A bill recently submitted to the New Jersey State Legislature proposes tax incentives that would target bitcoin miners as well as other digital currency businesses in the state.
The purpose of the Digital Currency Jobs Creation Act, according to its authors, “is to promote innovation in the burgeoning digital currency industry, to protect consumers of digital currency services and to create jobs in the State of New Jersey”.
Among the specific incentives included in the draft is a proposed tax break on energy and utility bills for digital currency miners.
The bill reads:
“Receipts from retail sales of energy and utility service to a digital currency servicer or a company registered under 'The Digital Currency Job Creation Act' for use or consumption directly and primarily in the creation of digital currency, including mining, shall be exempt from the tax imposed under the 'Sales and Use Tax Act.'"
The text establishes that digital currency companies would become eligible for funding under existing law created to fuel job creation in New Jersey.
Notably, the bill also includes a passage that, if approved, would empower the state to accept tax payments in bitcoin through a previously approved electronic payments system.
In line with its stated purpose of fostering digital currency innovation, the bill would stop state municipalities “from prohibiting, abridging, levying a tax upon or otherwise restricting the creation, retention, transmission or any other use of the digital currency within the state, except as otherwise provided for in the bill”.
The New Jersey Commissioner of Banking and Insurance would oversee the state's digital currency sector should the measure be approved.
Job growth boosters
The bill would allow qualifying digital currency companies the ability to receive tax breaks provided they meet certain job creation thresholds.
The tax breaks would stem from the Grow New Jersey Assistance Act, a job-boosting measure signed into law in 2012 by Governor Chris Christie and later adjusted last year.
“For a digital currency servicer to be eligible for that program, the minimum number of new or retained full-time jobs would be a minimum of 10 new or 25 retained full-time jobs, which is less than is required for certain other types of business,” the bill reads.
Digital currency companies would be able to receive additional tax breaks should they exceed these figures.
“Digital currency servicers and registrants would be eligible for, in addition to the base amount of the tax credit, an additional $5,000 for each new or retained full-time job each year,” the bill adds.
Rules for custodians
The bill echoes other state-based proposals for bitcoin regulation in its approach toward digital currency custodians, outlining the requirements related to cybersecurity, consumer risk disclosure and recordkeeping.
Among the stipulations included in the bill is a requirement that officers, major stockholders and employees that actually handle funds need to submit fingerprints to state regulators.
The bill would also empower the Commissioner of Banking and Insurance to seek injunction against companies that violate the stipulations, giving the state regulator the ability to levy as much as $5,000 per violation.
The full draft text of the Digital Currency Jobs Creation Act can be found below:
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The purpose of the Digital Currency Jobs Creation Act , according to its authors, “is to promote innovation in the burgeoning digital currency industry, to protect consumers of digital currency services and to create jobs in the State of New Jersey”.
Among the specific incentives included […]