Bill Text: NJ A2886 | 2010-2011 | Regular Session | Introduced
Bill Title: Provides a corporation business tax credit for certain investment in manufacturing equipment and manufacturing facility renovation, modernization and expansion; requires clawback of forfeited credits.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2010-06-14 - Introduced, Referred to Assembly Commerce and Economic Development Committee [A2886 Detail]
Download: New_Jersey-2010-A2886-Introduced.html
Sponsored by:
Assemblyman DOMENICK DICICCO, JR.
District 4 (Camden and Gloucester)
SYNOPSIS
Provides a corporation business tax credit for certain investment in manufacturing equipment and manufacturing facility renovation, modernization and expansion; requires clawback of forfeited credits.
CURRENT VERSION OF TEXT
As introduced.
An Act providing a corporation business tax credit for certain investment in manufacturing equipment and manufacturing facility renovation, modernization and expansion, supplementing P.L.1945, c.162 (C.54:10A-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. A taxpayer shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), in an amount equal to 20% of the amount paid for:
(1) manufacturing equipment installed at a manufacturing facility in this State and put into service in the privilege period; and
(2) the acquisition, construction, reconstruction, installation or erection of improvements or additions that result in the renovation, modernization or expansion of a manufacturing facility in this State, which renovated, modernized or expanded manufacturing facility is put into service in the privilege period.
An unused credit may be carried forward, if necessary, for use in
the seven privilege periods following the privilege period for which the credit is allowed.
b. Credit shall not be allowed under P.L.1993, c.170 (C.54:10A-5.4 et seq.), P.L.1993, c.171 (C.54:10A-5.16 et al.), P.L.1993, c.175 (C.54:10A-5.24), or P.L.2001, c.321 (C.54:10A-5.31 et seq.) for expenditures for which a credit is allowed pursuant to this section.
c. The order of priority of the application of the credit allowed under this section and any other credits allowed by law shall be as prescribed by the director. The amount of the credit applied under this section against the tax imposed pursuant to section 5 of P.L.1945, c.162 for a privilege period, together with any other credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162, shall not exceed 50% of the tax liability otherwise due and shall not reduce the tax liability to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162.
d. If manufacturing
equipment for which a credit was allowed pursuant to subsection a. of this
section is taken out of service in this State before the expiration of 36
months from its initial installation at a manufacturing facility in this State,
then the taxpayer shall forfeit any credit allowed for that manufacturing
equipment pursuant to this section. If improvements or additions to a
manufacturing facility for which a credit was allowed pursuant to subsection a.
of this section cease to be used for production before the expiration of 36
months from their initial operation as part of a
renovated, modernized or expanded manufacturing facility in this State, then
the taxpayer shall forfeit any credit allowed for those improvements or
additions. Any amount of credit so forfeited that has been applied against
liability shall become a liability of the taxpayer due and payable together
with interest, which shall accrue as of the date of the return against which
the credit was applied.
e. As used in this section:
"Manufacturing equipment" means machinery, apparatus or equipment used in the production of tangible personal property that is eligible for the sales tax exemption pursuant to subsection a. of section 25 of P.L.1980, c.105 (C.54:32B-8.13); and
"Manufacturing facility" means a business location, including but not limited to a factory, mill, or plant, at which more than 50% of the business personal property that is housed in the facility is manufacturing equipment.
2. This act shall take effect immediately and apply to amounts paid in privilege periods beginning after the date of enactment.
STATEMENT
This bill allows a corporation business tax credit for 20% of the costs of manufacturing equipment installed at a manufacturing facility in this State and 20% of the costs of improvements or additions that result in the renovation, modernization or expansion of a manufacturing facility in this State.
The bill provides that expenditures for manufacturing equipment and manufacturing facility renovation, modernization and expansion for which a credit is allowed under this bill will not be expenditures for which a credit will be allowed under the New Jobs Investment Tax Credit, the Manufacturing and Employment Investment Tax Credit, the Research and Development Credit or the Effluent Treatment and Conveyance Equipment Credit.
The bill defines "manufacturing equipment" as machinery, apparatus or equipment used in the production of tangible personal property that is eligible for the sales tax exemption for manufacturing equipment. That is machinery, apparatus or equipment for use or consumption directly and primarily in the production of tangible personal property by manufacturing, processing, assembling or refining, whose use is not incidental to those activities, and which has a useful life of more than one year. The bill defines a "manufacturing facility" as a business location, including but not limited to a factory, mill, or plant, at which more than 50% of the business personal property that is housed in the facility is manufacturing equipment.
The bill provides for a "clawback" of credits if the creditable manufacturing equipment or the creditable improvements or additions to manufacturing facilities are taken out of service within three years of their installation. If the equipment or facilities are not used for the 36 months following the installation for which credit is allowed, the credit is forfeited. If credit has already ben applied against tax liability, the credit is "clawed back" by creating a tax liability in the amount of the credit used The credit must be repaid as a tax liability, together with any interest that accrues at the rate imposed on past due tax liabilities.
