Bill Text: NJ S3256 | 2014-2015 | Regular Session | Introduced
Bill Title: Imposes gross consideration tax on certain casino licensees for performance of certain services in house for tax avoidance purposes.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2015-11-16 - Introduced in the Senate, Referred to Senate State Government, Wagering, Tourism & Historic Preservation Committee [S3256 Detail]
Download: New_Jersey-2014-S3256-Introduced.html
Sponsored by:
Senator JIM WHELAN
District 2 (Atlantic)
SYNOPSIS
Imposes gross consideration tax on certain casino licensees for performance of certain services in house for tax avoidance purposes.
CURRENT VERSION OF TEXT
As introduced.
An Act imposing a gross consideration tax on certain casino licensees for the performance of certain services in house for tax avoidance purposes, supplementing P.L.1977, c.110 (C.5:12-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. Notwithstanding the provisions of any other law to the contrary and in addition to any other tax or fee imposed by law, there is imposed a tax on each casino licensee, and each holding or intermediary company of a casino licensee, that cancels, terminates, or allows to expire a qualified contract or agreement for the performance of a qualified service and, within 360 calendar days of the date the qualified contract or agreement is canceled, terminated, or allowed to expire, that directs or authorizes an employee or an individual working on behalf of the casino licensee, or on behalf of a holding or intermediary company of the casino licensee, to perform, for the benefit of the casino licensee, or a holding or intermediary company of the casino licensee, the service that had been performed under the qualified contract or agreement that was canceled, terminated, or allowed to expire.
b. The tax imposed pursuant to this section shall be computed and paid at the rate of 7% upon the highest total amount of consideration that had been paid or exchanged by the casino licensee, or a holding or intermediary company of the casino licensee, on an annual basis, for the performance of the qualified service during the calendar year or in any one of the three calendar years immediately preceding the calendar year in which the qualified contract or agreement is canceled, terminated, or allowed to expire.
c. The tax imposed pursuant to this section shall be due and payable on or before the 120th calendar day immediately following the date the qualified contract or agreement is canceled, terminated, or allowed to expire and on or before that date each year thereafter until the first full calendar year beginning thereafter in which the service that had been performed under the qualified contract or agreement that was canceled, terminated, or allowed to expire is no longer performed by an employee or an individual working on behalf of the casino licensee, or a holding or intermediary company of the casino licensee.
d. The director shall collect and administer the tax imposed pursuant to this section. In carrying out the provisions of this section, the director shall have all of the powers and authority granted to the director to collect and administer the tax imposed by the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-1 et seq.).
e. The tax imposed pursuant to this section shall be governed by the provisions of the State Uniform Tax Procedure Law, R.S.54:48-1 et seq.
f. For the purposes of this section:
"Director" means the Director of the Division of Taxation in the Department of the Treasury.
"Qualified contract or agreement" means a contract or agreement with a qualified service provider for the performance of a qualified service that is made or entered into on or before or at any time after the effective date of this act, and that is determined by the director to generate, based on the total amount of consideration that is paid or exchanged for the qualified service performed by the qualified service provider, $1,500,000 or more in receipts annually in any of the three calendar years immediately preceding, or in the calendar year during or immediately following, the date the qualified contract or agreement is canceled, terminated, or allowed to expire. "Qualified contract or agreement" also includes multiple contracts or agreements with the same or multiple qualified service providers for the performance of a qualified service that are made or entered into on or before or at any time after the effective date of this act, and that are determined by the director to generate, based on the total, cumulative amount of consideration that is paid or exchanged for the qualified service performed by the same or multiple qualified service providers, $1,500,000 or more in receipts annually in any of the three calendar years immediately preceding, or in the calendar year during or immediately following, the date the qualified contract or agreement is canceled, terminated, or allowed to expire.
