SENATE, No. 2093

STATE OF NEW JERSEY

218th LEGISLATURE

 

INTRODUCED MARCH 5, 2018

 


 

Sponsored by:

Senator  TROY SINGLETON

District 7 (Burlington)

 

 

 

 

SYNOPSIS

     Reduces corporation business tax rate for certified benefit corporations by 20 percent per privilege period.

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act reducing the corporation business tax rate for certified benefit corporations, amending P.L.1945, c.162 and P.L.2002, c.40, supplementing P.L.1945, c.162.

 

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

 

     1.    Section 5 of P.L.1945, c.162 (C.54:10A-5) is amended to read as follows:

     5.    The franchise tax to be annually assessed to and paid by each taxpayer shall be the greater of the amount computed pursuant to this section or the alternative minimum assessment computed pursuant to section 7 of P.L.2002, c.40 (C.54:10A-5a); provided however, that in the case of a taxpayer that is a New Jersey S corporation, an investment company, a professional corporation organized pursuant to P.L.1969, c.232 (C.14A:17-1 et seq.) or a similar corporation for profit organized for the purpose of rendering professional services under the laws of another state, or a person operating on a cooperative basis under Part I of Subchapter T of the federal Internal Revenue Code of 1986, 26 U.S.C. s.1381 et seq., there shall be no alternative minimum assessment computed pursuant to section 7 of P.L.2002, c.40 (C.54:10A-5a).

     The amount computed pursuant to this section shall be the sum of the amount computed under subsection (a) hereof, or in the alternative to the amount computed under subsection (a) hereof, the amount computed under subsection (f) hereof, and the amount computed under subsection (c) hereof:

     (a)   That portion of its entire net worth as may be allocable to this State as provided in section 6 of P.L.1945, c.162 (C.54:10A-6), multiplied by the following rates:  2 mills per dollar on the first $100,000,000.00 of allocated net worth; 4/10 of a mill per dollar on the second $100,000,000[.00]; 3/10 of a mill per dollar on the third $100,000,000[.00]; and 2/10 of a mill per dollar on all amounts of allocated net worth in excess of $300,000,000[.00]; provided, however, that with respect to reports covering accounting or privilege periods set forth below, the rate shall be that percentage of the rate set forth in this subsection for the appropriate year:

            Accounting or Privilege

            Periods Beginning on or         The Percentage of the Rate

            after:                                        to be Imposed Shall be:

            April 1, 1983                                                   75%

            July 1, 1984                                                     50%

            July 1, 1985                                                     25%

            July 1, 1986                                                     0

     (b)   (Deleted by amendment, P.L.1968, c.250, s.2.)

     (c)   (1) For a taxpayer that is not a New Jersey S corporation , and not a certified benefit corporation pursuant to section 3 of    P.L.    , c.    (C.        ) (pending before the Legislature as this bill) for the entire privilege period for which the taxes are due pursuant to this section, 3 1/4% of its entire net income or such portion thereof as may be allocable to this State as provided in section 6 of P.L.1945, c.162 (C.54:10A-6) plus such portion thereof as is specifically assigned to this State as provided in section 5 of P.L.1993, c.173 (C.54:10A-6.1); provided, however, that with respect to reports covering accounting or privilege periods or parts thereof ending after December 31, 1967, the rate shall be 4 1/4%; and that with respect to reports covering accounting or privilege periods or parts thereof ending after December 31, 1971, the rate shall be 5 1/2%; and that with respect to reports covering accounting or privilege periods or parts thereof ending after December 31, 1974, the rate shall be 7 1/2%; and that with respect to reports covering privilege periods or parts thereof ending after December 31, 1979, the rate shall be 9%; provided however, that for a taxpayer that has entire net income of $100,000 or less for a privilege period and is not a partnership the rate for that privilege period shall be 7 1/2% and provided further that for a taxpayer that has entire net income of $50,000 or less for a privilege period and is not a partnership the rate for that privilege period shall be 6 1/2%.

