A4077

An Act imposing taxes and fees on operators of private prisons and supplementing Title 54 of the Revised Statutes.

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

1. Sections 1 through 4 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be known and may be cited as the “Knowledge, Accountability, and Rights in Incarceration Markets Act.”

2. a. For the purposes of this section:

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

“Public entity” means any federal, State, county, or municipal entity.

b. A taxpayer that operates a private correctional facility in the State and has entered into a contract with a public entity for the provision of correctional services, shall be subject to a fee based on the value of such contract with the public entity during each year in which the contract is in effect. The amount of the fee shall be equal to eight percent of the consideration given, or contracted to be given, by the public entity to the taxpayer for the provision of correctional services.

c. Every taxpayer subject to the fee imposed pursuant to subsection b. of this section shall annually file a return for the preceding calendar year with the director on such forms as the director shall prescribe. The return shall indicate the total dollar value of the contract entered into by the taxpayer for the provision of correctional services and include a copy of such contract. At the time a return is filed pursuant to this subsection, a taxpayer shall remit the full amount of the fee due.

d. A taxpayer that fails to file a return when due or fails to pay the amount of the fee when due shall be subject to such penalties and interest as shall be provided by the director.

e. There is established a special, nonlapsing account within the General Fund, to be known as the “Detention and Deportation Defense Initiative Support Fund,” into which all revenues generated from the fee imposed pursuant to this section shall be credited. The monies in the account shall be dedicated and annually appropriated by the Legislature to the Department of Human Services to support the provision of legal services by accredited institutions of higher education through the Detention and Deportation Defense Initiative, or any other successor initiative or program.

3. a. For the purposes of this section:

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

b. A taxpayer that operates a private correctional facility in the State shall be subject to a fee based on the number of inmates who are detained at the taxpayer’s private correctional facility. The amount of the fee shall be $15 per inmate for each day such inmate is detained at the taxpayer’s private correctional facility in a month.

c. Every taxpayer subject to the fee imposed pursuant to subsection b. of this section shall file a return for the preceding month with the director on such forms as the director shall prescribe. The return shall indicate the total number of inmates detained at the taxpayer’s private correctional facility during the preceding month and the number of days during that month in which such inmates were detained by the taxpayer. At the time a return is filed pursuant to this subsection, a taxpayer shall remit the full amount of the fee due.

d. A taxpayer that fails to file a return when due or fails to pay the amount of the fee when due, shall be subject to such penalties and interest as shall be provided by the director.

e. There is established a special, nonlapsing account within the General Fund, to be known as the “Private Prison Societal Rehabilitation Support Fund,” into which all revenues generated from the fee imposed pursuant to this section shall be credited. The monies in the account shall be dedicated and annually appropriated by the Legislature to support community-based programs related to food security, housing, recreation, job training, and youth mentorship.

4. a. For the purposes of this section:

“Allocated taxable net income” means taxable net income as defined in subsection (w) of section 4 of P.L.1945, c.162 (C.54:10A-4).

“Combined group” means a combined group as defined in subsection (z) of section 4 of P.L.1945, c.162 (C.54:10A-4).

“S corporation” shall mean a New Jersey S corporation, as defined in subsection (p) of section 4 of P.L.1945, c.162 (C.54:10A-4), which does not make an election to be taxed as a C corporation pursuant to either subsection (ff) of P.L.1945, c.162 (C.54:10A-4) or subsection d. of section 3 of P.L.1993, c.173 (C.54:10A-5.22).

“Taxpayer” means any business entity or combined group that is subject to tax, as provided in the Corporation Business Tax (1945), P.L.1945, c.162 (C.54:10A-1 et seq.), except not including any S corporation.

b. In addition to the tax paid by each taxpayer determined pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), a taxpayer that operates a private correctional facility in the State shall be assessed a private prison surtax equal to three percent of the taxpayer’s allocated taxable net income during each privilege period. The private prison surtax shall be due and payable in accordance with section 15 of P.L.1945, c.162 (C.54:10A-15), and the private prison surtax shall be administered pursuant to the provisions of P.L.1945, c.162 (C.54:10A-1 et seq.). Notwithstanding the provisions of any other law to the contrary, no credits shall be allowed against the private prison surtax liability computed under this section except for credits for installment payments, estimated payments made with a request for an extension of time for filing a return, or overpayments from prior privilege periods.

c. The gross amount of all revenues generated from the private prison surtax imposed pursuant to this section shall be credited to the “Private Prison Societal Rehabilitation Support Fund” established pursuant to subsection e. of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), except for amounts credited to the special account in the General Fund created pursuant to Article VIII, Section II, paragraph 6 of the New Jersey Constitution. The monies credited to the fund pursuant to this section shall be used for the fund’s authorized purposes, provided that one percent of the private prison surtax revenues shall be appropriated to support programs provided by the State, one percent of such revenues shall be appropriated to support programs provided by the county in which the private correctional facility of the taxpayer is located, and one percent of such revenues shall be appropriated to support programs provided by the municipality in which the private correctional facility of the taxpayer is located.

5. The Director of the Division of Taxation shall, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations as necessary to implement the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).

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

STATEMENT

This bill, to be called the “Knowledge, Accountability and Rights in Incarceration Markets Act,” or the “KARIM Act,” would impose additional taxes and fees on the operators of private prisons.

First, a private prison operator that has entered into a contract with a public entity for the provision of correctional services would be subject to a fee based on the value of such contract with the public entity. The amount of the fee would be equal to eight percent of the consideration given, or contracted to be given, by the public entity to the taxpayer for the provision of correctional services. The revenues collected from this fee would be credited to a special, nonlapsing account within the General Fund, to be known as the “Detention and Deportation Defense Initiative Support Fund,” and dedicated to the Department of Human Services to support the provision of legal services by accredited institutions of higher education through the Detention and Deportation Defense Initiative, or any other successor initiative or program.

The bill also imposes a monthly fee based on the number of inmates who are detained at a taxpayer’s private correctional facility. The amount of the fee would be $15 per inmate for each day such inmate is detained at the taxpayer’s private correctional facility each month. The revenues collected from the inmate fee would be credited to a special, nonlapsing account within the General Fund, to be known as the “Private Prison Societal Rehabilitation Support Fund,” and dedicated to support community-based programs related to food security, housing, recreation, job training, and youth mentorship.

Finally, the bill would impose a percent private prison surtax on corporate operators of private prisons. This surtax would be imposed in addition to the corporation’s tax liability under the State’s Corporation Business Tax in an amount equal to three percent of the corporation’s allocated taxable net income for any privilege period in which it operates a private correctional facility in the State. The revenues collected from the surtax would generally be credited to the Private Prison Societal Rehabilitation Support Fund” in support of the fund’s purposes, except that one percent of these revenues would be required to be appropriated to support programs provided by the State, the county in which the private correctional facility of the taxpayer is located, and the municipality in which the private correctional facility of the taxpayer is located respectively.