S2784

An Act providing a maximum sales and use tax imposition amount for sales and uses of boats and vessels and establishing a grace period for the imposition of use tax on certain boats and vessels used by resident purchasers, supplementing P.L.1966, c.30 (C.54:32B-1 et seq.).

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

1. Notwithstanding the provisions of P.L.1966, c. 30 (C.54:32B-1 et seq.) to the contrary, the maximum amount of tax imposed and collected on the sale or use of a boat or other vessel shall not exceed $20,000.

2. a. Notwithstanding the provisions of P.L.1966, c. 30 (C.54:32B-1 et seq.) to the contrary, the use within this State of a boat or other vessel for temporary periods, not totaling more than 30 calendar days in a calendar year, shall not be subject to the compensating use tax imposed by section 6 of P.L.1966, c.30 (C.54:32B-6), provided that:

(1) the boat or other vessel was purchased by a resident of the State of New Jersey outside of this State for use outside of this State,

(2) the boat or other vessel is legally operated by the resident purchaser and meets all current requirements pursuant to applicable federal law or pursuant to a federally-approved numbering system for boats and vessels adopted by another state, and

(3) the resident purchaser is not engaged in or carrying on in this State any employment, trade, business, or profession in which the boat or vessel will be used in this State.

b. If any of the conditions specified by subsection a. of this section have not been met, or after having been met fail to continue to be met, the exemption provided by subsection a. of this section shall not apply.

3. Notwithstanding the provisions of the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the Director of the Division of Taxation in the Department of the Treasury may adopt immediately upon filing with the Office of Administrative Law such rules and regulations as the director determines to be necessary to implement the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill), which rules and regulations shall be effective for a period not to exceed 360 days following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) and may thereafter be amended, adopted, or readopted by the director in accordance with the requirements of P.L.1968, c.410.

4. This act shall take effect immediately, provided that section 1 shall apply to sales and uses on or after the first day of the second month next following the date of enactment and that section 2 shall apply to uses on or after January 1 next following the date of enactment.

STATEMENT

This bill provides for a maximum limit on the amount of sales and use tax that can be imposed and collected on the sale or use of a boat or other vessel, and establishes a limited grace period for the imposition of use tax on certain boats and vessels that are purchased out-of-State, for use out-of-State, by New Jersey residents and subsequently used, on a temporary basis, within this State.

The bill provides that the maximum amount of tax imposed and collected on the sale or use of a boat or other vessel in this State is limited to $20,000. This maximum limitation on the imposition of tax will principally apply to new sales and uses of non-commercial boats and vessels, including motorboats, sailboats, and other yachts and cruisers, that are not eligible for the exemption currently granted for sales and uses of commercial ships and vessels under N.J.S.A.54:32B-8.12.

In addition, the bill establishes a limited grace period for the imposition of tax on the use of certain boats and vessels by resident purchasers by providing that the use within this State of a boat or other vessel for temporary periods, not totaling more than 30 calendar days in a calendar year, will not be subject to the State’s compensating use tax. The bill provides that for the grace period to apply:

-- the boat or other vessel used within this State must have been purchased by a resident of the State of New Jersey outside of this State for use outside of this State,

-- the boat or other vessel must be legally operated by the resident purchaser and must meet all current requirements pursuant to applicable federal law or pursuant to a federally-approved numbering system for boats and vessels adopted by another state, and

-- the resident purchaser must not be engaged in or carrying on in this State any employment, trade, business, or profession in which the boat or vessel will be used in this State.

The bill authorizes the Director of the Division of Taxation in the Department of the Treasury to adopt rules and regulations necessary to effectuate the purposes of the bill, and allows for the immediate filing of those rules and regulations with the Office of Administrative Law, effective for a period not to exceed 360 days following the bill’s effective date.

The bill takes effect immediately, but provides for the limitation on tax to apply to sales and uses on or after the first day of the second month next following the date of enactment and for the grace period to apply to uses on or after January 1 next following the date of enactment.

The purpose of this bill is to provide support to the marine industry in this State by encouraging sales of new boats and vessels, and to allow New Jersey residents an annual window, of a limited duration, to use boats and other vessels, that are purchased and ordinarily kept and maintained at an out-of-State location, in this State without incurring a tax liability. Currently, boats and other vessels that are acquired by residents of this State from a dealer outside this State for use outside this State are subject to use tax at the time the boat or other vessel is first used in this State, unless the resident is eligible to claim a credit for sales tax paid to another state or jurisdiction.