SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

[First Reprint]

SENATE, No. 2200

with committee amendments

STATE OF NEW JERSEY

DATED: FEBRUARY 3, 2025

      The Senate Budget and Appropriations Committee reports favorably and with committee amendments Senate Bill No. 2200 (1R).

      As amended and reported, this bill creates a pilot program that provides a tax credit against the corporation business tax (CBT) and the gross income tax based on the value of certain donated fruits and vegetables.

      Specifically, the tax credit is available to commercial farm operators who donate fruits or vegetables that are fit for human consumption to a charitable organization located in this State during the first three tax periods beginning on or after January 1 of the year next following the date of the bill’s enactment.  The amount of the credit is equal to 50 percent of the wholesale value of the fruits or vegetables donated, but not to exceed the value of $5,000 during each tax period.  However, if a commercial farm operator is unable to claim any portion of the credit otherwise permitted for a tax period, the unused credits can be carried forward for the earliest available use during the next five tax periods following the period for which the credits were allowed.

      Under the bill, a commercial farm operator is required to obtain a written statement from the charitable organization before claiming the credit.  In addition to certain other information, this statement is to specify the variety, grade, and quantity of the donated fruits and vegetables, and the wholesale value of the fruits and vegetables, as provided by the commercial farm operator.  The bill requires the Secretary of Agriculture to establish and publish the wholesale value of fruits and vegetables for the purpose of calculating the tax credit allowed under the bill.  The Secretary of Agriculture is also required to prepare a written statement form for use by individuals authorized to accept donations on behalf of the charitable organization.  Upon approval of the written statement, the Department of Agriculture is required to notify the Director of the Division of Taxation as to the eligibility of the commercial farm operator for a CBT credit or gross income tax credit in the amount approved by the department.

      The bill also requires the Secretary of Agriculture, in consultation with the Director of the Division of Taxation in the Department of the Treasury (director), to prepare an annual report on the utilization of the credits provided on or before December 1 beginning in the year next following the first year in which the utilization of tax credits is permitted pursuant to the bill.  In addition to certain requirements for each annual report required by the bill, the Secretary of Agriculture is required to provide recommendations in the final report as to whether: (1) the allowance of tax credits pursuant to the bill’s provisions should be continued; and (2) the percentage of the wholesale value of the fruits or vegetables donated to a charitable organization used to determine amounts of tax credits should be increased, and if so, to what percentage.

      The total value of tax credit amounts awarded under the bill’s provisions would not exceed $100,000 in any fiscal year.

COMMITTEE AMENDMENTS:

      The committee amended the bill to:

      (1) require the Secretary of Agriculture to establish and publish the wholesale value of fruits and vegetables for the purpose of calculating the tax credit allowed under the bill;

      (2) require the Secretary of Agriculture to develop a form for the written statement used by individuals authorized to accept donations on behalf of a charitable organization;

      (3) specify that after a commercial farm operator submits the written statement from a charitable organization to the Department of Agriculture received from the charitable organization, and upon approval of the written statement, the Department of Agriculture is required to notify the Director of the Division of Taxation as to the eligibility of the commercial farm operator for a tax credit;

      (4) require the Secretary of Agriculture, in consultation with the Director of the Division of Taxation, to prepare an annual report to the Governor and Legislature regarding the utilization of the tax credits, which report would be published on the Internet website of the Division of Taxation and the Department of Agriculture.  As introduced, the bill required this report to be prepared by the Director of the Division of Taxation;

      (5) remove the requirement that the Director of the Division of Taxation testify before the Senate Economic Growth Committee, the Assembly Commerce, Economic Development and Agriculture Committee, successor committees, or any other legislative committee in the event that an annual report is not submitted before the required date of completion; and

      (6) revise the effective date to clarify that the bill would apply to taxable years and privilege periods beginning on or after January 1 of the year next following the date of enactment.

FISCAL IMPACT:

      The Office of Legislative Services concludes that this bill will result in a $300,000 reduction in State revenues over a period of up to eight years associated with the provision of tax credits to commercial farm operators who donate certain fruits and vegetables. 

      This pilot program would run for three years, beginning on January 1 of the year following the bill's enactment, and unused tax credits could be carried forward for up to five taxable periods.