LEGISLATIVE FISCAL ESTIMATE
ASSEMBLY, No. 4265
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: JANUARY 8, 2026
SUMMARY
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Synopsis: |
Authorizes provision of monetary awards to whistleblowers who report State tax law violations committed by employers in construction industry. |
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Type of Impact: |
Increase in both annual State revenues and State expenditures. |
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Agencies Affected: |
Department of the Treasury. |
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Fiscal Impact |
Annual |
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State Revenue Increase |
Indeterminate |
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State Expenditure Increase |
Indeterminate |
· The Office of Legislative Services (OLS) determines that the bill will result in an indeterminate increase in both State revenues and expenditures, the net effect of which will be dependent on the extent to which any increase in revenue from enforcement activities offsets the increase in expenditures driven by reward payments.
BILL DESCRIPTION
This bill requires the Department of the Treasury to provide monetary awards to whistleblowers who report tax law violations committed by employers in the construction industry.
Under the bill, if the department proceeds with an administrative or judicial action against an employer in the construction industry and determines that the action is based on specific and credible information brought to the department by an individual, the director is required to provide that individual an award of at least 15 percent in most circumstances, but not more than 30 percent, of the proceeds collected as a result of the action or from any settlement in response to that action.
If the department determines that the claim for an award pursuant to the bill is brought by an individual who planned and initiated the actions that led to the violation resulting in the administrative or judicial action in which that individual is a party, the bill permits the department to reduce the amount of the award. In addition, if such an individual is convicted of criminal conduct arising from the individual’s role in the violation, then the department is not permitted to provide an award to that individual. The following individuals are also ineligible to receive an award under the bill: (1) an individual who obtained information through the individual’s official duties as an employee of the Department of the Treasury; and (2) an individual who filed a claim for an award based on information obtained from an ineligible individual for the purpose of avoiding the rejection of the claim that would have resulted if the claim was filed by the ineligible individual.
The bill protects any employee, as defined by the bill, from retaliatory action under the provisions of the Conscientious Employee Protection Act.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS determines that the bill will result in an indeterminate increase in both State revenue and expenditures. The bill provides incentives for employees of construction companies to report tax violations, which may increase administrative and judicial penalties. While the payment of rewards will generate an increase in State expenditures, to the extent that the potential rewards provide an incentive for increased reporting of violations these costs may be mitigated by an aggregate increase in successful administrative or judicial actions against construction companies.
The bill provides for awards of up to 30 percent of the proceeds connected to any case, subject to the various restrictions outlined in the bill. In order to determine a range of potential outcomes, the OLS would need information on the historical annual level of related administrative and judicial actions and determine what portion of the claims would be eligible for the various awards in addition to an estimate of the increase in fines directly attributable to whistleblower activity in future periods. Absent of this information, it is not possible to accurately forecast the potential financial outcomes of the legislation.
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Section: |
Commerce, Labor and Industry |
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Analyst: |
Associate Fiscal Analyst |
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Approved: |
Thomas Koenig Legislative Budget and Finance Officer |
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).