New Legislation 2008
Conformance with Streamlined Agreement
P.L.2008, c. 123, enacted on December 19, 2008 makes revisions to a number of aspects of the Sales and Use Tax Act (N.J.S.A. 54:32B-1 et seq.) in an effort to conform New Jersey’s law with various provisions of the Streamlined Sales and Use Tax Agreement of which New Jersey is a member. Areas of change include telecommunications, direct mail, sales price, fur clothing, and the medical exemption.
Throwout Rule and Regular Place of Business Requirements Eliminated
P.L.2008, c. 120, signed on December 19, 2008, applicable to privilege periods beginning on or after July 1, 2010, eliminates the throw-out provision of the apportionment formula for corporate business tax. It also removes the “regular place of business” requirement for taxpayers to allocate income. To allocate less than 100% of income to New Jersey, a taxpayer will no longer be required to show a regular place of business exists outside of the State.
Income Eligibility Limits for Senior Freeze Increased
P.L.2008, c. 119, approved December 18, 2008 and effective immediately, modifies who constitutes an “eligible claimant” under the homestead property tax reimbursement program (often referred to as the Senior Freeze program). The legislation increases the income eligibility limits from $45,135, if single, and $55,344 for married couples to $60,000 in tax year 2007; to $70,000 in tax year 2008; and to $80,000 in tax year 2009, whether single or married.
Changes in Urban Enterprise Zone Sales Tax Rebate Program
P.L.2008, c. 118, approved on December 17, 2008, and effective in relation to purchases made on or after February 1, 2009, amends the definition of “small business” applicable to the UEZ sales tax rebate program by raising the maximum annual gross receipts threshold from less than $3 million to less than $10 million. “Small businesses” are an exception to the requirement that qualified UEZ businesses claiming exemption from sales tax on purchases for their own use in the zone must first pay the tax at the point of purchase and then apply for a refund of the tax paid. “Small businesses,” as defined in the act, may instead claim the exemption at the point of sale.
InvestNJ Business Grant Program Established
P.L.2008, c. 112, signed into law on December 9, 2008 establishes the InvestNJ Business Grant program, which is designed to boost certain capital investment and job creation in the State. This short-term initiative is being administered by the Economic Development Authority (EDA). To obtain information on this program, please contact the EDA’s Call Center at (866) 534-7789.
New Net Operating Loss Carryover Enacted
P.L. 2008, C.102, signed into law November 24, 2008, created a new net operating loss carryover under the Corporation Business Tax. The law provides that a net operating loss for any privilege period ending after June 30, 2009 shall be a net operating loss carryover to each of the twenty privilege periods following the period of the loss. This new twenty year carryover applies only to net operating losses accruing for privilege periods ending after June 30, 2009. Net operating losses accruing for privilege periods ending before June 30, 2009 continue to have a net operating loss carryover to each of the seven privilege periods following the period of the loss.
Implementation of Encrypted Counterfeit-resistant Revenue Stamps
P.L.2008, c.98, signed into law on October 31, 2008, and effective immediately, requires that the stamps affixed to cigarettes sold in the State include encryption, security, and counterfeit-resistant features as the Director may prescribe. The Director is required to provide a report to the Governor and Legislature, on or before the 240th day after enactment, to detail the effectiveness of the measures.
Prohibition on the Sale of Certain Flavored Cigarettes
P.L. 2008, c.91, signed into law on October 1, 2008, and effective the 60th day after enactment, prohibits the sales of certain flavored, cigarettes in New Jersey. It further establishes civil penalties for violations and outlines circumstances in which the Division of Taxation may suspend or revoke the license of a retailer dealer and may subject the dealer to administrative charges.
Property Tax Exemption for Renewable Energy System
P.L.2008, c. 90, enacted on October 1, 2008 and effective immediately, provides a property tax exemption for the value of an installed renewable energy system.
Income Verification Procedure for Medicaid and NJ FamilyCare Applicants
P.L. 2008, c.53, enacted on August 5, 2008, and effective 90 days after enactment, establishes a new income verification procedure for applicants of Medicaid and NJ FamilyCare benefits. Applicants will be required to provide the Division of Taxation written authorization to release applicable tax information to the Commissioner of Human Services for purposes of ensuring that program income guidelines are met.
Fair Housing Reforms
P.L. 2008, c.46, enacted on July 17, 2008, and effective on that date, revises various laws concerning the provision of affordable housing. It requires that regulatory proposals advanced by State agencies include a housing affordability impact statement. It further requires the Director of the Division of Taxation to establish an appeals procedure to address challenges brought by developers regarding municipal residential development fees.
Out-of-State CPAs Authorized to Practice in New Jersey
P.L. 2008, c.45, enacted on July 15, 2008 and effective on the 365th day after enactment, revises the “Accountancy Act of 1997” to authorize out-of-State CPAs to practice public accounting in New Jersey. It requires qualifying out-of-State CPAs or accounting firms seeking to practice in New Jersey to register with the New Jersey State Board of Accountancy and subjects them to the laws and regulations governing CPAs in this State.
Extension and Phase-out of TEFA
P.L. 2008, c. 32, enacted on June 30, 2008, and effective immediately, freezes transitional energy facility assessment (TEFA) unite rate surcharges at calendar years 2008 through 2011, and reduces surcharges in calendar years 2012 and 2013. It provides that TEFA surcharges will expire on December 31, 2013.
Amendments to the Recycling Enhancement Act and Delay of Its Effective Date
P.L. 2008, c.6, enacted March 26, 2008, deferred the effective date of the recycling tax, which was enacted by P.L. 2007, c.311. The effective date is now April 1, 2008. Entities subject to the recycling tax are required to register with the Division of Taxation by April 1, 2008, and the first quarterly recycling tax returns and tax payments are due July 20, 2008. The provisions delaying the effective date of the tax are retroactive to January 13, 2008. The act also adds type 27-A asbestos-containing waste to the list of types of waste included within the definition of “solid waste.” In addition, the act treats recycling tax revenue as an exclusion to be added to calculations of the adjusted local property tax levy.