New Jersey § 34:1b-7

§ 34:1b-7.

a. The New Jersey Economic Development Authority shall establish within the New Jersey

Emerging Technology and Biotechnology Financial Assistance Program established pursuant

to P.L.1995, c. 137 ( C.34:1B-7.37 et seq. ), a corporation business tax benefit certificate transfer program to allow new or

expanding emerging technology and biotechnology companies in this State with unused

amounts of research and development tax credits otherwise allowable which cannot be

applied for the credit's tax year due to the limitations of subsection b. of section

1 of P.L.1993, c. 175 ( C.54:10A-5.24 ) and unused prior net operating loss conversion carryover or net operating loss carryover

pursuant to section 4 of P.L.1945, c. 162 ( C.54:10A-4 ), to surrender those tax benefits for use by other corporation business taxpayers

in this State, provided that the taxpayer receiving the surrendered tax benefits is

not affiliated with a corporation that is surrendering its tax benefits under the

program established under P.L.1997, c. 334 . For the purposes of this section, the test of affiliation is whether the same entity

directly or indirectly owns or controls five percent or more of the voting rights

or five percent or more of the value of all classes of stock of both the taxpayer

receiving the benefits and a corporation that is surrendering the benefits. The tax benefits may be used on the corporation business tax returns to be filed

by those taxpayers in exchange for private financial assistance to be provided by

the corporation business taxpayer that is the recipient of the corporation business

tax benefit certificate to assist in the funding of costs incurred by the new or expanding

emerging technology and biotechnology company. For purposes of this subsection, a member of a combined group may sell prior net

operating loss conversion carryover to other members of the combined group, if otherwise

applicable and allowable under section 2 of P.L.1997, c. 334 ( C.54:10A-4.2 ) and this section; provided, however, such sale of prior net operating loss conversion

carryover shall be made at arm's length price at the same rate as though the sale

was to an unrelated taxpayer. b. The authority, in cooperation with the Division of Taxation in the Department of

the Treasury, shall review and approve applications by new or expanding emerging technology

and biotechnology companies in this State with unused but otherwise allowable carryover

of research and development tax credits pursuant to section 1 of P.L.1993, c. 175 ( C.54:10A-5.24 ), and unused but otherwise allowable prior net operating loss conversion carryover

or net operating loss carryover pursuant to section 4 of P.L.1945, c. 162 ( C.54:10A-4 ), to surrender those tax benefits in exchange for private financial assistance to

be made by the corporation business taxpayer that is the recipient of the corporation

business tax benefit certificate in an amount equal to at least 80 percent of the amount of the surrendered tax benefit. Provided that the amount of the surrendered tax benefit for a surrendered research

and development tax credit carryover is the amount of the credit, and provided that

the amount of the surrendered tax benefit for a surrendered prior net operating loss

conversion carryover or net operating loss carryover is that amount for the tax year

in which the benefit is transferred and subsequently multiplied by the corporation

business tax rate provided pursuant to subsection (c) of section 5 of P.L.1945, c.

162 ( C.54:10A-5 ). The authority shall be authorized to approve the transfer of no more than $75,000,000

of tax benefits in a State fiscal year. If the total amount of transferable tax benefits requested to be surrendered by

approved applicants exceeds $75,000,000 for a State fiscal year, the authority, in

cooperation with the Division of Taxation in the Department of the Treasury, shall

not be authorized to approve the transfer of more than $75,000,000 for that State

fiscal year and shall allocate the transfer of tax benefits by approved companies

using the following method: (1) an eligible applicant with $250,000 or less of transferable tax benefits shall

be authorized to surrender the entire amount of its transferable tax benefits; (2) an eligible applicant with more than $250,000 of transferable tax benefits shall

be authorized to surrender a minimum of $250,000 of its transferable tax benefits; (3) (Deleted by amendment, P.L.2009, c. 90 .) (4) an eligible applicant with more than $250,000 shall also be authorized to surrender

additional transferable tax benefits determined by multiplying the applicant's transferable

tax benefits less the minimum transferable tax benefits that company is authorized

to surrender under paragraph (2) of this subsection by a fraction, the numerator of

which is the total amount of transferable tax benefits that the authority is authorized

to approve less the total amount of transferable tax benefits approved under paragraphs

(1), (2), and (5) of this subsection and the denominator of which is the total amount

of transferable tax benefits requested to be surrendered by all eligible applicants

less the total amount of transferable tax benefits approved under paragraphs (1),

(2), and (5) of this subsection; (5) The authority shall establish the boundaries for three innovation zones to be

geographically distributed in the northern, central, and southern portions of this

