A3431

An Act providing corporation business tax credits and gross income tax credits to certain commercial farm operators, designated as the New Jersey Loves New Jersey Farmers Act, 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. This act shall be known and may be cited as the “New Jersey Loves New Jersey Farmers Act.”

2. a. A taxpayer that is a commercial farm operator shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) in an amount equal to the price loss of the commercial farm during the privilege period, provided that the taxpayer obtains a certification of the price loss for the privilege period from the Secretary of Agriculture pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).

b. The order of priority of the application of the credit allowed pursuant to this section, and any other credits allowed by law against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), shall be as prescribed by the director. The amount of the credit applied under this section against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) 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 lower 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 tax credit otherwise allowable under this section which cannot be applied for the privilege period due to the limitations of this subsection or under other provisions of P.L.1945, c.162 (C.54:10A-1 et seq.) may be carried forward, if necessary, to the seven privilege periods following the privilege period for which the tax credit was issued, after which the tax credit shall expire.

c. No tax credit shall be allowed pursuant to this section for any costs or expenses included in the calculation of any other tax credit or exemption granted pursuant to a claim made on a tax return filed with the director, or included in the calculation of an award of business assistance or incentive, for a period of time that coincides with the privilege period for which a tax credit authorized pursuant to this section is allowed.

d. When filing a return that includes a claim for a tax credit allowed pursuant to this section, a taxpayer shall include a copy of the certification issued by the secretary.

e. (1) A taxpayer that obtains a certification of the price loss from the Secretary of Agriculture pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill) may apply to the director for a tax credit transfer certificate in lieu of the taxpayer being allowed any amount of tax credit against the tax liability of the taxpayer, as authorized under this section. The tax credit transfer certificate, upon receipt thereof by the taxpayer from the director, may be sold or assigned, in full or in part, in the privilege period during which the taxpayer receives the tax credit transfer certificate from the director, to another person, who may apply the credit against a tax liability under the tax pursuant to the “Corporation Business Tax Act (1945),” P.L.1945, c.162 (C.54:10A-1 et seq.), or the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. The certificate provided to the taxpayer shall include a statement waiving the taxpayer’s right to claim the amount of the credit that the taxpayer has elected to sell or assign against the tax for a tax liability. The tax credit certificate issued to a taxpayer by the director shall be subject to any terms and conditions that the director may prescribe; provided, however, that the holder of a tax credit certificate may transfer all or part of the tax credit amount, on or after the date of issuance of the tax credit transfer certificate, for use by the transferee in the tax period for which it was issued, in the tax period in which it was issued, or in any of the next three successive tax periods.

(2) The tax credit certificate holder or transferee may first use the credit against tax liabilities in the tax period in which it was issued or a succeeding tax period, as authorized in this section, without the need to amend the tax return for the tax period for which the credit was issued, subject to the provisions of this subsection. A transferee may carry forward an unused credit for use in any of the next five successive tax periods, and the unused credit shall expire thereafter.

f. As used in this section:

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

“Commercial farm operator” means a person or entity that is primarily responsible for the on-site, day-to-day operation of a commercial farm.

“New Jersey commercial farm product” means a crop, including, but not limited to, a fruit or vegetable, harvested for human consumption from a commercial farm. “New Jersey commercial farm product” shall not include crops harvested for consumption by livestock.

“Price loss” means the same as that term is defined in section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).

3. a. A taxpayer that is a commercial farm operator shall be allowed a credit against the tax otherwise due under the “New Jersey Gross Income Tax Act,” N.J.S.A.54A:1-1 et seq., in an amount equal to the price loss of the commercial farm during the taxable year, provided that the taxpayer obtains a certification of the price loss for the taxable year from the Secretary of Agriculture pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).

b. The order of priority of the application of the credit allowed pursuant to this section, and any other credits allowed by law against the tax imposed pursuant to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq., for a taxable year, shall be as prescribed by the director. The amount of the credit applied under this section against the tax imposed pursuant to N.J.S.54A:1-1 et seq. for a taxable year, together with other payments, credits, deductions, and adjustments allowed by law, shall not reduce a taxpayer’s tax liability to an amount lower than zero. The amount of the tax credit otherwise allowable under this section which cannot be applied for the taxable year due to the limitations of this subsection or under other provisions of N.J.S.54A:1-1 et seq. may be carried forward, if necessary, to the seven taxable years following the taxable year for which the tax credit was issued, after which the tax credit shall expire.

