A3846

An Act providing tax relief for certain businesses and persons impacted by certain public highway projects, designated as the Road to Tax Relief Act, supplementing various parts of the statutory law, and making an appropriation.

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

1. a. A seller that operates a retail business establishment within an impacted construction zone shall be entitled to claim a refundable credit against the remittance required under section 18 of the “Sales and Use Tax Act,” P.L.1966, c.30 (C.54:32B-18) in the amount of taxes collected at the establishment, less the amount of tax dedicated pursuant to subparagraph (b) of Article VIII, Section I, paragraph 7 of the New Jersey Constitution, during each month of the relief period, provided that the seller is approved by the director pursuant to subsection b. of this section. The credit allowed pursuant to this section shall not exceed the amount of taxes collected at the establishment during the month for which the credit is claimed.

b. (1) Before or after the commencement of a public highway project, a seller may apply to the director for the credit authorized under this section. The application shall be submitted in a form and manner prescribed by the director. The director shall require the seller to submit such documentation as the director deems necessary to verify that the seller operates a retail business establishment within an impacted construction zone.

(2) If the director deems that the seller meets the conditions set forth in subsection a. of this section, the director shall issue a written determination to the seller, which determination shall indicate the retail business establishments at which the credit shall be available and the relief period during which the credit shall apply.

c. Upon approval of the director pursuant to subsection b. of this section, a seller may claim the credit on the monthly or quarterly return filed to the Director of the Division of Taxation in the Department of the Treasury pursuant to section 17 of P.L.1966, c.30 (C.54:32B-17). Until the conclusion of the relief period, the seller shall be entitled to claim a refundable credit against the remittance of any tax collections for which the credit is claimed, subject to the appropriation of funds for this purpose.

d. (1) Upon the commencement or completion of a public highway project, the Commissioner of Transportation shall provide written notice to the director attesting to the commencement or completion of the project, as applicable. Within 30 days following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), the commissioner shall provide written notice to the director attesting to each ongoing public highway project within the State.

(2) Within 30 days of receiving the written notice from the commissioner concerning the completion of a public highway project, the director shall provide written notice to each seller for which a credit has been authorized under this section related to the public highway project, which notice shall indicate that allowance to claim a credit against the remittance required under section 18 of the “Sales and Use Tax Act,” P.L.1966, c.30 (C.54:32B-18) is terminated, as of the date of receipt of the written notice.

e. As used in this section:

“Director” means the Director of the Division of Taxation.

“Full-time employee” means a person who is employed by the small business for at least 35 hours per week at a wage no less than the State minimum wage.

“Impacted construction zone” means any area immediately surrounding a public highway project within which area the occurrence of the public highway project impedes or blocks the normal and reasonable flow of traffic or otherwise restricts access to business establishments located within the area.

“Public highway project” means any infrastructure project that involves the construction, improvement, or maintenance of a State, county, or municipal highway, road, or street, including, but not limited to, the repair or reconstruction of any highway, road, or street that has suffered serious damage as a result of a natural disaster or catastrophic failure from any external cause.

“Relief period” means the period of time between the date on which a public highway project commences and the date on which the project concludes.

“Retail business establishment” means a small business that maintains a fixed permanent location where goods are exhibited or services are offered on an appointment or walk-in basis.

“Small business” means a business with no more than 50 full-time employees, is independently owned and operated, has its principal place of business in the State of New Jersey, and is not delinquent or deficient with respect to the payment of any State tax.

2. a. A taxpayer that operates a retail business establishment within an impacted construction zone 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 revenue loss experienced by the retail business establishment during the privilege period as a result of the public highway project, provided that the taxpayer obtains a certification of the revenue loss for the privilege period from the director 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. 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 of revenue loss issued by the director.

d. (1) A taxpayer that obtains a certification of the revenue loss from the director 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 a successive tax period.

(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.

e. As used in this section:

“Full-time employee” means a person who is employed by the small business for at least 35 hours per week at a wage no less than the State minimum wage.

“Retail business establishment” means a small business that maintains a fixed permanent location where goods are exhibited or services are offered on an appointment or walk-in basis.

