The Tax Incentives Task Force set up by Gov. Phil Murphy to investigate fraud and loopholes in New Jersey’s existing tax incentives system already is making waves. And revenue.
Task force Chair Ronald Chen said Thursday that one company readily agreed to cooperate and remit $1.5 million in tax credits after disclosing to the task force, willingly, that it was not in compliance.
“We hope that any other noncompliant companies will follow this example,” he said.
Chen was speaking at the first of many hearings scheduled by the task force.
The billions of dollars in incentives approved since the tax programs began are coming under scrutiny.
Chen said the group already has reached out to companies to prevent any destruction of relevant files, and has seen a mix of reactions to the request.
The task force has collected relevant documents from 100 companies and 20 lobbying firms or consultants through letters sent in early February — and the documents are still under review eight weeks later, Chen said.
Chen, a former public advocate of New Jersey and dean of Rutgers Law School in Newark, also said 50 companies have willingly provided sworn affidavits that their applications are truthful.
Is there more money out there? Only time will tell.
But the testimony of a whistleblower in an old case against tax preparation company Jackson Hewitt — which remained unnamed at the hearing — painted a similar picture to what was revealed in the Office of the State Comptroller’s audit of tax programs earlier this year. That is, that the EDA lacked the authority to verify information it was provided annually by companies who certified they still qualified for the incentives.
The executive, Gulsen Kama, who worked at Jackson Hewitt from 2015 to 2016, settled the case with Jackson Hewitt and did not mention the company by name in her testimony Thursday.
The case, settled in 2017, alleged that Jackson Hewitt, originally headquartered in Parsippany, lied about moving out of state in order to qualify for Grow New Jersey incentives, while it had already committed to moving to Jersey City.
“There was untruthful representation of information in the application submitted,” Kama said.
“The CEO certification was false and known by CEO to be false because, as of such date, the decision to relocate to Jersey City was already a done deal.”
Kama also said she heard the CEO reaffirm the done deal at a company meeting, and then two weeks later the Grow New Jersey application was filed, claiming the company was looking at New York and Florida.
The company was awarded $2.6 million in incentives in 2015 for 69 retained jobs, according to the EDA.
But the company was already in trouble, because the state had found it to be noncompliant for at least 18 months during a different program, the Business Employment Incentive Program, in 2015.
That also involved a $2.6 million incentive for keeping 75 employees in the state and was settled for $270,000.
Kama claimed that, soon after she told executives they were not in compliance, she was fired.
Darryl Isherwood, spokesman for the governor, said in a statement that the hearing validates the Murphy’s efforts to create new tax incentives for the state.
“Gov. Murphy has said from the start that, while tax incentives are an important part of any economic development package, they have to be targeted and transparent and taxpayer money must be fully accounted for,” he said.
“The comptroller’s report earlier this year detailed a disturbing lack of accountability that was highlighted in news accounts last week and again in today’s testimony before the task force.
“The governor appointed the task force to ensure that every dollar of taxpayer money that has been awarded by the EDA is accounted for and every promised job created or retained. Based on the findings so far, it seems the task force is doing that job admirably.”