c. No tax credit shall be allowed pursuant to this section for any costs or expenses included in the calculation of any other tax credit or exemption granted pursuant to a claim made on a tax return filed with the director, or included in the calculation of an award of business assistance or incentive, for a period of time that coincides with the taxable year for which a tax credit authorized pursuant to this section is allowed.

d. When filing a return that includes a claim for a tax credit allowed pursuant to this section, a taxpayer shall include a copy of the certification issued by the secretary.

e. (1) A business entity that is classified as a partnership for federal income tax purposes shall not be allowed a tax credit pursuant to this section directly, but the amount of tax credit of a taxpayer in respect to a distributive share of entity income shall be determined by allocating to the taxpayer that proportion of the tax credit acquired by the entity that is equal to the taxpayer’s share, whether or not distributed, of the total distributive income or gain of the entity for its taxable year ending within or with the taxpayer’s taxable year.

(2) A New Jersey S Corporation shall not be allowed a tax credit pursuant to this section directly, but the amount of the tax credit of a taxpayer in respect of a pro rata share of S Corporation income shall be determined by allocating to the taxpayer that proportion of the tax credit acquired by the New Jersey S Corporation that is equal to the taxpayer’s share, whether or not distributed, of the total pro rata share of income of the New Jersey S Corporation for its privilege period ending within or with the taxpayer’s taxable year.

f. (1) A taxpayer that obtains a certification of the price loss from the Secretary of Agriculture pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill) may apply to the director for a tax credit transfer certificate in lieu of the taxpayer being allowed any amount of tax credit against the tax liability of the taxpayer, as authorized under this section. The tax credit transfer certificate, upon receipt thereof by the taxpayer from the director, may be sold or assigned, in full or in part, in the taxable year during which the taxpayer receives the tax credit transfer certificate from the director, to another person, who may apply the credit against a tax liability under the tax pursuant to the “Corporation Business Tax Act (1945),” P.L.1945, c.162 (C.54:10A-1 et seq.), or the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. The certificate provided to the taxpayer shall include a statement waiving the taxpayer’s right to claim the amount of the credit that the taxpayer has elected to sell or assign against the tax for a tax liability. The tax credit certificate issued to a taxpayer by the director shall be subject to any terms and conditions that the director may prescribe; provided, however, that the holder of a tax credit certificate may transfer all or part of the tax credit amount, on or after the date of issuance of the tax credit transfer certificate, for use by the transferee in the tax period for which it was issued, in the tax period in which it was issued, or in any of the next three successive tax periods.

g. As used in this section:

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

“Commercial farm operator” means a person or entity that is primarily responsible for the on-site, day-to-day operation of a commercial farm.

“Price loss” means the same as that term is defined in section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).

4. a. As used in this section:

“Actual receipts” means the sum of the actual amounts, in dollars, that a commercial farm operator received in compensation for each unit of a New Jersey commercial farm product sold during the tax period.

“Baseline receipts” means the sum of the total number of units of a New Jersey commercial farm product sold during the tax year, multiplied by the monthly reference price for the month in which each unit was sold.

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

“Commercial farm operator” means a person or entity that is primarily responsible for the on-site, day-to-day operation of a commercial farm.

“Monthly reference price” means the average amount, in dollars, that the secretary determines, pursuant to subsection d. of this section, that a commercial farm operator should fairly receive in compensation for each unit of a New Jersey commercial farm product sold during that specific month.

“Price loss” means the difference between the baseline receipts and actual receipts for a New Jersey commercial farm product, provided that the amount of the actual receipts is lower than amount of the baseline receipts.

“Secretary” means the Secretary of Agriculture.

“Tax period” means a privilege period under the “Corporation Business Tax Act (1945),” P.L.1945, c.162 (C.54:10A-1 et seq.), or a taxable year under the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq., as applicable to the commercial farm operator.

“Unit” means a measurement of a New Jersey commercial farm product for the purpose of sale, as determined by the secretary.

b. A commercial farm operator that seeks a tax credit pursuant to sections 2 and 3 of P.L. , c. (C. and C. ) (pending before the Legislature as this bill) shall submit an application to the Secretary of Agriculture, in a form and manner prescribed by the secretary, for the certification of the commercial farm operator’s price loss during an applicable tax period. A commercial farm operator may submit an application pursuant to this section for the certification of the price loss for a single New Jersey commercial farm product or the total price loss for multiple New Jersey commercial farm products, provided that the application includes all the information required by this subsection for each New Jersey commercial farm product. In addition to other information and documentation that the secretary shall deem necessary, an application for the certification of price loss shall include:

