Newark Urban Enterprise Zone

Corporation Business Tax

1. How is the new employee tax credit granted?
2. What is the difference between the two credits?
3. How long must the new employee be employed?
4. How is this credit claimed?
5. How much credit is allowed?
6. Is the unused credit in any tax year lost?
7. Can the $500/$1,500 tax credit apply to all UEZ certified bank employees (including branches) or by a branch method?
8. What corporation business tax benefits are available to qualified businesses located within an Urban Enterprise Zone-impacted business district?

1. How is the new employee tax credit granted?
A qualified business which is not retail sales or warehousing oriented, may be entitled to an employee tax credit. It is available to corporations subject to the Corporation Business Tax which hire new employees at the zone location, after they become qualified. The corporation may claim either a $1,500 or $500 credit for each new employee, provided that all criteria are met.

2. What is the difference between the two credits?
A one-time credit of $1,500 is allowed for each new full-time, permanent employee who resides in any municipality which contains a zone, and immediately prior to employment by the qualified business was unemployed for at least 90 days or dependent upon public assistance as the primary source of income. A one-time credit of $500 is allowed for new full-time permanent employees who do not meet the qualification for the $1,500 tax credit, but are residents of any municipality in which a designated enterprise zone is located, and were not employed at a location within the qualifying municipality immediately prior to employment by the qualified business. The credit is available only for new full-time permanent employees who have been employed by the qualified business for at least six continuous months during the year for which the credit is claimed. For a new employee to be considered a full-time permanent employee, the total number of full-time permanent employees, including the new employee, employed by the qualified business during the calendar year must exceed the greatest number of full-time permanent employees employed in the zone by the qualified business during any prior calendar year since the zone was designated.

3. How long must the new employee be employed?
A tax credit may be available for each new permanent full-time employee who was hired in the preceding tax year, and employed for at least six consecutive months during the tax year for which the credit is claimed, provided that the employee works at the business location within the designated zone. For example, if a corporation is on a calendar year, it can hire new employees between April 20, 2000 and December 31, 2000. None of them can result in a 2000 credit, whether employed more than 6 months, or less, in 2000. Any qualifying employees hired in 2000 who work continuously through June 30, 2001 (6 months) can result in the credit for the 2001 tax-year C.B.T. return.

4. How is this credit claimed?
To claim the credit, an employer must file a completed CBT Form 300 with the New Jersey Corporation Business Tax Return (CBT-100). The credit is claimed on page one (1) of the return. The Form 300 can be obtained through the Forms Request System, (800) 323-4400.

5. How much credit is allowed?
There is no maximum limit on the credit. However, only 50% of the tax otherwise due may be offset by the credit in any tax year. Also, the minimum tax of $25.00 (domestic) or $50.00 (foreign) must be paid.

6. Is the unused credit in any tax year lost?
No. Unused credits are carried over to succeeding tax years and may be applied against 50% of the tax then due, up to the later of the date of termination of the zone or 20 years from the date on which Corporate Business Tax was first payable.

7. Can the $500/$1,500 tax credit apply to all UEZ certified bank employees (including branches) or by a branch method?
The UEZ Act provides in pertinent part: "Any qualified business... actively engaged in the conduct of business from a location within an enterprise zone ... which business at that location consists primarily of manufacturing or other business which is not retail sales or warehousing oriented, shall receive an enterprise zone employee tax credit ... for each new full-time permanent employed at that location . . ." N.J.S.A. 52:27H-78. The Division of Taxation would allow a business to take credit with regard to each location that meets all three of the following criteria:
(1) the location is certified as a "qualified business" by the UEZ Authority
(2) the location consists of a business that is not retail sales or warehousing oriented
(3) the employees meeting the statutory criteria are actually and "physically" working at the location.

8. What corporation business tax benefits are available to qualified businesses located within an Urban Enterprise Zone-impacted business district?
No corporation business tax benefits are available. The only benefit available to qualified businesses located within the Urban Enterprise Zone-impacted business district is the ability to collect sales tax at a reduced rate of 50% of most items of tangible personal property.