Tax Alert: New Economic Incentives Enacted—InvestNJ Business Grant Program
2/12/2009
On December 9, 2008, New Jersey Governor Jon Corzine signed into law Assembly Bill 3294, titled InvestNJ Business Grant Program. This bill establishes a two-year incentive program within the New Jersey Economic Development Authority (EDA) that will provide $120 million in grants to help stimulate in-state job creation and capital improvements. Of the $120 million authorized, $50 million is authorized for job creation grants and $70 million for capital improvement grants.
InvestNJ Business Grant Program provides the following two grants for all businesses, whether a corporation, partnership, limited liability company, or a sole proprietorship:
1. JOB CREATION GRANT provides a $3,000 cash grant for each new in-state job created and retained for one year, not to exceed $500,000 per business.
To qualify for the Job Creation Grant, a company must meet the following criteria:
- Has been operating continuously in New Jersey for at least the prior two years
- Currently employ at least five full-time employees
- Eligible positions must be covered under the company's group health plan
- Create an eligible position and maintain a net increase in jobs over a 12-month period
Positions benefiting from the Business Employment Incentive Program (BEIP), Business Retention and Relocation Assistance Grant (BRRAG) Program, or Urban Transit Hub Tax Credit are not eligible for grants under this program. 2. CAPITAL INVESTMENT GRANT provides a cash grant equal to seven percent of qualifying “capital investment” that is at least $5,000 with a maximum permissible grant of $1 million per business.
To qualify for the Capital Investment Grant, a company must meet the following criteria:
- Has been operating continuously for at least the prior two years
- Currently employ at least five full-time employees
- Make a capital investment in New Jersey after December 9, 2008, but before January 1, 2011
- Will maintain the capital investment in New Jersey for one year
Companies currently benefiting from the BEIP, BRRAG, Urban Transit Hub Tax Credit programs, or any retail sales purchase exemption, including but not limited to, Urban Enterprise Zone, manufacturing, and R&D, at the site of the capital investment are not eligible for grants under the program. An eligible capital investment means expenses of at least $5,000 incurred for the direct use and operation of a business. This includes costs for site preparation and construction, renovation, improvement, equipping of, or obtaining and installing fixtures and machinery, apparatus or equipment. Qualifying capital investment includes real property improvements (new construction and renovation). It also includes environmental remediation costs related to the cleanup of a company’s facility site if it has not already obtained financial assistance from another government agency.
Capital investments do not include soft costs such as financing or design, furniture, or decorative items such as artwork or plants. Capital investments also do not include any equipment with a useful life of less than five years as defined by the Internal Revenue Code.
To qualify and obtain the grants, a business must complete and file an application with the EDA online at https://application.njeda.com/account.asp.
An applicant needs to set up an account in order to submit an application for review and approval by the EDA. There are no fees associated with applying for these grants.
Because the grants will be given on a first-come, first-served basis, we urge all potential applicants to set up an account with the EDA and submit the application as soon as possible before the funding is exhausted. If your company is going through or plans to go through layoffs, consider waiting until after the layoffs occur before submitting for a job creation grant. By doing so, the company will start with a lower headcount and potentially qualify for a higher grant. However, keep in mind that the program is administered on a first come, first-serve basis and waiting may result in your company losing an opportunity for a grant altogether.
The grant(s) received will be subject to applicable Federal and state income taxes.
Additional Q&A regarding these grants can be found at http://www.njeda.com/web/pdf/investnj_faq.pdf
Please contact your J.H. Cohn representative at 877-704-3500 to learn more about these and other incentives that may be available for your business.
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