New Legislation 2014
Economic Opportunity Act of 2014, Part 3
P.L. 2014 Chapter 63 - This act modifies laws concerning incentives for certain economic development projects is designated as the Economic Opportunity Act of 2014, Part 3. The new law makes tax credit transfer certificates under the "Urban Transit Hub Tax Credit Act" and the "Grow New Jersey Assistance Act" (GROW NJ) more widely available by reducing the minimum amount of the credits that may be transferred from $100,000 to $25,000.
Checkoff for “Local Library Support Fund”
Public Law 2014, Chapter 47 was signed into law as on September 10, 2014 takes effect immediately and applies to taxable years commencing on or after the January 1 following the date of enactment.
Establishes New Jersey Farm to School and School Garden Fund
The law establishes the “Local Library Support Fund.” Taxpayers will have the opportunity to make voluntary contributions to the fund on the New Jersey gross income tax return. The law is effective immediately and is applicable to tax years beginning on and after January 1, 2015.
Any costs incurred by the Division of Taxation for collection or administration attributable to this act may be deducted from receipts collected pursuant to this act, as determined by the Director of the Division of Budget and Accounting.
Establishes process for payees to recover payments which were dishonored
Public Law 2014, Chapter 46 was signed into law on September 10, 2014 and became effective immediately.
The new law provides a process for payees to recover payments which were dishonored for lack of funds or because the maker does not have an account with the drawee. Prior to the enactment of this law, the statute only applied to payments made by checks, drafts, and orders of withdrawals. The new law amends the statute to specifically include payments made by electronic funds transfers (EFT).
This new law does not increase penalties; it merely takes existing provisions and applies them to dishonored payments made by electronic funds transfers.
Criminalizes dishonored electronic funds transfers (EFT)
Public Law 2014, Chapter 45 was signed into law as on September 10, 2014 and took effect immediately.
The new law provides that a person commits a crime if they issue or pass a check or other payment of money knowing that it will not be honored by the drawee. The new law amends the statute to specifically include payments made by electronic funds transfer (EFT). Thus, a person commits a crime if he/she authorizes an electronic funds transfer knowing that it will not be honored. The degree of the crime and the associated penalties depend on the amount of the payment.
P.L. 2014, Chapter 38, which was signed into law on August 25, 2014 shall take effect immediately and apply to taxable years beginning on or after January 1 next following enactment.
Adjust and Clarify Certain State Tax Compliance Standards and Restricts Certain State Tax Benefits
The new law requires the Department of the Treasury to establish a special fund to be known as the “New Jersey Farm to School and School Garden Fund.” Beginning with New Jersey gross income tax returns filed for tax year 2015, taxpayers will have the opportunity to indicate that a portion of the taxpayer’s refund or an enclosed contribution will be deposited in the special fund.
P.L. 2014, Chapter 13, which was signed into law on June 30, 2014, takes effect immediately, except that sections 1, 2, and 3 apply to privilege periods ending on or after July 1, 2014, and section 4 applies to sales made, services rendered, and uses occurring on or after July 1, 2014.
The new law restricts certain State tax benefits and clarifies law to protect revenue. These modifications were warranted as a result of Tax court decisions recently made in the cases.
Section 1 – Redefining Operational Income
This law revises the definition of operational income in response to the Tax Court’s decision in McKesson Water Products Co. v. Director, Div. of Taxation, 200 N.J. 506 (N.J. 2009). Previously, operational income was defined as income from real or tangible property if the acquisition, management, and disposition of the property constitute integral parts of the taxpayer’s trade or business operations. The court held that all three factors must be satisfied in order for income to be deemed operational. Under the new law, income will meet the definition of operational income as long as any one of the three factors (acquisition, management, or disposition of the property) is an integral part of the taxpayer's regular trade or business operations.
Section 2 - Refunds of Partnership Payments
In response to the Tax Court decision in BIS LP, Inc. v. Director, Div. of Taxation, 2014 N.J. Tax (App. Div. Apr. 11, 2014), the new law clarifies the circumstances in which the tax paid by a partnership on behalf of its nonresident partners may be claimed.
In 2002, legislation was enacted to require NJ partnerships to make payments on behalf of their nonresident partners. In the BIS decision the court interpreted this language to mean that a nonresident that was determined to have no filing obligation could be entitled to a refund of tax it did not pay, but that was paid on its behalf. This new law clarifies that these payments are only refundable to a nonresident partner who files a New Jersey tax return and reports income that is subject to tax in this State. In that case, the nonresident partner may apply the tax that was paid by the partnership and credited to the nonresident partner’s partnership account against the partner’s tax liability. The law also provides that a partnership that pays tax pursuant to this section is not entitled to claim a refund of payments credited to any of its nonresident partners.
Section 3 - State Parity with IRC Section 108
The new law provides corporation business tax parity with the Federal tax treatment of net operating losses (NOLs) when an entity receives discharge of indebtedness in certain circumstances.
The Internal Revenue Code excludes certain categories of debt cancellation from income (such as discharges in bankruptcy). Instead, IRC Sec 108(b) calls for a reduction of certain ‘tax attributes,’ including net operating losses (NOLs). The NJ Corporate Business Tax Act provides no such reduction. The new law requires that a net operating loss for any privilege period ending after June 30, 2014, and any net operating loss carryover to such privilege period, must be reduced by the amount excluded from Federal taxable income under subparagraph (A), (B), or (C) of paragraph (1) of subsection (a) of IRC section 108, for the privilege period of the discharge of indebtedness.
Section 4 - Sales and Use Tax: Click-Through Nexus
The new law creates the presumption that a remote seller making sales to New Jersey customers of tangible personal property, specified digital products, or services taxable under the Sales and Use Tax Act has nexus with New Jersey and is required to collect and remit New Jersey sales tax if that seller enters into an agreement to pay a commission or other consideration to an independent contractor or other representative located in this State who refers customers to that seller, whether by a link on an internet website or otherwise. The independent contractor or other representative is deemed to be soliciting customers on behalf of the remote seller through such links, thereby creating nexus. If more than $10,000 in New Jersey sales is achieved through such links, nexus is established and registration and remittance is required. This presumption may be rebutted by proof that the independent contractor or representative with whom the seller has an agreement did not engage in any solicitation in the State on behalf of the person that would satisfy the nexus requirements of the United States Constitution.
Northern New Jersey Veterans Memorial Cemetery Development Checkoff
P.L. 2014, Chapter 4 on May 15, 2014 was signed into law on June 30, 2014 is effective immediately and is applicable to tax years beginning on or after January 1, 2015.
The law establishes the "Northern New Jersey Veterans Memorial Cemetery Development Fund" and provides for a designation on the State gross income tax return that will permit taxpayers to make voluntary contributions to the fund. This fund will facilitate the development and operation of the Northern New Jersey Veterans Memorial Cemetery.