A5399

An Act providing gross income tax and corporation business tax deductions for businesses whose employees participate in full-time remote employment, and supplementing chapter 3 of Title 54A of the New Jersey Statutes and P.L.1945, c.162 (C.54:10A-1 et seq.).

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

1. a. If a taxpayer permits or requires any employees to participate in full-time remote employment during a taxable year, then the taxpayer may deduct from net profits of business, distributive share of partnership income, or pro rata share of S corporation income, as appropriate, an amount equal to $250 for each full-time employee who participates in full-time remote employment for more than half of the taxable year, except that the total deduction shall not exceed $12,500 for the taxable year.

b. A taxpayer who claims a deduction under this section shall submit the following information to the director, on a form prescribed by the director:

(1) the number of full-time employees who participated in full-time remote employment for more than half of the taxable year;

(2) the dates on which each full-time employee participated in full-time remote employment during the taxable year;

(3) the number of times in which each full-time employee was required to perform professional responsibilities at an on-site work location during the period of full-time remote employment; and

(4) any other information that the director may deem necessary to implement the provisions of this section.

c. (1) A business entity that is classified as a partnership shall not be allowed a deduction pursuant to this section directly, but the amount of deduction of a taxpayer in respect of a distributive share of partnership income shall be determined by allocating to the taxpayer that proportion of the deduction 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.

(2) A taxpayer that is a New Jersey S corporation shall not be allowed the tax deduction directly under N.J.S.54A:1-1 et seq., but the amount of deduction of a taxpayer in respect of a pro-rata share of S corporation income shall be determined by allocating to the taxpayer that proportion of the deduction acquired by the New Jersey S corporation that is equal to the taxpayer's share, whether or not distributed, of the total pro-rata share of S corporation income of the New Jersey S corporation for its privilege period ending within or with the taxpayer's taxable year.

d. As used in this section, “full-time remote employment” means an arrangement that permits a full-time employee to perform all professional responsibilities from an off-site work location, including the residence of the employee, during the entirety of the workweek, provided that the employee may be required to perform certain professional responsibilities at an on-site work location on an irregular and infrequent basis.

2. a. If a taxpayer permits or requires any employees to participate in full-time remote employment during a privilege period, then the taxpayer may deduct from entire net income an amount equal to $250 for each full-time employee who participates in full-time remote employment for more than half of the privilege period, except that the total deduction shall not exceed $12,500 for a privilege period.

b. A taxpayer who claims a deduction under this section shall submit the following information to the director, on a form prescribed by the director:

(1) the number of full-time employees who participated in full-time remote employment for more than half of the privilege period;

(2) the dates on which each full-time employee participated in full-time remote employment during the privilege period;

(3) the number of times in which each full-time employee was required to perform professional responsibilities at an on-site work location during the period of full-time remote employment; and

(4) any other information that the director may deem necessary to implement the provisions of this section.

c. As used in this section, “full-time remote employment” means an arrangement that permits a full-time employee to perform all professional responsibilities from an off-site work location, including the residence of the employee, during the entirety of the workweek, provided that the employee may be required to perform certain professional responsibilities at an on-site work location on an irregular and infrequent basis.

3. Notwithstanding any provision of the “Administrative Procedure Act,” 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, immediately upon filing with the Office of Administrative Law, adopt rules and regulations necessary to implement the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill), which shall be effective for a period not to exceed 18 months following the date of filing and may thereafter be amended, adopted, or readopted by the director in accordance with the requirements of P.L.1968, c.410 (C.52:14B-1 et seq.).

4. This act shall take effect immediately and apply to any taxable year or privilege period beginning on or after the date of enactment.

STATEMENT

This bill provides gross income tax and corporation business tax deductions for businesses that allow or require any employees to participate in full-time remote employment.

Under the bill, the tax deduction would be $250 for each full-time employee who participates in full-time remote employment for more than half of the taxable year or privilege period. The total deduction may not exceed $12,500 during any year.

The bill defines “full-time remote employment” as an arrangement that permits a full-time employee to perform all professional responsibilities from an off-site work location, including the residence of the employee, during the entirety of the workweek, provided that the employee may be required to perform certain professional responsibilities at an on-site work location on an irregular and infrequent basis.

The bill also requires each taxpayer claiming the deduction to submit the following information to the Director of the Division of Taxation in the Department of the Treasury: (1) the number of full-time employees who participated in full-time remote employment for more than half of the year; (2) the dates on which each full-time employee participated in full-time remote employment during the year; (3) the number of times in which each full-time employee was required to perform professional responsibilities at an on-site work location during the period of full-time remote employment; and (4) any other information that the director may deem necessary to implement the provisions this section.