Bill Text: NJ S2132 | 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 6-0)
Status: (Introduced - Dead) 2011-01-06 - Substituted by A1559 (SCS) [S2132 Detail]
Download: New_Jersey-2010-S2132-Introduced.html
Sponsored by:
Senator JEFF VAN DREW
District 1 (Cape May, Atlantic and Cumberland)
Senator JIM WHELAN
District 2 (Atlantic)
Co-Sponsored by:
Senator Stack
SYNOPSIS
Allows point of sale sales tax exemption for certain UEZ business purchases made by certain zone-located qualified businesses.
CURRENT VERSION OF TEXT
As introduced.
An Act allowing a point of sale sales tax exemption for certain urban enterprise zone business purchases made by certain zone-located 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 sales of tangible personal property (except motor vehicles and energy) and sales of services (except telecommunications 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 or a zone-located 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] Director of the Division of Taxation in the Department of the Treasury for a refund of sales and use taxes paid for the [goods and materials] tangible personal property and services. 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] director may require.
c. As used in this section:
"Qualified business" includes a business that becomes qualified by the time the refund application is filed pursuant to subsection b. 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; and
"Zone-located qualified business" means a qualified business that has been determined and certified by the director to have a business location or locations only within an enterprise zone; provided however, that if a qualified business is in an affiliated group, as defined by section 1504 of the federal Internal Revenue Code of 1986, 26U.S.C. s.1504, or a controlled group of corporations, as defined by section 1563 of the federal Internal Revenue Code of 1986, 26U.S.C. s.1563, any other business in the group that is in the same line of business as the zone-located qualified business shall only have one business location, which location is within an enterprise zone.
d. (1) 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.
(2) The director shall submit to the Senate Budget and Appropriations Committee and the Assembly Budget Committee any rules or regulations to effectuate amendments made to this section by P.L. , c. (pending before the Legislature as this bill) 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. , c. (pending before the Legislature as this bill) and report any findings and recommendations regarding the amendments to the Legislature, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), before the Governor presents a budget proposal for fiscal year 2012.
(cf: P.L.2008, c.118, s.1)
2. This act shall take effect immediately and apply to sales or services made or rendered on or after the first day of the third month next following the date of enactment.
STATEMENT
This bill broadens the class of businesses that are excluded from the sales tax rebate procedure established in connection with the sales and use tax exemption for sales of certain goods and services to certain Urban Enterprise Zone (UEZ) qualified businesses by allowing zone-located qualified businesses to make certain tax exempt business purchases at the point of sale.
Under current law, sales of tangible personal property, except motor vehicles and energy, and sale of services, except telecommunications and utilities, to a qualified business for the exclusive use or consumption of that business within a UEZ are exempt from the sales and use tax at the point of sale if the business is a "small qualified business" with annual gross receipts of less than $10,000,000. UEZ qualified businesses with annual gross receipts equal to or greater than $10,000,000 that are not a "small qualified business" are eligible for the exemption, but are required to pay tax on the tax-exempt goods or services at the point of sale and apply to the Division of Taxation in the Department of Treasury for a refund of the amount of tax paid on their purchase.
This bill extends the point of sale exemption to zone-located qualified businesses so that small qualified businesses and qualified businesses located exclusively within a UEZ are eligible to forgo the rebate process and make tax-exempt business purchases at the point of sale. For purposes of the bill, a "zone-located qualified businesses" is a qualified business that is determined and certified by the Director of the Division of Taxation to have a business location or locations exclusively within a UEZ, provided that if a qualified business is in an affiliated group or a controlled group of corporations, as defined by the federal Internal Revenue Code, any other business in the group that is in the same line of business as the zone-located qualified business must only have one business location, which location is within a UEZ.
The bill requires the Director of the Division of Taxation to submit to the Senate Budget and Appropriations Committee and the Assembly Budget Committee any rules or regulations that are necessary to permit zone-located qualified businesses to make tax exempt business purchases at the point of sale and are proposed for publication in the New Jersey Register, and requires the director to make a report, along with any findings and recommendations, regarding the effectiveness of allowing an additional class of businesses to forgo the rebate procedure. Under the bill, the report must be submitted to the Legislature before the Governor's annual budget message is presented to the Legislature for State Fiscal Year 2012.
Collectively, the changes provided by the bill are intended to increase the number and expand the types of businesses eligible to make tax exempt business purchases at the point of sale. The rebate process established under P.L.2006, c.34 has imposed an administrative burden on businesses and added to the financial hardship of cash-strapped UEZ businesses during the current economic decline.