     (2)   For a taxpayer that is a New Jersey S corporation but is not a certified benefit corporation pursuant to section 3 of P.L.    , c.    (C.        ) (pending before the Legislature as this bill) for the entire privilege period for which the taxes are due pursuant to this section:

     (i)    for privilege periods ending on or before June 30, 1998 the rate determined by subtracting the maximum tax bracket rate provided under N.J.S.54A:2-1 for the privilege period from the tax rate that would otherwise be applicable to the taxpayer's entire net income for the privilege period if the taxpayer were not an S corporation provided under paragraph (1) of this subsection for the privilege period; and

     (ii)   For a taxpayer that has entire net income in excess of $100,000 for the privilege period, for privilege periods ending on or after July 1, 1998, but on or before June 30, 2001, the rate shall be 2%,

     for privilege periods ending on or after July 1, 2001, but on or before June 30, 2006, the rate shall be 1.33%,

     for privilege periods ending on or after July 1, 2006, but on or before June 30, 2007, the rate shall be 0.67%, and

     for privilege periods ending on or after July 1, 2007 there shall be no rate of tax imposed under this paragraph; and

     (iii)  For a taxpayer that has entire net income of $100,000 or less for privilege periods ending on or after July 1, 1998, but on or before June 30, 2001 the rate for that privilege period shall be 0.5%, and for privilege periods ending on or after July 1, 2001 there shall be no rate of tax imposed under this paragraph.

     (iv)  The taxpayer's rate determined under subparagraph (i), (ii), or (iii)   of this paragraph shall be multiplied by its entire net income that is not subject to federal income taxation or such portion thereof as may be allocable to this State pursuant to sections 6 through 10 of P.L.1945, c.162 (C.54:10A-6 through 54:10A-10) plus such portion thereof as is specifically assigned to this State as provided in section 5 of P.L.1993, c.173 (C.54:10A-6.1).

     (3)   For a taxpayer that is a New Jersey S corporation, in addition to the amount, if any, determined under paragraph (2) of this subsection, the tax rate that would otherwise be applicable to the taxpayer's entire net income for the privilege period if the taxpayer were not an S corporation provided under paragraph (1) of this subsection for the privilege period multiplied by its entire net income that is subject to federal income taxation or such portion thereof as may be allocable to this State pursuant to sections 6 through 10 of P.L.1945, c.162 (C.54:10A-6 through 54:10A-10).

     (4)   For a taxpayer that is a certified benefit corporation pursuant to section 3 of P.L.     , c.    (C.       ) (pending before the Legislature as this bill) for the entire privilege period for which the taxes are due pursuant to this section, and subject to the statutory minimum taxes mandated by subsection (e) of this section, the rate shall be 80% of the rate that would have been applied in that privilege period if the taxpayer had not been a certified benefit corporation for that entire privilege period.

     (d)   Provided, however, that the franchise tax to be annually assessed to and paid by any investment company or real estate investment trust, which has elected to report as such and has filed its return in the form and within the time provided in this act and the rules and regulations promulgated in connection therewith, shall, in the case of an investment company, be measured by 40% of its entire net income and 40% of its entire net worth, and in the case of a real estate investment trust, by 4% of its entire net income and 15% of its entire net worth, at the rates hereinbefore set forth for the computation of tax on net income and net worth, respectively, but in no case less than $250, and further provided, however, that the franchise tax to be annually assessed to and paid by a regulated investment company which for a period covered by its report satisfies the requirements of Chapter 1, Subchapter M, Part I, Section 852(a) of the federal Internal Revenue Code shall be $250.

