S1645

An Act establishing tax credits for certain organic farmers.

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

1. a. For the privilege period beginning on or after January 1, 2022, but before January 1, 2023, a qualified taxpayer who meets the requirements of this section, and the rules and regulations adopted pursuant thereto, shall be allowed a credit against the tax due pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) in an amount equal to the difference between: the fees incurred by the qualified taxpayer to obtain from an accredited certifying agent certification for organic agricultural products for the period beginning on May 30, 2022 and ending on December 31, 2022; and the fees incurred by the qualified taxpayer to obtain from the department certification for organic agricultural products pursuant to P.L.2003, c.176 (C.4:10-79) for that same period.

b. (1) To qualify for the tax credit allowed pursuant to this section, the qualified taxpayer shall apply for a certification from the department that certifies: (a) the fees incurred by the qualified taxpayer to obtain from an accredited certifying agent certification for organic agricultural products for the period beginning on May 30, 2022 and ending on December 31, 2022; (b) the fees incurred by the qualified taxpayer to obtain from the department certification for organic agricultural products pursuant to P.L.2003, c.176 (C.4:10-79) for the period beginning on May 30, 2022 and ending on December 31, 2022; and (c) the amount of the tax credit to which the qualified taxpayer is entitled. The application shall be made in a form and manner as determined by the department, and include such information as the department determines relevant. Upon certification, the department shall submit a copy thereof to the qualified taxpayer and the director. When filing a tax return that includes a claim for a credit pursuant to this section, the qualified taxpayer shall include a copy of the certification issued by the department pursuant to this paragraph.

(2) The department may assess a reasonable fee to offset the costs of certifying a tax credit claim pursuant to this section.

c. If a qualified taxpayer incurs fees to obtain from the department or other accredited certifying agent annual certification for organic agricultural products, the department shall calculate the tax credit by: (1) prorating the fees incurred by the taxpayer to reflect the period beginning on May 30, 2022 and ending on December 31, 2022; and (2) subtracting (a) the fees the incurred by the qualified taxpayer to obtain certification from the department for that period from (b) the fees incurred by the qualified taxpayer to obtain certification from an accredited certifying agent during that period.

d. The order of priority of the application of the credit allowed pursuant to this section and any other credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for a privilege period shall be as prescribed by the director. The amount of the credit applied pursuant to this section against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) shall not reduce a qualified taxpayer’s tax liability for a privilege period 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).

e. The department, in consultation with the director, shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations necessary to carry out the provisions of this section.

f. As used in this section:

“Accredited certifying agent” means a person or entity that operates as an accredited certifying agent under the National Organic Program.

“Department” means the New Jersey Department of Agriculture.

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

“Qualified taxpayer” means any person or entity: who produces and sells organic agricultural products in adherence to applicable federal standards for such products; who was certified by the department pursuant to P.L.2003, c.176 (C.4:10-79) on January 11, 2022; who paid fees to the department in connection with certification for organic agricultural products for the period beginning on May 30, 2022 and ending on December 31, 2022; who was certified by an accredited certifying agent during the period beginning on May 30, 2022 and ending on December 31, 2022, and who paid fees to the accredited certifying agent in connection with that certification; and whose fees for certification by an accredited certifying agent during the period beginning on May 30, 2022 and ending on December 31, 2022 exceeded the qualified taxpayer’s fees for certification by the department during that same period.

2. a. For the taxable year beginning on or after January 1, 2022, but before January 1, 2023, a qualified taxpayer who meets the requirements of this section, and the rules and regulations adopted pursuant thereto, shall be allowed a credit against the New Jersey gross income tax due pursuant to N.J.S.54A:1-1 et seq. in an amount equal to the difference between: the fees incurred by the qualified taxpayer to obtain from an accredited certifying agent certification for organic agricultural products for the period beginning on May 30, 2022 and ending on December 31, 2022; and the fees incurred by the qualified taxpayer to obtain from the department certification for organic agricultural products pursuant to P.L.2003, c.176 (C.4:10-79) for that same period.

