Bill Text: NJ A3598 | 2010-2011 | Regular Session | Introduced
Bill Title: Eliminates use of rebate procedure for claims of sales and use tax exemption made in connection with certain sales to certain UEZ qualified businesses.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2010-12-09 - Introduced, Referred to Assembly Budget Committee [A3598 Detail]
Download: New_Jersey-2010-A3598-Introduced.html
Sponsored by:
Assemblywoman PAMELA R. LAMPITT
District 6 (Camden)
SYNOPSIS
Eliminates use of rebate procedure for claims of sales and use tax exemption made in connection with certain sales to certain UEZ qualified businesses.
CURRENT VERSION OF TEXT
As introduced.
An Act eliminating the use of the rebate procedure for claims of sales and use tax exemption made in connection with certain sales to certain Urban Enterprise Zone qualified businesses, amending P.L.1983, c.303.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 20 of P.L.1983, c.303 (C.52:27H-79) is amended to read as follows:
20. a. [Retail] Receipts from retail sales of tangible personal property (except motor vehicles and energy) and sales of services (except telecommunications services and utility services) to a qualified business for the exclusive use or consumption of such business within an enterprise zone are exempt from the taxes imposed under the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-1 et seq.).
b. [Notwithstanding the provisions of subsection a. of this section, the seller shall charge and collect from a purchaser that is not a small qualified business the tax at the rate then in effect, and the tax shall be refunded to the purchaser by the filing, within one year following the date of sale, of a claim with the New Jersey Division of Taxation for a refund of sales and use taxes paid for the goods and materials. Proof of claim for refund shall be made by the submission of auditable receipts and such other documentation as the Director of the Division of Taxation may require.] (Deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill)
c. As used in this section:
"Qualified business" includes a [business that becomes] person who is certified as a qualified business by the [time the refund application] authority on or before the date a claim for refund is made and filed with the Director of the Division of Taxation in the Department of the Treasury pursuant to subsection [b.] e. of this section [; and
"Small qualified business" means a qualified business that has been determined and certified by the director to have had less than $10,000,000 in annual gross receipts in that business's prior annual tax period].
d. [The director shall submit
to the Senate Legislative Oversight Committee and the Assembly Regulatory
Oversight Committee any rules or regulations to effectuate amendments made to
this section by P.L.2006, c.34 that are proposed for publication in the New
Jersey Register. The director shall evaluate the effectiveness of the
amendments made to this section by
P.L.2006,c.34 and report any findings and recommendations regarding the
amendments to the Senate Legislative Oversight Committee and the Assembly
Regulatory Oversight Committee before the Governor presents a budget proposal
for Fiscal Year 2008.]
(Deleted by amendment, P.L. , c. ) (pending before the Legislature as
this bill)
e. (1) Notwithstanding the provisions of section 20 of P.L.1966, c.30 (C.54:32B-20) and the provisions of R.S.54:49-14, the Director of the Division of Taxation in the Department of the Treasury shall refund to a person who is a qualified business the amount of any sales tax or any use tax paid by the person in connection with that person's purchase of tangible personal property or a service that is exempt, pursuant to subsection a. of this section, from the taxes imposed by the "Sales and Use Tax Act," if the person who is a qualified business makes and files a claim for refund with the director within one year of the date the payment of tax for purchase is made.
(2) A person who is a qualified business shall make and file a claim for refund on such forms, and accompanied by auditable receipts and such other documentation, as the director may prescribe.
(cf: P.L.2008, c.118, s.1)
2. This act shall take effect immediately; provided however, that section 1 shall remain inoperative until the first day of the first month next following the date of enactment.
STATEMENT
This bill largely eliminates the use of the refund procedure that was established for certain sales of sales and use tax-exempt property and services to certain Urban Enterprise Zone (UEZ) qualified businesses, in accordance with P.L.2006, c.34, to permit qualified businesses that are not small qualified businesses to receive the benefits of the exemption at the point of sale.
Current law permits certain businesses that are certified as qualified businesses by the Urban Enterprise Zone Authority to purchase tangible personal property, except motor vehicles and energy, and services, except telecommunications services and utility services, exempt from the sales and use tax, if the property or services purchased by the qualified business are purchased for the exclusive use or consumption of that business within an enterprise zone. Since 2006, however, qualified businesses that fail to fall within the parameters of a "small qualified business" must pay tax on purchases of eligible property and services at the point of sale and then file a claim for refund with the Division of Taxation in the Department of the Treasury for the amount of tax determined to be paid.
This refund procedure was established as a means to mitigate suspected fraud and abuse associated with the exemption, and to permit new businesses to receive the benefits of the exemption on certain purchases made before the business is certified as a qualified business. When P.L.2006, c.34 was implemented, the Executive projected the procedure would net, to the State, an additional $46 million of revenue in State fiscal year 2007.
These figures were never substantiated, and the State never allocated additional resources to the Division of Taxation to implement and enforce the refund procedure. Moreover, the procedure imposes an administrative burden on businesses. Qualified businesses that are not a small qualified business must make and file certain paperwork along with certain auditable receipts to receive a refund for purchases of property and services that, by law, are exempt from the sales and use tax.
The elimination of this rebate procedure for qualified businesses will alleviate the administrative burden on qualified businesses that are not small qualified businesses, and allow the State to realign its resources with more critical tax administration and compliance efforts. Under the bill, all qualified businesses will be eligible to receive the benefits of the exemption at the point of sale, regardless of annual gross receipts generated in the prior annual tax period.
The elimination of the refund procedure for qualified businesses will not, however, affect that portion of the procedure that applies to businesses not yet certified as qualified businesses. The bill retains the refund procedure whereby businesses that pay tax on purchases of property and services used in the initial building or equipping of a business are permitted to file a claim for refund for tax associated with eligible purchases after the business is certified as a qualified business by the Urban Enterprise Zone Authority. Under current law, claims for refund associated with eligible purchases must be made and filed with the Division of Taxation after a business is certified as a qualified business, but within one year of the date the purchase is made.
