New Legislation 2013
“Common Sense Shared Services Pilot Act”
P.L. 2013, Chapter 166, which was signed into law as on October 16, 2013, takes effective immediately.
The new law, known as the “Common Sense Shared Services Pilot Act,” revises current law to assist in the implementation of shared services agreements by allowing abrogation of tenure rights of certain personnel, including local assessors, who may be affected by those agreements. These shared services agreements are defined in the “Uniform Shared Services and Consolidation Act,” P.L.2007, c.63 (C.40A:65-1 et seq.).
The Division of Taxation maintains oversight of the municipal and county assessment process. Prior to the enactment of this new law, statutory requirements called for every municipality to appoint certain local officials to assess land and property values. Now, sharing of those personnel under a shared service agreement or joint contract for a joint meeting entered into pursuant to the provisions of the “Uniform Shared Services and Consolidation Act” may fulfill these requirements.
“New Jersey Economic Opportunity Act of 2013”
P.L. 2013, Chapter 161, which was signed into on September 18, 2013 became effective immediately.
The act, entitled the “New Jersey Economic Opportunity Act of 2013,” merges five current incentive programs into two: the Grow New Jersey Assistance Program (GROW NJ) and the Economic Redevelopment and Growth Grant program (ERGG). Both of these incentive programs are administered by the New Jersey Economic Development Authority (EDA). GROW NJ is the State's job creation and retention incentive program which offers transferable tax credits. The Act expands the areas of the State within which business can qualify for those credits and reduces the capital investment and employment requirements. These changes will allow New Jersey to better match or surpass the financial incentive packages offered by neighboring and competing states’, and provide bonuses to drive development to smart growth areas in the State. ERGG, which is the State's incentive program for developers, grants tax benefits based on annual incremental state and local taxes, in an effort to close project financing gaps and build public infrastructure critical to redevelopment projects. In addition, ERGG will provide bonuses to achieve public policy objectives, such as bringing fresh produce to urban “food deserts,” and rebuilding tourism destinations damaged or destroyed due to the effects of Hurricane Sandy.
The new law phases out the Business Retention and Relocation Assistance Grant Program (BRRAG), Business Employment Incentive Program (BEIP), and the Urban Transit Hub Tax Credit Program (HUB) and incorporates many of their elements into GROW NJ and ERGG. EDA will only process applications for BRRAG, BEIP, or HUB that were submitted to that agency on or before September 18, 2013, the date the new act went into effect. EDA must approve any BRAGG, BEI, or HUB applications in the pipeline on or before December 31, 2013 (some HUB approvals could be rendered 120 days from September 18, 2013). Supporting documentation for HUB grants approved prior to December 31, 2013, may be submitted no later than April 26, 2017. Current reviews of BEIP, BRRAG and HUB proposals that were received by EDA before September 18, 2013, will not be adversely impacted. Existing BEIP, BRRAG, and HUB grants which were to be claimed over multiple years are unaffected by the Act.
- The maximum aggregate value of all HUB tax credits that may be awarded in a single year increases from $250 million to $260 million.
- Businesses that submitted an application under GROW NJ or ERGG before the enactment of the Act may amend their applications to receive more favorable terms under the provisions of the Act.
- The maximum value of tax credits that EDA can approve for the State portion of ERGG redevelopment incentive grant agreements is set at $600 million. Tax credit awarded under this program may be transferred and may not be sold or assigned for an amount less than 75% of their value.
- All GROW NJ or ERGG proposals must be submitted on or before July 1, 2019. The law requires EDA to approve any submitted GROW NJ applications on or before July 1, 2023 (a three-year approval window with tw0 six-month extensions)
- There are a number of newly-designated geographical areas eligible for grants and tax credits, including: areas not located within a distressed municipality or priority area, including an aviation district; Planning Area 3 (as designated in the State Plan); certain portions of the Meadowlands, Pinelands and Highlands; and certain portions of Planning Areas 4A, 4B and 5 (also as designated within the State Plan).
In addition to the above described areas targeted for incentive financing, a newly-designated targeted growth area, the Garden State Growth Zone, which consists of the four poorest urban areas in the State (Camden, Trenton, Paterson and Passaic), as defined and designated in the current State Plan, would be eligible for incentive grants.
Increases Civil and Criminal Penalties Involving Unstamped And Counterfeit Cigarettes
P.L. 2013, Chapter 145, which was signed into law on August 19, 2013, became effective immediately.
The new law increases civil and criminal penalties involving unstamped and counterfeit cigarettes and cigarette smuggling and establishes a third degree crime of importing, selling or distributing, transporting or possessing with intent to sell, counterfeit cigarettes. Civil penalties for specified offenses are doubled, certain maximum county jail terms are doubled and certain criminal convictions may have a greater deterrent effect.
The Director of the Division of Taxation is now required to publish monthly reports on the State Treasury Department's website that indicate the quantity of cigarettes sold in this State by distributors, aggregated by manufacturer and brand family.
