A1277

An Act providing corporation business tax and gross income tax credits for employers who allow their employees to telecommute, supplementing P.L.1945, c.162 and Title 54A of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. A taxpayer shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), in an amount equal to 1% of that part of the salary and wages paid by the taxpayer during the privilege period to a qualified residential telecommuting employee residing in New Jersey during the privilege period multiplied by the percentage of the services that are part of the employee's normal workweek that are performed in the employee's residence.

b. As used in this section,

"Qualified residential telecommuting employee" means a salaried or hourly employee of the taxpayer who utilizes telecommuting and who, pursuant to a written residential telecommuting work arrangement between the taxpayer and that employee, regularly performs a portion of the services that are part of that employee's normal workweek in the employee's residence in this State, without making any work-related commute trips on the day or days that the employee is telecommuting, and is not directly supervised in the performance of the employee's duties while at the employee's residence;

"Residential telecommuting work arrangement" means a written contract between the taxpayer and employee defining the responsibilities of the taxpayer and employee with respect to a job allowing residential telecommuting; and

"Telecommuting" means an off-site arrangement that permits an employee to work in the employee's residence for all or part of the workweek.

c. The amount of the credits applied under this section for a privilege period, when taken together with any other credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162, shall not exceed 50% of the tax liability otherwise due and shall not reduce the tax liability to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162. The director shall determine the order in which credits allowed under this section and any other credits shall be taken. A credit allowed under this section shall be in addition to the credit allowed to the taxpayer pursuant to paragraph (5) of subsection b. of section 1 of P.L.1993, c.150 (C.27:26A-15), notwithstanding that the commuter transportation benefit under that section was based upon costs to the employer of telecommuting incurred in the same privilege period that the salary or wages were paid to the qualified residential telecommuting employee. The amount of the credit otherwise allowable under this section which cannot be applied for the privilege period due to the limitations of this subsection or for any other reason may be carried over, if necessary to the seven privilege periods following a credit's privilege period.

d. A taxpayer claiming a credit under this section shall file with the director, on a form prescribed by director, for each qualified residential telecommuting employee the following information which shall include the percentage of workdays the employee telecommutes. The taxpayer shall maintain records of this information and the number of workdays the employee works in the employee's residence and the number of workdays the employee worked for the employer in another location. A copy of this information required to be filed with the director shall be made available to the qualified residential telecommuting employee and may be provided as part of the statement as to tax withheld on wages required to be furnished by an employer to an employee pursuant to subsection (c) of N.J.S.54A:8-6.

2. a. A taxpayer shall be allowed a credit against the tax otherwise due for the taxable year under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., in an amount equal to 1% of that part of the salary and wages paid by the taxpayer during the taxable year to a qualified residential telecommuting employee residing in New Jersey during the taxable year multiplied by the percentage of the services that are part of the employee's normal workweek that are performed in the employee's residence.

b. As used in this section,

"Qualified residential telecommuting employee" means any salaried or hourly employee of the taxpayer who utilizes telecommuting and who, pursuant to a written residential telecommuting work arrangement between the taxpayer and that employee, regularly performs a portion of the services that are part of that employee's normal workweek in the employee's residence, without making any work-related commute trips on the day or days that the employee is telecommuting, and is not directly supervised in the performance of the employee's duties while at the employee's residence;

"Telecommuting" means an off-site arrangement that permits an employee to work in the employee's residence for all or part of the workweek.

c. The amount of the credits applied under this section for a taxable year, when taken together with any other credits allowed against the tax imposed pursuant to N.J.S.54A:1-1 et seq., shall not reduce a taxpayer's tax liability otherwise due in any taxable year by more than 50% of the amount of tax otherwise due. The director shall determine the order in which credits allowed pursuant to this section and any other credits shall be taken. The amount of the credit otherwise allowable under this section which cannot be applied for the taxable year due to the limitations of this subsection or for any other reason may be carried over, if necessary to the seven taxable years following a credit's taxable year.

d. A partnership shall not be allowed a credit under this section directly, but the amount of credit of a taxpayer in respect of a distributive share of partnership income under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., shall be determined by allocating to the taxpayer that proportion of the credit acquired by the partnership that is equal to the taxpayer's share, whether or not distributed, of the total distributive income or gain of the partnership for its taxable year ending within or with the taxpayer's taxable year. For the purposes of subsection c. of this section, the amount of tax liability which would be otherwise due of a taxpayer is that proportion of the total liability of the taxpayer that the taxpayer's share of the partnership income or gain included in gross income bears to the total gross income of the taxpayer. Provided further, however, that the portion of any credit allowed pursuant to this subsection shall be in addition to any portion of the credit acquired by the partnership and allowed to the taxpayer pursuant to paragraph (5) of subsection b. of section 1 of P.L.1993, c.150 (C.27:26A-15), notwithstanding that the commuter transportation benefit under that section was based upon costs to the employer of telecommuting. The amount of credit of a taxpayer in respect of a distributive share of partnership income otherwise allowable under this section which cannot be applied for the taxable year due to the limitations of this subsection or for any other reason may be carried over by the taxpayer, if necessary to the seven taxable years following a credit's taxable year.

e. A taxpayer claiming a credit under this section shall file with the director, on a form prescribed by director, for each qualified residential telecommuting employee the following information which shall include the percentage of workdays the employee telecommutes. The taxpayer shall maintain records of this information and the number of workdays the employee works in the employee's residence and the number of workdays the employee worked for the employer in another location. A copy of this information required to be filed with the director shall be made available to the qualified residential telecommuting employee and may be provided as part of the statement as to tax withheld on wages required to be furnished by an employer to an employee pursuant to subsection (c) of N.J.S.54A:8-6.

3. This act shall take effect immediately and sections 1 and 2 shall apply respectively to privilege periods and taxable years beginning after enactment.

STATEMENT

This bill provides corporation business and gross income tax credits to employers who allow their employees to regularly telecommute pursuant to a structured plan approved by the employer. A credit equals one percent of the portion of wages and salaries paid to employees for the part of the workweek that they regularly telecommute. For example, for telecommuting two out of five work days per week, the credit of one percent will be calculated based upon 40 percent of the remuneration paid to the employee, which is derived from 40 percent of the regular workweek that the employee telecommutes.

Telecommuting arrangements benefit communities, employers, and employees. They decrease the number of vehicle miles traveled by New Jersey commuters in New Jersey communities, thereby reducing overall gasoline consumption and improving air quality. While employers benefit from reductions in office space requirements and increased productivity from telecommuting workers, employees can rejoice at less time spent commuting, improved morale, and a better balance between work, commuting, and personal life.