"Qualified service" means a service that is subject to tax pursuant to paragraphs (1), (2), (3), (4), (5), (7), (11), (12), (13), (14), or (15) of subsection (b), paragraphs (1) or (2) of subsection (c), or paragraph (1) of subsection (f) of section 3 of P.L.1966, c.30 (C.54:32B-3).
"Qualified service provider" means a person that performs a qualified service for consideration, and that has been issued a certificate of authority empowering the person to collect the sales and use tax pursuant to section 15 of P.L.1966, c.30 (C.54:32B-15).
2. Notwithstanding the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the Director of the Division of Taxation in the Department of the Treasury may adopt immediately upon filing with the Office of Administrative Law such rules and regulations as the director determines to be necessary and appropriate to effectuate the purposes of this act, which rules and regulations shall be effective for a period not to exceed 360 days following the effective date of this act and may thereafter be amended, adopted, or readopted by the director in accordance with the requirements of P.L.1968, c.410 (C.52:14B-1 et seq.).
3. This act shall take effect immediately and apply to a casino licensee, and to a holding or intermediary company of a casino licensee, that cancels, terminates, or allows to expire a qualified contract or agreement for the performance of a qualified service on or after the effective date of this act.
STATEMENT
This bill imposes a gross consideration tax on certain casino licensees for the privilege of performing certain qualified services in house in order to avoid the sales and use tax that is due and ordinarily required to be paid for similar services previously provided by independent, third-party service providers.
Under the bill, the tax is imposed on each casino licensee, and each holding or intermediary company of a casino licensee, that cancels, terminates, or allows to expire a qualified contract or agreement for the performance of a qualified service and, within 360 calendar days of the date the qualified contract or agreement is canceled, terminated, or allowed to expire, that directs or authorizes an employee or an individual working on behalf of the casino licensee, or on behalf of a holding or intermediary company of the casino licensee, to perform the service that had been performed under the qualified contract or agreement that was canceled, terminated, or allowed to expire.
The bill imposes the tax at a rate of 7% upon the highest total amount of consideration paid or exchanged by the casino licensee, or a holding or intermediary company of the casino licensee, on an annual basis, for the performance of the qualified service during the calendar year or in any one of the three calendar years prior to the calendar year in which the qualified contract or agreement is canceled, terminated, or allowed to expire. The bill requires the tax to be paid on or before the 120th calendar day following the date the qualified contract or agreement is canceled, terminated, or allowed to expire and annually thereafter until the qualified service performed in house is no longer performed by an employee or an individual working on behalf of the casino licensee, or a holding or intermediary company of the casino licensee.
For purposes of the bill, "qualified service" is defined broadly to encompass a variety of services subject to the sales and use tax that are typically used by casino licensees and capable of being performed in house. The bill defines "qualified contract or agreement" as a contract or agreement with a qualified service provider for the performance of a qualified service that is made or entered into on or before or at any time after the effective date of the bill, and is determined to generate, based on the total consideration paid or exchanged for the qualified service, $1,500,000 or more in receipts annually in any of the three calendar years prior to, or in the calendar year during or immediately following, the date the qualified contract or agreement is canceled, terminated, or allowed to expire.
The bill directs the Director of the Division of Taxation in the Department of the Treasury to collect and administer the tax, and provides the director all of the powers and authority granted to the director to collect and administer the sales and use tax.
The bill authorizes the director to adopt rules and regulations necessary to effectuate the bill, and allows for the immediate filing of those rules and regulations with the Office of Administrative Law, effective for a period not to exceed 360 days following the bill's effective date.
The bill takes effect immediately upon enactment and applies to casino licensees that cancel qualified contracts or agreements for the performance of qualified services on or after the bill's effective date.
The purpose of this bill is to strengthen the State's ability to capture tax revenues that are lost when casino licensees modify business operations and bring certain services typically performed by outside vendors in house for tax avoidance purposes. The movement of taxable services in house has negatively affected State revenue collections, and had a detrimental impact on the vendors that rely on the ability to provide services to casino licensees to make a living.
