The New Jersey Economic Development Authority (“NJEDA”) announced on May 3, that applications are now open through June 30, for the 2022 Technology Business Tax Certificate Transfer Program, commonly known as the Net Operating Loss (NOL) Program.
The NOL program allows early-stage technology and life sciences businesses in New Jersey that are yet to be profitable to sell a percentage of their NJ net operating losses and R&D tax credits to an unrelated profitable corporation for cash. For 2022, the New Jersey Economic Recovery Act of 2020 (ERA) increased the program’s annual cap from $60 million to $75 million. It also increased the lifetime cap for an individual applicant from $15 million to $20 million.
Taxpayers who participate can use the capital raised through the NOL Program to cover allowable costs incurred in connection with operating their business such as salaries, R&D, and other working capital expenditures.
To be eligible a company must meet the following requirements:
- Only technology and biotechnology companies whose primary business involves the provision of a scientific process, product, or service are eligible
- An eligible company must own, have filed for, or have a license to use protected, proprietary intellectual property (defined as a patent or registered copyright)
- An eligible company cannot have had positive net operating income on either of its last two full-year income statements according to GAAP. In addition, an eligible company cannot have a parent company with positive net operating income or be part of a consolidated group of affiliates for federal income tax purposes with positive net operating income
- An eligible company must have no more than 224 and at least one full-time employee working in New Jersey if incorporated or formed less than three years, five full-time employees in New Jersey if incorporated or formed more than three years but less than five years, or 10 full-time employees in New Jersey if incorporated or formed more than five years
- An eligible company must have financial statements for the two most recent full years of operation compiled, reviewed, or audited by an independent CPA firm and prepared according to US GAAP
Over the past few years, Withum’s life science and technology clients have received over $40 million from the program, which will be reinvested in the state, spur innovation and lead to economic growth in New Jersey. Our Life Science and Technology groups serve a diverse client base throughout the state and focus on partnering with them from early stage to maturity. Our expertise in this area strengthens that partnership and puts your business in a Position of Strength.