Hundreds of New Jersey Business Employment Incentive Program (“BEIP”) Grant recipients may be eligible to convert their BEIP Grant to a refundable tax credit under Senate Bill 3232/Assembly Bill 4834 (S-3232/A-4834), which the State Legislature approved on December 17, 2015 and Governor Christie signed into law on January 11, 2016. If your business is a BEIP Grant recipient, Gibbons can assist you with the process of evaluating and implementing a BEIP conversion.
Since the enactment of BEIP in 1996, New Jersey has entered into 499 BEIP agreements with businesses creating approximately 110,000 jobs and resulting in $12 billion in total economic activity. In 2013, the New Jersey Legislature enacted the “Economic Opportunity Act of 2013” which sunset BEIP and created the Grow New Jersey Assistance Program. The State has subsequently not fully funded BEIP Grant payments in the annual State budget.
S-3232/A-4834 allows a business that is eligible to receive a BEIP Grant to direct the New Jersey Economic Development Authority (“NJEDA”) to convert its BEIP Grant to a refundable tax credit that would not be subject to the annual appropriations process. These tax credits may be applied against the business’ corporate tax liability, insurance premium tax liability, or foreign insurance tax liability. A business without these tax liabilities can apply for a tax credit transfer certificate that allows the tax credit to be sold or assigned, in full or in part, to any other person that may have a corporate, gross income, or insurance premium tax liability.
A business approved for a BEIP Grant prior to the enactment of S-3232/A-4834 must notify the NJEDA, within 180 days of the bill being signed into law, to convert its BEIP Grant to a tax credit. The decision to convert the grant to a tax credit is irrevocable.
The tax credits shall be issued according to a specific schedule outlined in the legislation, which varies depending upon the year the BEIP Grant accrued. Approved tax credits may only be applied in the tax period for which they are issued and cannot be carried forward. If the tax credit exceeds the amount of tax liability otherwise due from a business that pays corporate business taxes, the amount in excess is deemed an overpayment and the business shall receive a refund without interest.
Because of the 180 day timeframe for election, BEIP Grant recipients should begin the process of evaluating this opportunity to convert BEIP Grants to tax credits as soon as possible. We will continue to monitor S-3232/A-4834 and the NJEDA regulatory and application process.