ASSEMBLY, No. 1173
STATE OF NEW JERSEY
Introduced Pending Technical Review by Legislative Counsel
PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION
By Assemblyman DALTON and Assemblywoman VANDERVALK
An Act allowing a credit against the corporation business tax for certain child care support supplementing 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. A taxpayer shall be allowed a credit, to be computed as provided in this section, against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5). The credit shall be an amount equal to
(1) 25% of the amount paid or incurred by the taxpayer for the establishment, construction and operation by the taxpayer of a day care center for children of the taxpayer's employees;
(2) 25% of the amount paid or incurred by the taxpayer for the operation of a day care center for children of employees in cooperation with one or more persons required to pay State taxes;
(3) Up to 25% of the amount paid or incurred by the taxpayer for child care services (a) under a dependent care assistance program which amount is excludable from an employee's gross income for federal income tax purposes pursuant to section 129 of the federal Internal Revenue Code of 1986, 26 U.S.C. §129 or (b) under a flexible benefit account or cafeteria plan which amount is excludable from an employee's gross income for federal income tax purposes pursuant to section 125 of the federal Internal Revenue Code of 1986, 26 U.S.C. §125;
(4) 25% of the amount paid or incurred by the taxpayer as a grant to a day care center to reimburse that center for services provided to children of an employee of the taxpayer, or
(5) 25% of the amount paid or incurred by the taxpayer to an unaffiliated third party for use in the construction, expansion or maintenance expense of a day care center by that third party that serves the children of the taxpayer's employees.
b. As used in this section, "a day care center for children" means a community-based, employer-based, or employer-supported facility which is a licensed, nonprofit child care center.
c. The tax imposed for a fiscal or calendar accounting year pursuant to section 5 of P.L.1945, c.162, shall first be reduced by the amount of any credit allowed pursuant to section 19 of P.L.1983, c.303 (C.52:27H-78), and then by any credit allowed pursuant to section 42 of P.L.1987, c.102 (C.54:10A-5.3), prior to applying any credits allowable pursuant to this section. Credits allowable pursuant to this section shall be applied in the order of the credits' tax years. The amount of the credits applied under this section against the tax imposed pursuant to section 5 of P.L.1945, c.162, for an accounting year 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 amount of tax year credit otherwise allowable under this section which cannot be applied for the tax year due to the limitations of this subsection may be carried over, if necessary, to the ten accounting years following a credit's tax year.
d. When filing a tax return that includes a claim for a credit pursuant to this section, the taxpayer shall include a certified statement that the amount claimed was used exclusively for children's day care center purposes and shall identify the center.
2. This act shall take effect immediately and be applicable to tax years beginning on or after January 1, 1994.
STATEMENT
This bill provides for a tax credit under the corporation business tax for certain corporate taxpayer's support of a licensed child care service for their employees' children, or who have paid part or all of the cost of outside child care services for children of employees. The credit is equal to 25% of expenses incurred. The credit may be taken in cooperation with other businesses involved in the same child care center service. This will act as an incentive for smaller businesses to form a consortia and then be able to provide child care for their employees.
Provides a corporation business tax credit for day care center support benefiting children of employees.