Prohibits the Imposition of The Corporation Business Tax On Certain Foreign Corporations
P.L. 2013, Chapter 98, which was signed into law as on August 7, 2013 applies prospectively to privilege periods beginning on or after January 1, 2013.
This mew law prohibits the imposition of the corporation business tax on foreign (out-of-State) corporations that would otherwise be subject to the tax. A corporation will be exempt from tax if their only contact with the State of New Jersey is carrying passengers into the State in a motor vehicle or motorbus operated over the public highways, delivering those passengers to a destination in the State, and returning those passengers to a location outside the State.
Creates A Craft Distillery License
P.L. 2013, Chapter 92, which was signed into law on August 7, 2013, takes effect on the first day of December 2013.
This new law creates a craft distillery license. Subject to rules and regulations, the holder of this license is entitled to manufacture up to 20,000 gallons of distilled alcoholic beverages per year and to make certain sales specified in the law. The holder of this license cannot sell food or operate a restaurant on the licensed premises. A holder of this license who certifies that not less than 51% of the raw materials used in the production of distilled alcoholic beverages are grown in this State or purchased from providers located in this State may, consistent with all applicable federal laws and regulations, label these distilled alcoholic beverages as “New Jersey Distilled.”
The law’s intent is to support and encourage the creation of small distilleries around the State.
Revises the Permitted Amount of the Surcharge on Admission Charges
P.L. 2013, Chapter 84, was signed into law on July 17, 2013 takes immediately.
This new law revises the permitted amount of the surcharge on admission charges at certain major places of amusement. Under P.L.2007, c.302, the permitted surcharge is 5% of each admission charge that is subject to the New Jersey sales tax pursuant to paragraph (1) of subsection (e) of section 3 of P.L.1966, c.30 (C.54:32B-3). The law applies to places of amusement, as defined under the "Sales and Use Tax Act,” which seat at least 10,000 patrons, but excluding motion picture theaters, amusement parks, and places of amusement owned by, or located on property owned by, the State or an independent State authority.
This surcharge is now set at an amount up to 5% of the admission charges at major places of amusement, thereby allowing a municipality authorized to collect this surcharge to charge a surcharge that is less than 5% of the admission charge.
Donors' Contributions to Charities and Establishing NJ Residency
P.L. 2013, Chapter 73, which was signed into law on June 27, 2013, takes effect immediately.
The new law clarifies that, for New Jersey gross income tax purposes, donors' contributions to charities are not a factor in determining where a person is domiciled for the purpose of defining tax residency.
Domicile is a composite of many factors and encompasses the whole fabric of a person's social, economic, and civic life. Prior to publication of informal advice in 2005, the Division of Taxation had regarded charitable contributions, among other factors, as an indicator of whether a taxpayer is domiciled in a state.
Although domicile is usually determined from all the evidence and circumstances, under this bill the Division of Taxation is statutorily prohibited from considering a taxpayer's charitable contributions as relevant or applicable in determinations of domicile.
Expands the Availability of the Neighborhood Revitalization State Tax Credit to Include Gross Income Taxpayers
P.L. 2013, Chapter 61, which was signed into law as on June 6, 2013, takes effect immediately and applies to tax years beginning on or after January 1, 2012.
The law, as amended to concur with the Governor’s conditional veto, expands the availability of the neighborhood revitalization State tax credit to include gross income taxpayers. A business entity that contributes financial assistance to a nonprofit sponsor may be granted a tax credit certificate that may be applied against tax liability on business income. The tax credits may be granted in an amount up to 100 percent of the approved assistance provided to a nonprofit organization to implement a qualified project that is part of an approved neighborhood preservation and revitalization plan. Per taxable year, the credit allowed to a business entity may not exceed $1 million or the total amount of tax otherwise due. Additionally, the credit may not exceed statutory limits established under the particular tax for which it is claimed.
The credit may be claimed by gross income taxpayers for tax years beginning on or after January 1, 2012, however N.J.S.A. 52:27D-492 e sets forth that the Commissioner of the Department of Community Affairs must specifically issue a certificate and the tax credit must be claimed for that tax year, effectively guaranteeing that no gross income tax credit can be claimed prior to tax year 2013. The available credit shall be a percentage of the taxpayer’s gross income tax liability equal to the percentage of taxpayer’s gross income (before exclusions or deductions) attributable to the business through which the qualified project funding was provided. The credit cannot exceed the taxpayer’s total liability for that year.
Labor and Workforce Development Undertake a Review Of Corporation Business Tax Credit and Gross Income Tax Credit Programs for Payments To Interns
P.L. 2013, Chapter 60, was signed into law on June 6, 2013.
The law requires that the Commissioner of Labor and Workforce Development undertake a review of corporation business tax credit and gross income tax credit programs for payments to interns and report any findings and recommendations directly to the Governor no later than 12 months from the date of enactment of this act. Specifically, the commissioner shall examine the impact of, and make recommendations on, tax credit programs for interns as it pertains to increasing long-term employment for future college graduates.
Revisions to the “Farmland Assessment Act of 1964”
P.L. 2013, Chapter 43, which was signed into law as on April 15, 2013 takes effect for tax years commencing with tax year 2015..
