Last call for New Jersey’s 2022 Technology Business Tax Certificate Transfer (NOL) Program

The New Jersey Economic Development Authority’s (NJEDA’s) “Technology Business Tax Certificate Transfer Program,” more commonly referred to as the NOL Program, is closing soon. The deadline to submit your applications for the NOL Program is June 30, 2022. Corporate Business Tax Returns must also be filed with the New Jersey Division of Taxation by June 30, 2022.

Although labeled as a technology incentive, this lucrative program offers a substantial benefit to life sciences companies as well. Under this program, qualifying New Jersey-based Technology and Biotechnology businesses can sell their unused New Jersey net operating losses (NOLs) and/ or research and development (R&D) tax credits for cash. The market price for the benefit is generally 88-94 cents on the dollar. The minimum price is 80 cents. Simply put, eligible companies can sell unused New Jersey NOLs and R&D tax credits for at least 80% of the value of the tax benefits. This program is especially beneficial for companies that qualify for the R&D credit but have been reluctant to claim it due to lack of utilization. Now, eligible companies can generate cash by selling unused R&D credits.

Biotechnology companies located in New Jersey can take advantage of substantial tax savings through the R&D tax credit. Many New Jersey life science companies are unaware that much of their existing costs can be recovered through New Jersey — and federal — R&D tax credits. This includes costs relating to developing products or software, and improving manufacturing processes. The tax code’s definition of what qualifies for the R&D tax credit is quite broad. Furthermore, depending on eligibility, some companies with no income tax can instead apply the federal R&D Tax Credit against payroll tax expense.

Through the New Jersey NOL Program the R&D tax credit can significantly increase a company’s cash flow. If you want to learn more about the New Jersey NOL program, or are interested in learning more about CohnReznick’s no cost R&D feasibility analysis, contact us today.