(2) The department may assess a reasonable fee to offset the costs of certifying a tax credit claim pursuant to this section.

d. The order of priority of the application of the credit allowed pursuant to this section and any other credits allowed against the tax imposed pursuant to 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 pursuant to this section against the tax imposed pursuant to pursuant to N.J.S.54A:1-1 et seq. shall not reduce a taxpayer’s tax liability for a taxable year to an amount less than zero.

f. As used in this section:

“Accredited certifying agent” means a person or entity that operates as an accredited certifying agent under the National Organic Program.

“Department” means the New Jersey Department of Agriculture.

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

3. This act shall take effect immediately and apply to privilege periods and taxable years beginning on or after January 1, 2022, but before January 1, 2023.

STATEMENT

This bill would provide one-time corporation business tax and gross income tax credits to certain State-certified organic farmers who are required in 2022 to obtain certification for organic agricultural products from an accredited certifying agent outside of the New Jersey Department of Agriculture.

In a notice dated January 11, 2022, the department informed currently certified organic farmers within the State that department certification for organic agricultural products would be surrendered effective May 30, 2022 and that the department would no longer certify or inspect organic operations. Organic farmers that are certified with the department would be required to, within 60 of days of the date of the department's notice, apply to another Accredited Certification Agency for an organic certification.

For the privilege period and taxable year beginning on or after January 1, 2022, but before January 1, 2023, a qualified taxpayer who meets the requirements of the bill would be allowed a credit against the corporation business tax or gross income tax in an amount equal to the difference between: the fees incurred by the qualified taxpayer to obtain from an accredited certifying agent certification for organic agricultural products for the period beginning on May 30, 2022 and ending on December 31, 2022; and the fees incurred by the qualified taxpayer to obtain from the department certification for organic agricultural products pursuant to P.L.2003, c.176 (C.4:10-79) for that same period.

To qualify for a credit, a taxpayer would have to apply for a certification from the Department of Agriculture that certifies: the fees incurred by the qualified taxpayer to obtain from an accredited certifying agent certification for organic agricultural products for the period beginning on May 30, 2022 and ending on December 31, 2022; the fees incurred by the qualified taxpayer to obtain from the department certification for organic agricultural products pursuant to P.L.2003, c.176 (C.4:10-79) for the period beginning on May 30, 2022 and ending on December 31, 2022; and the amount of the tax credit to which the qualified taxpayer is entitled. The application would include such information as the department determines relevant. When filing a tax return that includes a claim for a credit pursuant to this bill, the taxpayer would have to include a copy of the certification issued by the department.

Under the bill, if a qualified taxpayer incurs fees to obtain from the department or other accredited certifying agent annual certification for organic agricultural products, the department is required to calculate the tax credit by: (1) prorating the fees incurred by the taxpayer to reflect the period beginning on May 30, 2022 and ending on December 31, 2022; and (2) subtracting (a) the fees incurred by the qualified taxpayer to obtain certification from the department for that period from (b) the fees incurred by the qualified taxpayer to obtain certification from an accredited certifying agent during that period.

Under the bill, a “qualified taxpayer” means any person or entity: who produces and sells organic agricultural products in adherence to applicable federal standards for such products; who was certified by the department pursuant to P.L.2003, c.176 (C.4:10-79) on January 11, 2022; who paid fees to the department in connection with certification for organic agricultural products for the period beginning on May 30, 2022 and ending on December 31, 2022; who was certified by an accredited certifying agent during the period beginning on May 30, 2022 and ending on December 31, 2022, and who paid fees to the accredited certifying agent in connection with that certification; and whose fees for certification by an accredited certifying agent during the period beginning on May 30, 2022 and ending on December 31, 2022 exceeded the qualified taxpayer’s fees for certification by the department during that same period. The bill defines “accredited certifying agent” as a person or entity that operates as an accredited certifying agent under the National Organic Program.