Bill Text: NJ S2595 | 2014-2015 | Regular Session | Introduced
Bill Title: Provides sales and use tax exemption for sales of certain services performed to manufacturing equipment.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2015-05-27 - Reviewed by the Sales Tax Review Commission Recommend to not enact [S2595 Detail]
Download: New_Jersey-2014-S2595-Introduced.html
Sponsored by:
Senator ANTHONY R. BUCCO
District 25 (Morris and Somerset)
SYNOPSIS
Provides sales and use tax exemption for sales of certain services performed to manufacturing equipment.
CURRENT VERSION OF TEXT
As introduced.
An Act providing a sales and use tax exemption for sales of certain services performed to manufacturing equipment, supplementing P.L.1966, c.30 (C.54:32B-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Receipts from sales of the following services are exempt from the tax imposed under the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-1 et seq.): installing, maintaining, servicing, or repairing machinery, apparatus, or equipment that is used or consumed directly and primarily in the production of tangible personal property by manufacturing, processing, assembling, or refining and that is exempt from taxation pursuant to subsection a. of section 25 of P.L.1980, c.105 (C.54:32B-8.13).
2. Except as otherwise provided in the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-1 et seq.), receipts received from all services of installing, maintaining, servicing, or repairing machinery, apparatus, or equipment that are rendered on or after July 15, 2006 but prior to July 1, 2015 are subject to the taxes imposed under paragraph (2) of subsection (b) of section 3 of P.L.1966, c.30 (C.54:32B-3), at the rate of 7%, except if the services so sold are rendered on or after July 1, 2015, in which case the tax shall be computed and paid at a rate of 0% in accordance with the exemption provided by section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill); provided however, that if an installation, maintenance, service, or repair contract or agreement taxable under P.L.1966, c.30 (C.54:32B-1 et seq.) covers any period commencing on or after July 15, 2006, and ending after July 1, 2015, the receipts from such contract or agreement are subject to tax at the rate applicable to each period as set forth hereinabove and shall be apportioned on the basis of the ratio of the number of days falling within each of the said periods to the total number of days covered thereby.
3. This act shall take effect immediately; provided however, that section 1 shall remain inoperative until July 1, 2015.
STATEMENT
This bill provides a sales and use tax exemption for sales of certain services that are performed to manufacturing equipment, the purchase of which is exempt from the sales and use tax.
Under current law, sales of manufacturing equipment are generally exempt from the sales and use tax. The law provides a statutory exemption from tax for sales of machinery, apparatus, and equipment that is used or consumed directly and primarily in the production of tangible personal property by manufacturing, processing, assembling, or refining.
The current exemption, however, does not apply to a number of services that are typically performed to manufacturing equipment. Contractors, subcontractors, and other repairpersons that install, maintain, service, or repair tax-exempt machinery, apparatus, and equipment must charge and collect the applicable tax at the rate determined to be due on charges rendered for their services.
This bill extends the current exemption to sales of those currently taxable services. As a result, both the initial sale of and any charges by contractors, subcontractors, or other repairpersons for service performed to install, maintain, service, or repair machinery, apparatus, or equipment that is used or consumed directly and primarily in the production of tangible personal property by manufacturing, processing, assembling, or refining are exempt from sales and use taxation.
The bill takes effect immediately, but provides for the exemption to remain inoperative until July 1, 2015.