State. Of the $75,000,000 of transferable tax benefits authorized for each State fiscal

year, $15,000,000 shall be allocated for the surrender of transferable tax benefits exclusively by

new and expanding emerging technology and biotechnology companies that operate within

the boundaries of the innovation zones or opportunity zones, or for new and expanding emerging technology and biotechnology

companies that are certified as a woman- or minority-owned business at the time of

program application , except that any portion of the $15,000,000 that is not so approved shall be available for that State fiscal year for the surrender

of transferable tax benefits by new and expanding emerging technology and biotechnology

companies that do not operate within the boundaries of an innovation zone or opportunity zone, or for a new and expanding emerging technology and biotechnology

company that is certified as a woman- or minority-owned business at the time of program

application . If the total amount of transferable tax benefits that would be authorized using the

above method exceeds $75,000,000 for a State fiscal year, then the authority, in cooperation

with the Division of Taxation in the Department of the Treasury, shall limit the total

amount of tax benefits authorized to be transferred to $75,000,000 by applying the

above method on an apportioned basis. For purposes of this section transferable tax benefits include an eligible applicant's

unused but otherwise allowable prior net operating loss conversion carryover or net

operating loss carryover determined pursuant to section 4 of P.L.1945, c. 162 ( C.54:10A-4 ) for the tax year in which the benefit is transferred and subsequently multiplied

by the corporation business tax rate as provided in subsection (c) of section 5 of

P.L.1945, c. 162 ( C.54:10A-5 ) plus the total amount of the applicant's unused but otherwise allowable carryover

of research and development tax credits. An eligible applicant's transferable tax benefits shall be limited to net operating

losses and research and development tax credits that the applicant requests to surrender

in its application to the authority and shall not, in total, exceed the maximum amount

of tax benefits that the applicant is eligible to surrender. No application for a corporation business tax benefit transfer certificate shall be

approved in which the new or expanding emerging technology or biotechnology company

(1) has demonstrated positive net operating income in any of the two previous full

years of ongoing operations as determined on its financial statements issued according

to generally accepted accounting standards endorsed by the Financial Accounting Standards

Board; or (2) is directly or indirectly at least 50 percent owned or controlled by

another corporation that has demonstrated positive net operating income in any of

the two previous full years of ongoing operations as determined on its financial statements

issued according to generally accepted accounting standards endorsed by the Financial

Accounting Standards Board or is part of a consolidated group of affiliated corporations,

as filed for federal income tax purposes, that in the aggregate has demonstrated positive

net operating income in any of the two previous full years of ongoing operations as

determined on its combined financial statements issued according to generally accepted

accounting standards endorsed by the Financial Accounting Standards Board. For purposes of this subsection, a member of a combined group may sell prior net operating

loss conversion carryover to other members of the combined group, if otherwise applicable

and allowable under section 2 of P.L.1997, c. 334 ( C.54:10A-4.2 ) and this section; provided, however, such sale of prior net operating loss conversion

carryover shall be made at arm's length price at the same rate as though the sale

was to an unrelated taxpayer. The maximum lifetime value of surrendered tax benefits that a corporation shall be

permitted to surrender pursuant to the program is $20,000,000. Applications must be received on or before June 30 of each State fiscal year. The authority, in consultation with the Division of Taxation, shall establish rules

for the recapture of all, or a portion of, the amount of a grant of a corporation

business tax benefit certificate from the new or expanding emerging technology and

biotechnology company having surrendered tax benefits pursuant to this section in

the event the taxpayer fails to use the private financial assistance received for

the surrender of tax benefits as required by this section or fails to maintain a headquarters

or a base of operation in this State during the five years following receipt of the

private financial assistance; except if the failure to maintain a headquarters or

a base of operation in this State is due to the liquidation of the new or expanding

emerging technology and biotechnology company. c. The authority, in cooperation with the Division of Taxation in the Department of

the Treasury, shall review and approve applications by taxpayers under the Corporation

Business Tax Act (1945), P.L.1945, c. 162 ( C.54:10A-1 et seq. ), to acquire surrendered tax benefits approved pursuant to subsection b. of this

section which shall be issued in the form of corporation business tax benefit transfer

certificates, in exchange for private financial assistance to be made by the taxpayer

in an amount equal to at least 80 percent of the amount of the surrendered tax benefit of an emerging technology or biotechnology

company in the State. A corporation business tax benefit transfer certificate shall not be issued unless

the applicant certifies that as of the date of the exchange of the corporation business

tax benefit certificate it is operating as a new or expanding emerging technology

or biotechnology company and has no current intention to cease operating as a new

or expanding emerging technology or biotechnology company. The managerial member of a combined group shall be the member that acquires a corporation

business tax benefit certificate on behalf of the combined group for use on the combined

return. The private financial assistance shall assist in funding expenses incurred in connection

with the operation of the new or expanding emerging technology or biotechnology company

in the State, including but not limited to the expenses of fixed assets, such as the

construction and acquisition and development of real estate, materials, start-up,

tenant fit-out, working capital, salaries, research and development expenditures and

any other expenses determined by the authority to be necessary to carry out the purposes

of the New Jersey Emerging Technology and Biotechnology Financial Assistance Program. The authority shall require a corporation business taxpayer that acquires a corporation

business tax benefit certificate to enter into a written agreement with the new or

expanding emerging technology or biotechnology company concerning the terms and conditions

of the private financial assistance made in exchange for the certificate. The written agreement may contain terms concerning the maintenance by the new or

expanding emerging technology or biotechnology company of a headquarters or a base

of operation in this State. d. (Deleted by amendment, P.L.2009, c. 90 .)