A2382

An Act creating a pilot program to provide credits against the corporation business tax and the gross income tax for the value of certain fruit and vegetable donations made by commercial farm operators and supplementing P.L.1945, c.162 (C.54:10A-1 et seq.) and Title 54A of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. For the first three privilege periods beginning on or after January 1 of the year next following the date of enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), as part of a pilot program, a commercial farm operator that makes a donation of fruits or vegetables fit for human consumption to a charitable organization located in this State shall be allowed credit against the corporation business tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), in an amount equal to 50 percent of the wholesale value of the fruits or vegetables that are donated to the charitable organization, but not to exceed the value of $5,000 during each privilege period of donation.

b. In order to claim the credit allowed pursuant to this section, a commercial farm operator shall obtain a written statement from the charitable organization substantiating each donation of fruits or vegetables made during the privilege period for which the credit is allowed. At the time a donation is made, the commercial farm operator shall provide to the charitable organization the wholesale value of the donated fruits or vegetables and information identifying the location where the fruits or vegetables were grown. The charitable organization, upon receipt of the donated fruits or vegetables, shall issue to the commercial farm operator making the donation a written statement, signed and dated by an individual authorized to accept the donation on behalf of the charitable organization, that contains the variety, grade, and quantity of the donated fruits or vegetables, the name and address of the commercial farm operator making the donation, the name and address of the charitable organization, and, as provided by the commercial farm operator, the wholesale value of and the location where the donated fruits or vegetables were grown.

c. During each month of the pilot program, the Secretary of Agriculture shall establish and publish the wholesale value of fruits or vegetables for purposes of calculating the tax credit allowed pursuant to this section. The Secretary of Agriculture shall prepare a written statement form for use by individuals authorized to accept donations on behalf of the charitable organization.

d. In order to receive the tax credit allowed pursuant to this section, a commercial farm operator shall submit to the Department of Agriculture the written statement received from a charitable organization pursuant to subsection b. of this section. Upon approval of the written statement, the Department of Agriculture shall notify the Director of the Division of Taxation as to the eligibility of the commercial farm operator for a tax credit in the amount approved by the department.

e. The order of priority of the application of the credit allowed pursuant to this section and any other credits allowed by law shall be as prescribed by the Director of the Division of Taxation. The amount of the credit applied under this section against the corporation business tax liability of the taxpayer for a privilege period, together with any other credits allowed by law, shall not exceed 50 percent of the tax liability otherwise due and shall not reduce the tax liability to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5). The amount of the credit allowable under this section which cannot be used to reduce the taxpayer’s corporation business tax liability for the privilege period due to the limitations of this section may be carried forward and applied to the earliest available use within the five privilege periods immediately following the privilege period for which the credit is allowed. The wholesale value of any donated fruits or vegetables that are included in the calculation of the credit allowed pursuant to this section shall not be allowed as an amount calculated or claimed pursuant to any other deduction or credit allowed under the corporation business tax.

f. The aggregate value of tax credit amounts awarded pursuant to sections 1 and 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall not exceed $100,000 in any fiscal year.

g. As used in this section:

“Charitable organization” includes any organization that is incorporated under the provisions of Title 15 or Title 16 of the Revised Statutes or Title 15A of the New Jersey Statutes; any organization that is exempt from taxation under section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. s.501(c)(3); any entity to which a charitable contribution as defined under subsection (c) of section 170 of the Internal Revenue Code, 26 U.S.C. s.170(c), is deductible under section 170; and any food bank as defined in section 2 of P.L.1982, c.178 (C.24:4A-2).

“Commercial farm” means “commercial farm” as that term is defined by section 3 of P.L.1983, c.31 (C.4:1C-3).

“Commercial farm operator” means the taxpayer primarily responsible for the on-site, day-to-day operation of a commercial farm, at which farm fruits or vegetables are planted, managed, and harvested for donation.

“Wholesale value” means:

the value calculated by using a quantity-weighted average wholesale sales price of the donated fruits or vegetables as determined based on the wholesale sales price paid for each wholesale sale of fruits or vegetables made by the commercial farm operator during the calendar month of the commercial farm operator’s donation that are the same variety and grade as the donated fruits or vegetables and the respective weight, volume, or other standard unit of measure of each wholesale sale; or

if no wholesale sales of fruits or vegetables that are the same variety and grade as the donated fruits and vegetables are made by the commercial farm operator during the calendar month of the commercial farm operator’s donation, the wholesale value shall be equal to the overall average price paid for fruits or vegetables that are the same variety and grade as the donated fruits or vegetables at the nearest terminal market located the fewest miles from the commercial farm operator’s commercial farm during the calendar month of the commercial farm operator’s donation as determined using the Fruit and Vegetable Custom Average Tool maintained by the United States Department of Agriculture’s Agricultural Marketing Service, or another similar source of average price data as may be prescribed by the director.

