New Jersey Administrative Code › Title 19 - OTHER AGENCIES › NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY › Chapter 31K - TECHNOLOGY BUSINESS TAX CERTIFICATE TRANSFER PROGRAM › Subchapter 1 - TECHNOLOGY BUSINESS TAX CERTIFICATE TRANSFER PROGRAM › Section 19:31K-1.2 - Definitions

Current through Register Vol. 56, No. 14, July 15, 2024
The following words and terms, as used in this subchapter,
					 shall have the following meanings, unless the context clearly indicates
					 otherwise.
"Allowable expenditures" means costs incurred in connection
					 with the operation of the new or expanding emerging technology or biotechnology
					 business in the State, including, but not limited to, the expenses of fixed
					 assets, such as the construction, acquisition and development of real estate,
					 materials, start-up, tenant fit-out, working capital, salaries, and research
					 and development expenditures.
"Authority" means the New Jersey Economic Development
					 Authority.
"Biotechnology" means the continually expanding body of
					 fundamental knowledge about the function of biological systems from the macro
					 level to the molecular and sub-atomic levels, as well as novel products,
					 services, technologies and sub-technologies developed as a result of insights
					 gained from research advances which add to the body of fundamental
					 knowledge.
"Biotechnology business" means an emerging corporation that
					 has a headquarters or base of operations located in New Jersey that owns, has
					 filed for, or has a license to use protected, proprietary intellectual property
					 and whose primary business is the research, development, production, or
					 provision of biotechnology for the purpose of developing or providing products
					 or processes for specific commercial or public purposes, including, but not
					 limited to, medical, pharmaceutical, nutritional, and other health-related
					 purposes, agricultural purposes, and environmental purposes.
"Board" means the Board of the New Jersey Economic
					 Development Authority, established at section 4 of P.L. 1974, c. 80
					 (N.J.S.A.
					 34:1B-4).
"Buying business" means a business with the financial
					 ability to purchase the unused net operating loss carryover and/or unused
					 research and development tax credits from an unaffiliated selling business. For
					 the purpose of this definition, the test of affiliation is whether the same
					 entity directly or indirectly owns or controls five percent or more of the
					 voting rights or five percent or more of the value of all classes of stock of
					 both the selling and buying businesses.
"Camden innovation zone" means the innovation zone in the
					 southern part of the State bounded as follows: in the north by the Ben Franklin
					 Bridge, in the east by Interstate 676, in the south by Kaighns Avenue, and in
					 the west by the Delaware River.
"Certificate" means the certificate issued by the Division
					 of Taxation certifying to the selling business amounts of unused net operating
					 loss carryover and/or unused research and development tax credit
					 carryovers.
"Financial statements" means a statement prepared by an
					 independent Certified Public Accountant (CPA), which shall include an opinion
					 letter indicating the scope of the services performed (compilation, review, or
					 audit) in accordance with Generally Accepted Accounting Principles (GAAP) as
					 determined by the Financial Standards Accounting Board (FASB) and shall include
					 a balance sheet, statement of income and expenses, cash flow statement, other
					 statements as determined by the independent CPA, and footnotes where
					 applicable.
"Full-time employee" means a person employed by a new or
					 expanding emerging technology or biotechnology company on a permanent or
					 indefinite basis for consideration for at least 35 hours a week, or who renders
					 any other standard of service generally accepted by custom or practice as
					 full-time employment and whose wages are subject to withholding as provided in
					 the New Jersey Gross Income Tax Act,
					 N.J.S.A.
					 54A:1-1 et seq., or who is a partner of a new
					 or expanding emerging technology or biotechnology company who works for the
					 partnership for at least 35 hours a week, or who renders any other standard of
					 service generally accepted by custom or practice as full-time employment, and
					 whose distributive share of income, gain, loss, or deduction, or whose
					 guaranteed payments, or any combination thereof, is subject to the payment of
					 estimated taxes, as provided in the New Jersey Gross Income Tax Act,
					 N.J.S.A.
					 54A:1-1 et seq., or who is employed under a
					 formal written agreement with an institution of higher education, whereby the
					 institution's students are employed by the technology or biotechnology company
					 on a permanent basis within a single position and in compliance with all other
					 requirements of this definition. To qualify as a "full-time employee," an
					 employee shall also receive from the new or expanding emerging technology or
					 biotechnology company health benefits under a health benefits plan authorized
					 pursuant to State or Federal law. "Full-time employee" shall not include any
					 person who works as an independent contractor or on a consulting basis for the
					 new or expanding emerging technology or biotechnology business; or any person
					 who works as an intern, as a temporary employee, or in a temporary
					 position.
"Full-time employee working in this State" means a
					 full-time employee whose primary office is in New Jersey and who spends at
					 least 80 percent of his or her time in New Jersey, or who spends any other
					 period of time generally accepted by custom or practice as full-time employment
					 in New Jersey, as determined by the Authority.
"Greater New Brunswick innovation zone" means the
					 innovation zone bounded as follows: in the north by Route 287 to Stelton Road
					 to Metlars Lane to Route 18, in the east by Route 1, in the south by Suydam
					 Road/Claremont Road/Finnegan's Lane, and in the west by the Millstone River and
					 Raritan River, which includes parts of North Brunswick, New Brunswick,
					 Piscataway and Franklin Township and Rutgers University's Livingston
					 campus.