     (e)   The tax assessed to any taxpayer pursuant to this section shall not be less than $25 in the case of a domestic corporation, $50 in the case of a foreign corporation, or $250 in the case of an investment company or regulated investment company.  Provided however, that for privilege periods beginning in calendar year 1994 and thereafter the minimum taxes for taxpayers other than an investment company or a regulated investment company shall be as provided in the following schedule:

     Period Beginning               Domestic                    Foreign

     In Calendar Year                Corporation                 Corporation

                                                Minimum Tax              Minimum Tax

                        1994                            $  50                            $100

                        1995                            $100                            $200

                        1996                            $150                            $200

                        1997                            $200                            $200

                        1998                            $200                            $200

                        1999                            $200                            $200

                        2000                            $200                            $200

                        2001                            $210                            $210

and for calendar years 2002 through 2005 the minimum tax for all taxpayers shall be $500, and for calendar year 2006 through calendar year 2011 the minimum tax for all corporations, and for privilege periods beginning in calendar year 2012 and thereafter the minimum tax for corporations that are not New Jersey S corporations shall be based on the New Jersey gross receipts, as defined for the purposes of this section pursuant to section 7 of P.L.2002, c.40 (C.54:10A-5a), of the taxpayer pursuant to the following schedule:

                New Jersey Gross Receipts:                        Minimum Tax:

                        Less than $100,000                 . . . . . . . .$500

                        $100,000 or more but

                                    less than $250,000      . . . . . . . $750

                        $250,000 or more but

                                    less than $500,000      . . . . . . $1,000

                        $500,000 or more but

                                    less than $1,000,000   . . . . . . $1,500

                        $1,000,000 or more                  . . . . . . $2,000

     and for privilege periods beginning in calendar year 2012 and thereafter the minimum tax for corporations that are New Jersey S corporations shall be based on the New Jersey gross receipts, as defined for the purposes of this section pursuant to section 7 of P.L.2002, c.40 (C.54:10A-5a), of the taxpayer pursuant to the following schedule:

                New Jersey Gross Receipts:                        Minimum Tax:

                        Less than $100,000                 . . . . . . .$375

                        $100,000 or more but

                                    less than $250,000      . . . . . . . $562.50

                        $250,000 or more but

                                    less than $500,000      . . . . . .  $750

                        $500,000 or more but

                                    less than $1,000,000   . . . . . . $1,125

                        $1,000,000 or more                  . . . . . . $1,500

provided however, that for a taxpayer that is a member of an affiliated group or a controlled group pursuant to section 1504 or 1563 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.1504 or 1563, and whose group has total payroll of $5,000,000 or more for the privilege period, the minimum tax shall be $2,000 for the privilege period.

     (f)   In lieu of the portion of the tax based on net worth and to be computed under subsection (a) of this section, any taxpayer, the value of whose total assets everywhere, less reasonable reserves for depreciation, as of the close of the period covered by its report, amounts to less than $150,000, may elect to pay the tax shown in a table which shall be promulgated by the director.

     (g)   Provided however, that for privilege periods beginning on or after January 1, 2001 but before January 1, 2002 the franchise tax annually assessed to and paid by a taxpayer:

     (1)   that is a limited liability company or foreign limited liability company classified as a partnership for federal income tax purposes shall be the amount determined pursuant to the provisions of section 3 of P.L.2001, c.136 (C.54:10A-15.6); or

     (2)   that is a limited partnership or foreign limited partnership classified as a partnership for federal income tax purposes shall be the amount determined pursuant to the provisions of section 4 of P.L.2001, c.136 (C.54:10A-15.7).

     (h)   Provided however, that for privilege periods beginning on or after January 1, 2002 the franchise tax annually assessed to and paid by a taxpayer that is a partnership shall be the amount determined pursuant to the provisions of section 12 of P.L.2002, c.40 (C.54:10A-15.11).

     (i)    (Deleted by amendment, P.L.2008, c.120)

(cf: P.L.2011, c.84, s.1)

 

     2.    Section 7 of P.L.2002, c.40 (C.54:10A-5a) is amended to read as follows:

     7.    a.   For the purposes of this section:

     "Affiliated group" means a group of corporations defined as an affiliated group by section 1504 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.1504, or any successor federal law, that files a consolidated federal income tax return for the privilege period pursuant to sections 1501 through 1504 of the federal Internal Revenue Code of 1986, 26 U.S.C. ss.1501-1504 or any successor federal law.