(1) business records of a commercial farm operator demonstrating the actual receipts of each New Jersey commercial farm product for which the commercial farm operator seeks certification of price loss; and

(2) an indication of the dates beginning and ending the tax period for which the application is made and a calculation of the baseline receipts for that tax period.

c. The secretary shall issue a certification of price loss for the purposes of sections 2 and 3 of P.L. , c. (C. and C. ) (pending before the Legislature as this bill) to any commercial farm operator whose application meets the requirements of subsection b. of this section.

d. The secretary shall calculate the monthly reference price for each New Jersey commercial farm product, which monthly reference price shall reflect current market conditions, cost of production, and any other factors that the secretary determines appropriate. The secretary shall publish on the Internet website of the Department of Agriculture each monthly reference price for the months in the current and most recent two calendar years. The secretary shall calculate and publish the monthly reference price for each month of a calendar year within 90 days following the final day of that month. The secretary shall not be required to calculate or publish any monthly reference price for a month that precedes the January 1 next following the date of enactment of P.L. , c. (pending before the Legislature as this bill).

e. The Department of Agriculture shall adopt, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations as shall be necessary to implement this section and consistent with the purposes of P.L. , c. (pending before the Legislature as this bill).

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

STATEMENT

This bill, which is designated as the “New Jersey Loves New Jersey Farmers Act,” provides corporation business tax credits and gross income tax credits to commercial farm operators in an amount equal to the price loss of New Jersey commercial farm products, as determined by the Secretary of Agriculture (secretary).

Under the bill, a commercial farm operator is allowed a tax credit based on the price loss of New Jersey commercial farm products sold during a tax period. As defined in the bill, “New Jersey commercial farm product” means a crop, including, but not limited to, a fruit or vegetable, harvested for human consumption from a commercial farm. A “commercial farm operator” means the taxpayer primarily responsible for the on-site day-to-day operation of a commercial farm, at which New Jersey commercial farm products are planted, managed, and harvested.

The bill defines “price loss” to mean the difference between the baseline receipts and actual receipts for a New Jersey commercial farm product, provided that the amount of the actual receipts is lower than amount of the baseline receipts. Under the bill, “actual receipts” is defined to mean the sum of the actual amounts, in dollars, that a commercial farm operator received in compensation for each unit of a New Jersey commercial farm product sold during the tax period. In contract, “baseline receipts” means the sum of the total number of units of a New Jersey commercial farm product sold during the tax year, multiplied by the monthly reference price for the month in which each unit was sold. The bill defines “monthly reference price” as the average amount, in dollars, as determined by the secretary, that a commercial farm operator should fairly receive in compensation for each unit of a New Jersey commercial farm product sold during that specific month.

The bill requires the secretary to accept and review applications for the certification of a commercial farm operator’s price loss during a tax period. A commercial farm operator may submit an application for certification of the price loss for a single New Jersey commercial farm product or the total price loss for multiple New Jersey commercial farm products. In addition to such other information and documentation that the secretary may deem necessary, an application for the certification of price loss is required to include: (1) business records of a commercial farm operator demonstrating the actual receipts of each New Jersey commercial farm product for which the commercial farm operator seeks certification of price loss; and (2) an indication of the dates beginning and ending the tax period for which the application is made and calculation of the baseline receipts for that tax period. The secretary is also required under the bill to calculate and publish the monthly reference price for each month of a calendar year, as described in the bill, within 90 days following the final day of that month.

Under the bill, any amount of any unused tax credit may be carried forward to the seven tax periods following the year for which the tax credit was issued, after which the tax credit expires. The bill requires the Director of the Division of Taxation to determine the form and manner by which a taxpayer can apply for the tax credit, coordinating with the secretary as necessary.

In addition to authorizing tax credits for commercial farm operators, the bill also permits the operators to apply for a tax credit transfer certificate so that part or all of the credit awarded may be sold or assigned in the tax period during which the tax credit transfer certificate is received. The bill provides that a transferee may use the tax credit transfer certificate in the tax period for which it was issued, in the tax period in which it was issued, or in any of the next three successive tax periods. The transferee is permitted to use the credit against tax liabilities in the tax period in which it was issued or in a succeeding tax period, as authorized in the bill, without the need to amend the tax return for the tax period for which the credit was issued. The bill authorizes a transferee to carry forward an unused credit for use in any of the next five successive tax periods, and the unused credit expires thereafter.