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

3. a. A taxpayer that operates a retail business establishment within an impacted construction zone shall be allowed a 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 the revenue loss experienced by the retail business establishment during the taxable year as a result of the public highway project, provided that the taxpayer obtains a certification of the revenue loss for the taxable year from the director 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. 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 of revenue loss issued by the director.

d. (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.

e. (1) A taxpayer that obtains a certification of the revenue loss from the director 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 a successive tax period.

f. As used in this section:

“Full-time employee” means a person who is employed by the small business for at least 35 hours per week at a wage no less than the State minimum wage.

“Retail business establishment” means a small business that maintains a fixed permanent location where goods are exhibited or services are offered on an appointment or walk-in basis.

“Revenue loss” means the same as the 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 receipts, in dollars, received in compensation for goods and services sold at a retail business establishment located within an impacted construction zone during the relief period.

“Baseline receipts” means the average sum of the actual receipts, in dollars, received in compensation for goods and services sold at a retail business establishment located within an impacted construction zone during the dates comprising the applicable relief period in each of the four years immediately preceding such period.

“Director” means the Director of the Division of Taxation in the Department of the Treasury.

“Full-time employee” means a person who is employed by the small business for at least 35 hours per week at a wage no less than the State minimum wage.

“Relief period” means all or part of the tax period for which a tax credit is sought in which work on a public highway project is underway.

“Retail business establishment” means a small business that maintains a fixed permanent location where goods are exhibited or services are offered on an appointment or walk-in basis.

“Revenue loss” the difference between the baseline receipts and actual receipts for a retail business establishment, provided that the amount of the actual receipts is lower than amount of the baseline receipts.

“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 retail business establishment.

b. A retail business establishment that seeks a tax credit pursuant to section 2 or 3 of P.L. , c. (C. or C. ) (pending before the Legislature as this bill) shall submit an application to the director, in a form and manner prescribed by the director, for the certification of the retail business establishment’s revenue loss experienced during an applicable tax period as a result of a public highway project. In addition to other information and documentation that the director shall deem necessary, an application for the certification of revenue loss shall include:

(1) evidence documenting that the retail business establishment is located within an impacted construction zone;

(2) business records and receipts demonstrating the actual receipts of the retail business establishment during the relief period for which the certification of revenue loss is sought;

(3) business records and receipts demonstrating the baseline receipts of the retail business establishment during the applicable relief period for which the certification of revenue loss is sought; and

(4) an indication of the dates of the beginning and ending of the tax period for which the application is made.

c. The director shall issue a certification of revenue 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 retail business establishment whose application meets the requirements of subsection b. of this section.

5. a. A resident taxpayer who is an employee of a retail business establishment within an impacted construction zone shall be allowed a 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 the lost wages experienced by the taxpayer during the taxable year as a result of a modification or reduction to the taxpayer’s work schedule due to the impacts of a public highway project.

c. 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 of lost wages for the taxable year, as obtained from the director pursuant to section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill).

d. As used in this section:

“Full-time employee” means a person who is employed by the small business for at least 35 hours per week at a wage no less than the State minimum wage.

“Lost wages” means the same as the term is defined in section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill).

“Retail business establishment” means a small business that maintains a fixed permanent location where goods are exhibited or services are offered on an appointment or walk-in basis.

6. a. As used in this section:

“Actual wages” means the actual compensation received by an employee during the relief period for services rendered at a business establishment.

“Baseline wages” means the compensation that an employee would have otherwise received during the relief period for services rendered at a business establishment had the employee’s work schedule not been modified or reduced as a result of the impacts of a public highway project.

“Full-time employee” means a person who is employed by the small business for at least 35 hours per week at a wage no less than the State minimum wage.

“Lost wages” means the difference between the baseline wages and actual wages for the employee of a business establishment located within an impacted construction zone, provided that the amount of the actual wages is lower than the amount of the baseline wages.

“Relief period” means all or part of the tax period for which a tax credit is sought in which work on a public highway project is underway.