     "Cost of goods sold" means the cost of goods sold calculated pursuant to the same method used by the taxpayer for the purpose of computing its federal income tax, or other input or expenditure, as determined by the director, as may be necessary to equitably measure the business activity of the taxpayer, multiplied by the allocation factor computed as set forth in section 6 of P.L.1945, c.162 (C.54:10A-6).

     "Member of an affiliated group" means a taxpayer that is part of an affiliated group.

     "New Jersey gross profits" means New Jersey gross receipts reduced by returns and allowances attributable to New Jersey gross receipts, less the cost of goods sold.

     "New Jersey gross receipts" means the receipts of the taxpayer for the privilege period, computed on the cash or accrual basis according to the method of accounting used in the computation of its net income for federal tax purposes arising during the privilege period from:

     (1)   sales of its tangible personal property located within this State at the time of the receipt of or appropriation to the orders where shipments are made to points within this State,

     (2)   sales of tangible personal property located without the State at the time of the receipt of or appropriation to the orders where shipment is made to points within the State,

     (3)   services performed within the State,

     (4)   rentals from property situated, and royalties from the use of patents or copyrights, within the State,

     (5)   all other business receipts earned within the State.

     b.    For privilege periods beginning on or after January 1, 2002, the alternative minimum assessment shall be equal to the amount computed under paragraph (1) or (2) of this subsection pursuant to the election made pursuant to subsection c. of this section:

 

 (1) If New Jersey gross profits are:

the assessment is:

  Not more than $1,000,000

No amount is assessed

  More than $1,000,000 but not

  over $10,000,000

 

.0025 times the gross profits in excess of $1,000,000 multiplied by 1.11111

  More than $10,000,000 but not

  over $15,000,000

 

.0035 times the gross profits

  More than $15,000,000 but not

  over $25,000,000

 

.006 times the gross profits

  More than $25,000,000 but not

  over $37,500,000

 

.007 times the gross profits

  More than $37,500,000

.008 times the gross profits; or

 

 (2) If New Jersey gross receipts are:

 

the assessment is:

  Not more than $2,000,000

No amount is assessed

  More than $2,000,000 but not

  over $20,000,000

 

.00125 times the gross receipts in excess of $2,000,000 multiplied by 1.11111

  More than $20,000,000 but not

  over $30,000,000

 

.00175 times the gross receipts

 

  More than $30,000,000 but not

  over $50,000,000

 

 

.003 times the gross receipts

  More than $50,000,000 but not

  over $75,000,000

 

.0035 times the gross receipts

  More than $75,000,000

.004 times the gross receipts

 

     (3)   The sum of the amounts untaxed for all of the members of an affiliated group or a controlled group pursuant to section 1504 or 1563 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.1504 or 1563, shall not exceed $5,000,000 of gross profits, or shall not exceed $10,000,000 of gross receipts, or, for a group whose members have not all elected the same computation method under this subsection, shall not exceed five times the applicable amounts not subject to assessment of the individual members.

     c.     A taxpayer shall, for the first privilege period for which it is required to compute the alternative minimum assessment pursuant to this section, elect to employ the computation method set forth in paragraph (1) or the computation method set forth in paragraph (2) of subsection b. of this section, which computation method shall be employed by the taxpayer for the computation of the alternative minimum assessment for that privilege period and for the next succeeding four privilege periods, pursuant to regulations and forms as the director may prescribe.  The taxpayer may change its election at any time after the initial five privilege periods; provided however, that any change in the method of computation of the alternative minimum assessment which the taxpayer elects shall be employed by the taxpayer for the privilege period for which the change is effective and for the next four succeeding privilege periods.

     d.  (1) Notwithstanding the provisions of subsection b. of this section, the alternative minimum assessment for a taxpayer for a privilege period, shall not exceed $5,000,000.

