State Treasurer Elizabeth Maher Muoio today announced the launch of a new web-based portal that will transform the way Treasury’s Division of Taxation and the NJ Economic Development Authority (EDA) issue and review economic development tax incentives that have been awarded, allowing the agencies to track the entire lifespan of a tax credit, regardless of how many times it is sold from company to company.
“After the administration took over last year, we started examining the Division of Taxation’s role in the review of tax credits,” said Treasurer Muoio. “We were surprised and a bit alarmed to find out that previous administrations had very little oversight in place, particularly when it comes to tracking the transfer of tax credits. With more than 70 percent of tax credits transferred to date, the need for additional oversight and monitoring is critical.”
“The NJEDA’s highest obligation is to be a careful steward of taxpayer dollars and to ensure that our programs most effectively support Governor Murphy’s goals of building a stronger, fairer economy that works for everyone in New Jersey,” said NJEDA Chief Executive Officer Tim Sullivan. “The NJ eCERTS system is one of many steps we are taking in partnership with the Department of the Treasury to support transparency and accountability at all stages of the tax credit process.”
The new system was born out of a directive from the Treasurer’s Office to boost transparency and accountability and will now be used to issue and track tax incentives that have already been approved by the EDA. The system, known as the New Jersey Electronic Credit Evaluation, Records, and Transfer System (NJ eCERTS), was developed by Treasury’s divisions of Taxation and Revenue and Enterprise Services, in concert with the state Office of Information Technology.
Tax incentives are awarded to certain qualifying entities once they fulfill specified conditions, such as creating a certain number of jobs in the state. Under current law, most tax incentive programs allow grantees to then sell their credits to another entity. In fact, more than 70 percent of tax credits awarded to date have been sold, often multiple times, before they are finally redeemed with the Division of Taxation.
Under the system put in place by previous administrations, tax credits were issued by the Division of Taxation as paper certificates that were difficult to track. While the Division of Taxation oversaw the first transfer of a tax credit from the original applicant to another entity, it could not track any subsequent transfers of that certificate until it was physically redeemed against another taxpayer’s liability.
Not only will NJ eCERTS make it easier for grantees to manage their tax credits, it will also allow the Division of Taxation and EDA to track those credits in real time from the initial award through any and all subsequent transfers. The data can also be used by the Department of the Treasury to better predict the year-to-year impact of outstanding tax credit redemptions on state revenues.