"Innovation zone" means any of the three zones located in
					 the northern, central and southern portions of New Jersey designated by the
					 Authority as the Newark innovation zone, North/New Brunswick innovation zone
					 and Camden innovation zone, respectively.
"License" means an agreement that states therein that it is
					 granting an exclusive license that authorizes the applicant to control aspects
					 of the development of the protected proprietary intellectual property. License
					 shall not include an agreement, such as an exclusive distribution agreement or
					 similar business arrangement that is not registered with the U.S. Federal
					 Government, such as the U.S. Patent and Trademark Office, that does not grant
					 the applicant control of the protected proprietary intellectual
					 property.
"Net operating loss" means the excess of the deductions
					 over the gross income used in computing entire net income in a specific year
					 without regard to the net operating loss carryover to that year and the
					 dividend exclusion, as provided in 54:10A-4(k)(6)(C).
"New or expanding" means a technology or biotechnology
					 company that:
1. On June 30 of the
				  year in which the company files an application for surrender of unused but
				  otherwise allowable tax benefits under
				  P.L.
				  1997, c. 334 (34:1B-7.4
				  2a et al.) and on the date of the exchange of the corporation business tax
				  benefit certificate, has fewer than 225 employees in the United States of
				  America;
2. On June 30 of the year
				  in which the company files such an application, has at least one full-time
				  employee working in this State if the company has been incorporated or formed,
				  irrespective of corporate structure or tax status, for less than three years,
				  has at least five full-time employees working in this State if the company has
				  been incorporated or formed, irrespective of corporate structure or tax status,
				  for more than three years but less than five years, and has at least 10
				  full-time employees working in this State if the company has been incorporated
				  or formed, irrespective of corporate structure or tax status, for more than
				  five years; and
3. On the date of
				  the exchange of the corporation business tax benefit certificate, the company
				  has the requisite number of full-time employees in New Jersey that were
				  required on June 30 as set forth in paragraph 2 above.
In calculating the number of employees under this
					 definition, employees of all affiliates and subsidiaries as shown on its
					 consolidated financial statements, employees of any company that owns or
					 controls at least 50 percent of the applicant, as well as the employees of any
					 consolidated group of affiliated corporations as filed for Federal income tax
					 purposes shall be included.
"Newark innovation zone" means the innovation zone in the
					 northern part of the State bounded as follows: in the north by Interstate 280,
					 in the east by McCarter Highway (Route 21) and the Pennsylvania Railroad, in
					 the south by Market Street to South Orange Avenue, and in the west by Bergen
					 Street.
"Opportunity zone" means a Federal population census tract
					 in this State that was eligible to be designated as a qualified opportunity
					 zone pursuant to 26 U.S.C. § 1400Z-1.
"Program" means the Technology Business Tax Certificate
					 Transfer Program.
"Protected proprietary intellectual property" means
					 intellectual property that is the technology of the applicant's primary
					 business as a technology or biotechnology business that is also protected via a
					 patent pending, patent awaiting approval, approved patent, or registered
					 copyright.
"Research and development tax credits" means a tax credit
					 against corporation business tax liabilities for taxpayers who have performed
					 qualified research activities in New Jersey, calculated in the manner as the
					 Federal tax credit for increasing research activities. The credit is based on
					 qualified expenditures in New Jersey beginning on or after January 1, 1994. It
					 provides a credit of 10 percent of the excess qualified research expenses over
					 a base amount plus 10 percent of the basic research payments. Taxpayers must
					 complete New Jersey Division of Taxation--Corporate Business Tax Form 306 to
					 claim their credit. The amount of credit claimed for any single tax year cannot
					 exceed 50 percent of that year's tax liability prior to the consideration of
					 this credit and it cannot reduce the tax liability below the statutory minimum,
					 as set forth in 54:10A-5.2 4.
"Selling business" means a new or expanding technology
					 and/or biotechnology business that has unused net operating loss carryover
					 and/or unused research and development tax credits which it wishes to
					 "sell."
"Technology business" means an emerging corporation, that
					 has a headquarters or base of operations located in New Jersey, that owns, has
					 filed for, or has a license to use protected, proprietary intellectual property
					 whose primary business is the provision of a scientific process, product, or
					 service and that employs some combination of the following: highly educated
					 and/or trained managers and workers employed in New Jersey who use
					 sophisticated scientific research, service or production equipment, processes
					 or knowledge to discover, develop, test, transfer or manufacture a product or
					 service. Examples of activities satisfying this definition include: the
					 designing and developing of computing hardware and software; the research,
					 development, production, or provision of materials with engineered properties
					 created through the company's development of specialized processing and
					 synthesis technology and the research, development, production or provision of
					 technology involving microelectronics, semiconductors, electronic equipment and
					 instrumentation, radio frequency, microwave and millimeter electronics, and
					 optical and optic-related electrical devices, or data and digital
					 communications and imaging devices.
"Unused net operating loss carryover" means net operating
					 loss for any tax year as defined in 54:10A-4(k)(6)(B).
"Unused research and development tax credits" means the
					 amount of tax credit otherwise allowable which cannot be applied because it
					 would reduce the tax liability below 50 percent of the liability prior to
					 consideration of the credit or it reduces the tax below the statutory minimum,
					 as provided in 54:10A-5.2 4(b).