     (2)   If five or more taxpayers are members of an affiliated group, the sum of the alternative minimum assessments of each of the members of the affiliated group for a privilege period shall not exceed $20,000,000.  If the sum of the alternative minimum assessment for all members of the affiliated group computed as set forth in subsection b. after application of the maximum set            by paragraph (1) of this subsection would otherwise exceed $20,000,000, the alternative minimum assessment for a member of the affiliated group shall equal the alternative minimum assessment for that member of the affiliated group computed as set forth in subsection b. after application of the maximum set by paragraph (1) of this subsection multiplied by a fraction,  the numerator of which is $20,000,000 and the denominator of which is the sum of the alternative minimum assessments for all members of the affiliated group computed as set forth in subsection b. after application of the maximum set by paragraph (1) of this subsection.

     (3)   For the purpose of calculating the alternative minimum assessment, the amount of the sum of the alternative minimum assessments of the members of an affiliated group shall not, when added to the amounts of the members' tax computed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), exceed $20,000,000.

     e.     The alternative minimum assessment computed pursuant to this section for privilege periods commencing after June 30, 2006 shall be $0.00, except that for taxpayers exempt from corporation net income taxation pursuant to 15 U.S.C. s.381 et seq. (Pub.L.86-272), 73 Stat. 555, such assessment shall continue to be computed as otherwise provided herein; provided however, that for privilege periods commencing after December 31, 2006, a taxpayer exempt from corporation net income taxation pursuant to 15 U.S.C. s.381 et seq. that has filed a consent, in the form as shall be prescribed by the director, to the jurisdiction of this State to impose and the duty of the taxpayer to pay the tax imposed pursuant to section 5 of P.L.1945, c.165 (C.54:10A-5) for the privilege period shall have an alternative minimum assessment for that period of $0.00.

     f.  (1) If the alternative minimum assessment for a taxpayer computed pursuant to this section exceeds the tax computed pursuant to section 5 of P.L.1945, c.165 (C.54:10A-5) for a privilege period, the taxpayer shall be allowed an amount of credit equal to the amount by which the alternative minimum assessment computed pursuant to this section for the privilege period exceeds the tax computed pursuant to section 5 of P.L.1945, c.165 (C.54:10A-5) for that privilege period; provided however, that a taxpayer shall not be allowed a credit for any amount of alternative minimum assessment for a privilege period for which a credit is allowed pursuant to section 29 of P.L.2002, c.40 (C.54:10A-5b). The amount of credit may be carried forward for application in subsequent privilege periods subject to the limitations of paragraph (2) of this subsection.

     (2)   A taxpayer may apply all or a portion of the credits allowed by paragraph (1) of this subsection against the tax computed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), for a privilege period for which the tax pursuant to that section exceeds the alternative minimum assessment computed for the privilege period pursuant to this section; provided however, that the amount of credit applied shall not reduce the amount of tax otherwise due to less than the alternative minimum assessment as computed pursuant to this section for the privilege period, shall not reduce the amount of tax otherwise due by more than 50%, and shall not reduce the amount of tax otherwise due below the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5).

     g.    The alternative minimum assessment computed pursuant to this section for a privilege period shall be reduced by 20 percent if the taxpayer is a certified benefit corporation pursuant to section 3 of P.L.     , c.    (C.        ) (pending before the Legislature as this bill) for that entire privilege period.

(cf: P.L.2002, c.40, s.7)

 

     3.    (New section)  a.  For purposes of this section:

     “Annual benefit report” means the annual benefit report required pursuant to section 11 of P.L.2011, c.30 (C.14A:18-11).

     “Benefit corporation” means the same as that term is defined in section 1 of P.L.2011, c.30 (C.14A:18-1).

     “Director” means the Director of the Division of Taxation in the Department of the Treasury.

     “Specific public benefit” means the same as that term is defined in section 1 of P.L.2011, c.30 (C.14A:18-1).

     b.    For purposes of the reduced corporation business tax, permitted pursuant to paragraph (4) of subsection (c) of section 5 of P.L.1945, c.162 (C.54:10A-5) or subsection g. of section 7 of P.L.2002, c.40 (C.54:10A-5a), a corporation that has elected to become a benefit corporation may apply to the director for certified benefit corporation status.  To obtain certified status, the benefit corporation shall transmit to the director:

     (1)   the benefit corporation’s most recent annual benefit report; or

     (2)   a report containing all of the information described in section 11 of P.L.2011, c.30 (C.14A:18-11). 