The law makes various revisions to the “Farmland Assessment Act of 1964.” It increases the minimum gross sales and payments standard for typical agricultural or horticultural lands to qualify for farmland assessment on the first five acres of land from the current $500 to $1,000. This change would not apply to woodland managed under a woodland management plan, which would continue as under current law to qualify for farmland assessment with minimum gross sales and payments of $500, nor does it apply to land subject to a forest stewardship plan, which has no minimum income qualifying standard for farmland assessment. The State Farmland Evaluation Committee now must review these minimums every three years or sooner, and adopt regulations to raise the amount of those minimums to levels the committee determines appropriate.
It establishes a civil penalty of up to $5,000 for a gross and intentional misrepresentation on an application to qualify for farmland assessment. The penalties collected are to be divided equally between the municipality or county and the State, and dedicates the penalty revenue collected to administering and enforcing the “Farmland Assessment Act of 1964.”
New and more stringent standards to qualify for farmland assessment are now codified and the State Board of Agriculture and the Department of Agriculture are tasked with the duty to develop guidelines describing generally accepted agricultural and horticultural practices which are to be distributed to, and which may be used by, municipal and county tax assessors, county tax administrators, and other appropriate local government officials to assist them in determining whether land may be deemed to be in agricultural use, horticultural use, or actively devoted to agricultural or horticultural use pursuant to the “Farmland Assessment Act of 1964.” The Division of Taxation, after consultation with the State Board of Agriculture, is required to include with each farmland assessment application, a letter or other document explaining any changes to the law, rules, regulations, and guidelines on farmland assessment that have occurred in the prior tax year and which would be newly in effect in the tax year for which the application is being submitted. A landowner whose farm management unit is less than seven acres in size is now required to submit with the application form a narrative and a sketch relating to the agricultural or horticultural uses on the farm management unit, including information on the number of acres that will be actively devoted to such uses. The division, in conjunction with the Department of Agriculture, is also required to offer at such time intervals as may be established by the division but at least biennially, and free of charge, a continuing education course to municipal and county tax assessors, county tax administrators, and other appropriate local government officials explaining the guidelines. Effective January 1, 2018, in any county or municipality in which farmland assessed properties are located, the assessor as a condition of relicensing must provide proof of having taken at least once in the prior three years the continuing education course.
Multi-agency consultation in the disciplines of woodland management or forest stewardship is also required.
Fraud Prevention Contractors
P.L.2013, c. 20 was signed into law on January 25, 2013 and takes effect immediately.
This law authorizes the use of fraud prevention contractors by the Division of Taxation. It provides that the director may enter into agreements with one or more private persons, companies, associations or corporations providing fraud prevention services. It further provides that the director may provide such taxpayer information as is necessary for the provider of fraud prevention services to fulfill its obligations under the fraud prevention agreement, provided that such disclosure is not contrary to the provisions of subsection (a) of section 6103 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.6103.
The law is designed to expand the agency’s ability to employ subcontractors to assist in activities specifically related to fraud prevention. All persons, companies, associations or corporations providing fraud prevention services, and their employees, would be specifically subject to the confidentiality provisions of N.J.S.A. 54:50-8. Each entity is required to furnish the director with the affidavit attesting each employee’s acknowledgement of the confidentiality provisions noted in the law.
This new law takes effect immediately.
New Jersey Angel Investor Tax Credit Act
Public Law 2013, Chapter 14 was signed into law on January 31, 2013 and effective for privilege periods and taxable years, as appropriate, beginning on or after January 1, 2012.
This new law, cited as the "New Jersey Angel Investor Tax Credit Act,” revives the expired Small New Jersey-based High Technology Business Investment Tax Credit by establishing credits against corporation business and gross income taxes for individuals or entities investing in New Jersey emerging technology businesses. Subject to certain limitations, the corporation business and gross income tax credits equal 10% of qualified investment in an emerging technology company as approved by the Economic Development Authority, subject to a $25 million annual cap.
Tax credit recipients cannot claim tax credits for that part of an investment in a single company that exceeds $500,000. For gross income tax purposes, it is a refundable tax credit while a corporation business taxpayer may choose between a refund and a 15-year carryforward credit.
Angel investments are equity placements by high net worth individuals into high-risk start-up ventures.
Special Olympics New Jersey Checkoff
P.L.2013, c.13, signed into law on January 29, 2013 and effective for tax years 2012, 2013 and 2014.
This new law provides for voluntary contributions by taxpayers on gross income tax returns to support New Jersey athletes participating in the 2014 Special Olympics USA Games. It establishes a special fund in the Department of the Treasury, to be known as the “2014 NJ Special Olympics Home Team Fund,” to which all donations collected from voluntary contributions are deposited. All funds deposited in the special fund will go to Special Olympics New Jersey to help fund the training and participation of New Jersey athletes in the 2014 Special Olympics USA Games.
As the 2012 gross income tax returns and instructions have already been released, future returns and instructions will include the changes.