2. a. For the first three taxable years beginning on or after January 1 of the year next following the date of enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), as part of a pilot program, a commercial farm operator that makes a donation of fruits or vegetables fit for human consumption to a charitable organization located in this State shall be allowed credit against the tax otherwise due under the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq., in an amount equal to 50 percent of the wholesale value of the fruits or vegetables that are donated to the charitable organization, but not to exceed the value of $5,000 during each taxable year of donation.

b. In order to claim the credit allowed pursuant to this section, a commercial farm operator shall obtain a written statement from the charitable organization substantiating each donation of fruits or vegetables made during the taxable year for which the credit is allowed. At the time a donation is made, the commercial farm operator shall provide to the charitable organization the wholesale value of the donated fruits or vegetables and information identifying the location where the fruits or vegetables were grown. The charitable organization, upon receipt of the donated fruits or vegetables, shall issue to the commercial farm operator making the donation a written statement, signed and dated by an individual authorized to accept the donation on behalf of the charitable organization, that contains the variety, grade, and quantity of the donated fruits or vegetables, the name and address of the commercial farm operator making the donation, the name and address of the charitable organization, and, as provided by the commercial farm operator, the wholesale value of and the location where the donated fruits or vegetables were grown.

d. In order to claim the tax credit allowed pursuant to this section, a commercial farm operator shall submit to the Department of Agriculture the written statement received from a charitable organization pursuant to subsection b. of this section. Upon approval of the written statement, the Department of Agriculture shall notify the Director of the Division of Taxation as to the eligibility of the commercial farm operator for a tax credit in the amount approved by the department.

e. (1) The order of priority of the application of the credit allowed pursuant to this section and any other credits allowed by law shall be as prescribed by the Director of the Division of Taxation. The amount of the credit applied under this section against the gross income tax liability of the taxpayer for a taxable year, together with any other credits allowed by law, shall not exceed 50 percent of the tax liability otherwise due. The amount of the credit allowable under this section which cannot be used to reduce the taxpayer’s gross income tax liability for the taxable year due to the limitations of this section may be carried forward and applied to the earliest available use within the five taxable years immediately following the taxable year for which the credit is allowed. The wholesale value of any donated fruits or vegetables that are included in the calculation of the credit allowed pursuant to this section shall not be allowed as an amount calculated or claimed pursuant to any other deduction or credit allowed under the gross income tax.

(2) A business entity classified as a partnership for federal income tax purposes shall not be allowed a credit directly under the gross income tax, but a taxpayer shall be allowed a credit in proportion to the taxpayer’s distributive share of the business entity’s donation of fruits or vegetables during the taxable year. A New Jersey S corporation shall not be allowed a credit directly under the gross income tax, but a taxpayer shareholder shall be allowed a credit in proportion to the taxpayer’s distributive share of the New Jersey S corporation’s donation of fruits or vegetables during the taxable year.

f. The aggregate value of tax credit amounts awarded pursuant to sections 1 and 2 of P.L. , c. (C. and C. ) (pending before the Legislature as this bill) shall not exceed $100,000 in any fiscal year.

g. As used in this section:

“Commercial farm” means “commercial farm” as that term is defined by section 3 of P.L.1983, c.31 (C.4:1C-3).

“Wholesale value” means:

the value calculated by using quantity-weighted average wholesale sales price of the donated fruits or vegetables as determined based on the wholesale sales price paid for each wholesale sale of fruits or vegetables made by the commercial farm operator during the calendar month of the commercial farm operator’s donation that are the same variety and grade as the donated fruits or vegetables and the respective weight, volume, or other standard unit of measure of each wholesale sale; or

3. a. The Secretary of Agriculture, in consultation with the Director of the Division of Taxation in the Department of the Treasury, shall prepare an annual report regarding the utilization of the tax credits allowed pursuant to sections 1 and 2 of P.L. , c. (C. and C. ) (pending before the Legislature as this bill), on or before December 1 of the year next following the first year in which the utilization of tax credits is permitted pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) and on or before that date each year thereafter for each of the two immediately following calendar years.

b. The annual report shall be separate and in addition to the report required to be prepared pursuant to section 1 of P.L.2009, c.189 (C.52:27B-20a), and shall, at a minimum, describe the following for tax periods that begin in the calendar year immediately preceding the calendar year in which the report is required to be prepared:

(1) the number of taxpayers claiming the tax credits allowed pursuant to sections 1 and 2 of P.L. , c. (C. and C. ) (pending before the Legislature as this bill);

(2) the total dollar value of tax credits claimed by commercial farm operators;

(3) the wholesale value of all fruits and vegetables donated to charitable organizations;

(4) the counties in which the greatest percentage of donated fruits or vegetables were grown by commercial farm operators;

(5) the months in which the greatest percentage of fruits and vegetables were donated to charitable organizations; and

(6) the charitable organizations benefiting from the donated fruits and vegetables.

c. The annual report shall be submitted to the Governor and the Legislature, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), and shall be made available to the public in electronic form through a link prominently displayed on the official Internet website of the Division of Taxation in the Department of the Treasury and the Department of Agriculture, within 10 calendar days of the date the report is required to be prepared.

d. In addition to the information required pursuant to subsection b. of this section, the Secretary of Agriculture shall include recommendations within the final annual report required pursuant to this section on whether:

(1) the allowance of tax credits pursuant to sections 1 and 2 of P.L. , c. (C. and C. ) (pending before the Legislature as this bill) 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, in the event that the allowance of tax credits pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) is continued.

4. This act shall take effect immediately and apply to taxable years and privilege periods beginning on and after January 1 of the year next following the date of enactment.

STATEMENT

This bill creates a pilot program that provides a tax credit against the corporation business tax 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 tax 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 prepare a written statement form for use by individuals authorized to accept donations on behalf of the charitable organization.

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 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 aggregate value of tax credit amounts awarded under the bill’s provisions is limited to $100,000 in any fiscal year.