     A report provided to the director pursuant to this section shall also include a narrative assessment that analyzes the performance and policies of the benefit corporation relative to its social impact on the environment, State and local community, its workers, its customers, and its corporate governance, as well as analysis of the specific public benefit provided by the benefit corporation. 

     c.   The director shall review each report received pursuant to subsection b. of this section.  Within 60 days of receipt thereof, the director shall make a determination as to whether the benefit corporation is in compliance with P.L.2011, c.30 (C.14A:18-1 et seq.), including but not limited to, analysis of the performance and policies of the benefit corporation relative to the environment, State and local community, its workers, its customers, and its corporate governance, as well as the specific public benefit provided by the corporation.  The director shall send notice to the benefit corporation for purposes of advising whether the benefit corporation has been granted certified status.

     d.    Certified benefit corporation status shall be effective for one calendar year, commencing on the date the director approves the application pursuant to subsection c. of this section; provided, however, that if a corporation terminates its benefit corporation status, its certified status shall also expire on the date of the termination.  For purposes of the reduced corporation business tax permitted pursuant to paragraph (4) of subsection (c) of section 5 of P.L.1945, c.162 (C.54:10A-5) or subsection g. of section 7 of P.L.2002, c.40 (C.54:10A-5a), a certified benefit corporation shall submit an updated report to the director, pursuant to subsection b. of this section, no less than once per calendar year, for purposes of renewing its certified status.

     e.     A certified benefit corporation shall be eligible to receive the reduced corporation business tax, permitted pursuant to paragraph (4) of subsection (c) of section 5 of P.L.1945, c.162 (C.54:10A-5) or subsection g. of section 7 of P.L.2002, c.40 (C.54:10A-5a), only for those privilege periods during which the benefit corporation was certified by the director as a certified benefit corporation for each part of a calendar year that is within the entire privilege period for which the taxes are due pursuant to the "Corporation Business Tax Act (1945)," P.L.1945, c.162 (C.54:10A-1 et seq.).

     f. The director may promulgate additional procedures and forms by which a benefit corporation may apply for certified benefit corporation status pursuant to this section.

 

     4.    (New section)   a. Notwithstanding any provision of P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the Director of the Division of Taxation in the Department of the Treasury may adopt, immediately upon filing with the Office of Administrative Law, such regulations as the director deems necessary to implement the provisions of this act, which shall be effective for a period not to exceed 360 days following enactment of P.L.    , c.  (C.       ) (pending before the Legislature as this bill) and may thereafter be amended, adopted or readopted by the director in accordance with the requirements of P.L.1968, c.410.

     b.    Notwithstanding any provision of P.L.1968, c.410 (C.52:14B-1 et seq.) or section a. of this section to the contrary, the Director of the Division of Taxation in the Department of the Treasury, in consultation with the New Jersey Economic Development Authority, shall adopt, immediately upon filing with the Office of Administrative Law, such regulations as the director deems necessary to implement the provisions of section 3 this act, including but not limited to the environmental, community, worker, customer, and corporate governance criteria to be evaluated for purposes of granting, renewing, or terminating certified benefit corporation status; any such regulations shall be effective for a period not to exceed 360 days following enactment of P.L.    , c.    (C.        ) (pending before the Legislature as this bill) and may thereafter be amended, adopted or readopted by the director in accordance with the requirements of P.L.1968, c.410.

 

     5.    This act shall take effect immediately and apply to privilege periods beginning on or after the July 1 next following the date of enactment.

STATEMENT

 

     This bill authorizes a 20 percent reduction in the corporation business tax rate for a corporation that is a certified benefit corporation, as determined by the Division of Taxation in the Department of the Treasury, for a privilege period. 

