Jackson Hewitt lied to get $2.7M tax break from NJ, executive says
TRENTON — A whistleblower said her former company lied about its plans to move out of New Jersey in order to secure $2.7 million in business tax incentives from the state. The claim was part of the opening testimony before a task force appointed by Gov. Phil Murphy.
Murphy has criticized the $11 billion of tax incentives that has been awarded to companies, not all of which has been redeemed, and he wants stricter caps and more focus for the next set of awards that may replace the current programs, which expire at the end of June.
Gulsen Kama didn’t name her former employer, at the request of the task force, but it was clearly Jackson Hewitt Tax Service Inc., which received a Grow New Jersey grant in 2015 as part of moving its headquarters from Parsippany to Jersey City.
Kama was Jackson Hewitt’s vice president of financial planning and analysis at the time. She had taken the job in early 2015 in part because she was told in her interview that the company planned to remain in New Jersey.
“The CEO certification was false and known by the CEO to be false because as of such date, the decision to relocate to Jersey City was already a done deal,” Kama said, reading from a lawsuit she filed against the company.
“I heard the CEO of the company state that the relocation to Jersey City was a done deal in a meeting,” said Kama, who said that was two weeks prior to the filing of the application in which the company said it planned to split its headquarters between New York and Sarasota, Florida, if it didn’t get the grant.
Kama said she directed to study the impacts of moving to New York and Florida, to make the idea look credible, at the request of a consulting firm. The company got the grant in exchange for keeping its 69 New Jersey-based workers in the state – then violated the terms, Kama said.
“Part of that relocation actually moved the human resources and payroll departments to Florida,” Kama said. “So they never came to the Jersey City location. And doing so violated the minimum threshold required in the number of employees that needed to be in New Jersey.”
Jackson Hewitt issued a statement in which it said it intends to cooperate with the task force and that the company “believes it provided an accurate and comprehensive application to the EDA and is in compliance with all applicable provisions” of the state’s tax incentive programs.
The New Jersey Tax Incentive Task Force plans additional hearings through June that will explore who had a role in drafting the 2013 legislation that led to a sharp increase in incentive awards and whether anyone put pressure on the Economic Development Authority to approve undeserving awards.
The task force plans to review every award that has been given to document whether the promised capital investment and job creation were delivered, after a report from the state comptroller raised questions about state oversight.
Task force chairman Ronald Chen said the panel has established an “accelerated recertification program” through which companies can proactively demonstrate their compliance and that more than 50 companies have already requested to take part.
They will have to submit detailed affidavits that could be followed up by interviews with employees, lobbyists and lawyers. He said the task force will also compare that proof with state Department of Labor and Workforce Development data.
“We are not going to take the companies’ word at face value. Companies will have to provide backup data on every important aspect of the requirements,” Chen said.
“Most companies readily agreed to cooperate with our investigation,” he said. “Indeed, one company went so far as to disclose to us, on our very first call to them, that they were not in compliance with program requirements.”
Chen said that company, which he did not name, has agreed in principle to repay the tax credits it received and to the termination of its nearly $1.5 million award.
“So we’ve already begun the process of recovering money for New Jersey’s treasury,” Chen said. “We hope that any other non-compliant companies will follow this example. If we must flesh them out through our investigation, the results could be far worse for non-compliant companies.”
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