments of the tax during a tax year. For tax years 2019 and 2020, the Director of the Division of Taxation may waive in part, or entirely, penalties for underpayment of taxes in connection with installment payments to the extent that the director finds that the underpayment occurred because of a good faith error of the employer in calculating the amount of the credit. Any misclassification of an employee by an employer who knowingly, in applying for the tax credit, falsely represents an employee as an employee with an impairment shall be regarded as a violation of the applicable State tax law and shall be subject to three times the amount of penalties otherwise provided in that law for violations of the law and, for that violation, the penalty shall not be waived, including during tax years 2019 and 2020.

f. An employer shall not be eligible for a tax credit pursuant to sections 5 through 9 of P.L.2019, c.32 (C.34:11-56a39 to 34:11-56a41, 54:10A-5.42, and 54A:4-18) if the commissioner determines that the employer reduced the wages that the employer paid to any employee with an impairment employed by the employer to be eligible for a tax credit under sections 5 through 9 of P.L.2019, c.32 (C.34:11-56a39 to 34:11-56a41, 54:10A-5.42, and 54A:4-18) in a future year.

g. The combined value of all tax credits approved annually by the commissioner pursuant to this section shall not exceed $10,000,000 in a calendar year. The commissioner shall annually review and report to the Legislature in accordance with section 2 of P.L.1991, c.164 (C.52:14-19.1) on the sufficiency of the tax credit cap authorized pursuant to this subsection and have any recommendations with respect thereto to the Legislature.

L.2019, c.32, s.6.