     The State’s benefit corporation law permits a corporation to elect benefit corporation status.  The purpose of a benefit corporation is to create a general public benefit, defined as a material positive impact on society and the environment, through activities that promote some combination of specific public benefits.  This status permits a benefit corporation, at the direction of its shareholders, to pursue a mission that goes beyond maximizing profit for owners and investors, while providing legal justification of and protection for the corporation’s officers and board members to consider the social and environmental impact of decisions made on behalf of the corporation.

     A benefit corporation that received certified benefit corporation status by the Division of Taxation in the Department of the Treasury is, pursuant to this bill, entitled to a 20 percent reduction in the corporation business tax due for a privilege period (a “privilege period” means a tax year pursuant to the corporation business tax).  Under current law, a corporation that, for a privilege period, has an entire net income of greater than $100,000 is assessed at a corporation business tax rate of 9 percent; if the entire net income is $100,000 or less but greater than $50,000, the rate is 7.5 percent; and if the entire net income is $50,000 or less, the rate is 6.5 percent.  By applying the 20 percent reduction provided for in this bill, a certified benefit corporation will, for a privilege period, be assessed at a corporation business tax rate of 7.2 percent, if the entire net income for that privilege period is greater than $100,000; if the entire net income is $100,000 or less but greater than $50,000, the reduced rate is 6 percent; and if the entire net is $50,000 or less, the rate is 5.2 percent.  The reduced rate provided for in this bill applies to C-corporations, as well as to S-corporations that, under present law, have a corporation business tax liability in a privilege period.  If a certified benefit corporation is required to pay the alternative minimum assessment in a given privilege period, pursuant to section 7 of P.L.2002, c.40 (C.54:10A-5a), then that liability will, correspondingly, be reduced by 20 percent.  This bill, however, does not affect the statutory minimum corporation business tax rates mandated in section 5 of P.L.1945, c.162 (C.54:10A-5).

     The reduced corporation business tax provided for in this bill is only applicable to a benefit corporation that is a certified benefit corporation for the entire privilege period for which the reduced rate is claimed.  If a benefit corporation attains certified benefit corporation status part way through a privilege period, or if the corporation loses certified status, then that corporation is required to pay the standard corporation business tax rate for that privilege period.

     This bill also creates a procedure through which the Division of Taxation in the Department of the Treasury is to receive applications and grant, or revoke, certified status to a benefit corporation.  To this end, a corporation that has elected benefit corporation status may submit a report to Taxation.  This report may be either the annual benefit report that all benefit corporations are required to deliver to their shareholders, pursuant to section 11 of P.L.2011, c.30 (C.14A:18-11), or a report that contains the information required per that statute.  As such, the report is required to include an assessment of the ways in which the benefit corporation pursued a general public benefit during the year and the extent to which the general public benefit was created; the ways in which the benefit corporation pursued any specific public benefit; and assessment of social and environmental performance.  The report submitted to the Director of the Division of Taxation in the New Jersey Department of the Treasury (“director”) is required to, moreover, specifically describe the performance and policies of the benefit corporation relative to its social impact on the environment, State and local community, its workers, its customers, its corporate governance, and the specific public benefit provided by the corporation.

     The director is required to review the submissions and, within 60 days, make a determination as to whether to certify that the applicant is, or continues to be, in compliance with the State’s benefit corporation law.  If a benefit corporation has been a certified benefit corporation for an entire privilege period, then the corporation may claim the reduced corporation business tax provided for in this bill against the corporation business tax liability owed during that privilege period.  A corporation is required to recertify with the director at least once per calendar year, as a certification is only applicable for one year commencing on the date the certification is granted by the director (unless the corporation terminates its benefit corporation status, in which case the certification ends as of the date of the termination). 

     The director, in consultation with the Economic Development Authority, is directed to promulgate rules and regulations to develop additional guidance as to the aspects of environmental, community, worker, customer, corporate governance standards that permit a benefit corporation to be certified by Taxation.