“Retail business establishment” means a small business that maintains a fixed permanent location where goods are exhibited or services are offered on an appointment or walk-in basis.

b. A taxpayer that seeks a tax credit pursuant to section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall submit an application to the director, in a form and manner prescribed by the director, for the certification of the taxpayer’s lost wages experienced as a result of a modification or reduction in the taxpayer’s work schedule due to the impacts of the public highway project. In addition to other information and documentation that the director shall deem necessary, an application for the certification of lost wages shall include:

(1) evidence documenting that the taxpayer is employed by a retail business establishment that is located within an impacted construction zone;

(2) a written statement from the taxpayer’s employer confirming that the taxpayer’s work schedule was modified or reduced due to the impacts of the public highway project, and documenting the hourly wages paid to the employee during all times within the relief period, as well as the times and dates on which the employee’s work schedule was modified or reduced; and

(3) evidence documenting the actual wages received by the taxpayer during the relief period.

c. The director shall issue a certification of lost wages for the purposes of section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill) to any taxpayer whose application meets the requirements of subsection b. of this section.

7. The Director of the Division of Taxation in the Department of the Treasury shall adopt, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations to implement the provisions of P.L. , c. (pending before the Legislature as this bill).

8. There is appropriated such amounts as are necessary from the General Fund to the Division of Taxation in the Department of the Treasury to defray the costs of the credits authorized against the remittance of sales and use tax collections pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill), subject to the approval of the Director of the Division of Budget and Accounting in the Department of the Treasury.

9. This act shall take effect on the first day of the next month immediately following the date of enactment, except that sections 2, 3, and 5 of this act shall apply to taxable years and privilege periods beginning on or after the January 1 next following the date of enactment.

STATEMENT

This bill, designated as the “Road to Tax Relief Act,” provides various forms of tax relief to certain businesses and employees who are adversely impacted by a public highway project, such as the ongoing repair of Interstate 80 in Morris County after the discovery of numerous sinkholes and voids along the roadway.

Specifically, a retail business establishment that operates within an impacted construction zone would be entitled to claim a refundable credit against the remittance required under the “Sales and Use Tax Act,” P.L.1966, c.30 (C.54:32B-1 et seq.) in the amount of taxes collected at the establishment during each month in which the public highway project remains ongoing, less the portion of the tax that is constitutionally dedicated to the Property Tax Relief Fund. To claim the credit, the retail business establishment would be required to submit an application to the Director of the Division of Taxation (director) to verify that the retail business establishment operates within an impacted construction zone. Upon approval of the application, the retail business establishment would be permitted to claim a refundable credit against the requirement to remit any tax collections for which the credit is claimed, subject to the appropriation of funds for this purpose. The bill also appropriates such amounts as are necessary to defray the costs of the credits against sales tax remittances.

Under the bill, an “impacted construction zone” is defined as any area immediately surrounding a public highway project within which area the occurrence of the public highway project impedes or blocks the normal and reasonable flow of traffic or otherwise restricts access to business establishments located within the area. The bill also defines a “retail business establishment” to include any small business, with no more than 50 full-time employees, that maintains a fixed permanent location where goods are exhibited or services are offered on an appointment or walk-in basis.

Additionally, the bill provides gross income tax and corporate income tax credits to retail business establishments operating within an impacted construction zone in the amount of the revenue losses experienced by the establishment as a result of the public highway project. To claim the credit, the retail business establishment would be required to apply to the director for a certification of the establishment’s revenue loss for the applicable tax period. Under the bill, the retail business establishment’s revenue loss would be calculated based on the difference between: (1) the “baseline receipts,” which include the average sum of the actual receipts, in dollars, received in compensation for goods and services sold at the establishment during the dates comprising the applicable relief period in the four prior years; and (2) the “actual receipts,” which includes the sum of the actual receipts, in dollars, received in compensation for goods and services sold at a retail business establishment located within an impacted construction zone during the relief period.

After approval of the certificate of revenue loss, the retail business establishment would be permitted to claim the tax credit. However, the bill also permits the retail business establishment 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.

Lastly, the bill also provides gross income tax credits to the employees of retail business establishments operating within an impacted construction zone based on the amount of lost wages experienced by the employee as a result of a modification or reduction to their work schedule due to the impacts of a public highway project. To claim the credit, the employee would be required to apply to the director for a certification of lost wages for the applicable tax period. Under the bill, the employee’s lost wages would be calculated based on the difference between: (1) the “baseline wages,” which include the compensation that an employee would have otherwise received during the relief period for services rendered at a business establishment had the employee’s work schedule not been modified or reduced as a result of the impacts of a public highway project; and (2) the “actual wages,” which include the actual compensation received by an employee during the relief period for services rendered at a business establishment.