S4521

An Act providing tax credits for the construction or expansion of certain meat processing facilities 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. a. As used in this section:

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

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

“Secretary” means the Secretary of Agriculture.

b. For privilege periods beginning on or after the January 1 next following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), and for the next five taxable years thereafter, a taxpayer who invests in a project to construct a rural meat processing facility, or a project to expand an existing rural meat processing facility, shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), to be calculated as provided in paragraph (2) of this subsection, to compensate the taxpayer for a portion of the taxpayer’s expenditure on the project.

(1) To qualify for the tax credit allowed pursuant to this section, a taxpayer shall apply, in a form and manner determined by the secretary, to the secretary for a certification that provides: (a) evidence that the taxpayer provided funding to a project to construct a rural meat processing facility, or a project to expand an existing rural meat processing facility; (b) evidence that the project included a smokehouse, sausage line, packaging facility, or cold storage facility, if applicable; (c) evidence that the project is coordinating with a regional agricultural innovation center for workforce alignment, producer integration, and supply chain development; and (d) the amount of the tax credit calculated pursuant to paragraph (2) of this subsection. The secretary shall transmit a copy of any certification issued pursuant to this subsection to the taxpayer and the director.

(2) The amount of the credit authorized pursuant to this section shall not exceed the lesser of:

(a) 20 percent of the total costs incurred by the taxpayer after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) to provide funding to a project to construct a rural meat processing facility, or a project to expand an existing rural meat processing facility, or 30 percent of the total costs incurred if the project includes a smokehouse, sausage line, packaging facility, or cold storage facility; or

(b) $5,000,000.

c. The director shall prescribe the order of priority of the application of the tax 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 the privilege period. 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 reduce the tax liability 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). The amount of the tax credit otherwise allowable under this section which cannot be applied for the privilege period may be carried forward, if necessary, to the four privilege periods following the privilege period for which a portion of the tax credit was allowed.

d. The value of tax credits provided by the director pursuant to this section and pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall not exceed a cumulative total of $50 million.

e. 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 pursuant to this section is allowed.

f. The secretary, 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 as are necessary to implement the provisions of this section.

g. No later than five years after the effective date of this section, the division shall prepare and submit to the Governor, the State Treasurer, and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature, a report that, at a minimum, summarizes the effectiveness of the tax credit in incentivizing projects to construct or expand rural meat processing facilities.

2. a. As used in this section:

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

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

“Secretary” means the Secretary of Agriculture.

b. For privilege periods beginning on or after the January 1 next following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), and for the next five taxable years thereafter, a taxpayer who invests in a project to construct a rural meat processing facility, or a project to expand an existing rural meat processing facility, 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., to be calculated as provided in paragraph (2) of this subsection, to compensate the taxpayer for a portion of the taxpayer’s expenditure on the project.

(2) The amount of the credit authorized pursuant to this section shall not exceed the lesser of:

(b) $5,000,000.

c. 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 under this section against the New Jersey gross income tax imposed pursuant to N.J.S.54A:1-1 et seq. for a taxable year, when taken together with any other payments, credits, deductions, and adjustments allowed by law, shall not reduce a taxpayer's tax liability to an amount less 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 section or other provisions of N.J.S.54A:1-1 et seq. may be carried forward, if necessary, to the four taxable years following the taxable year for which the tax credit was allowed.

d. 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.

e. The value of tax credits provided by the director pursuant to this section and pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall not exceed a cumulative total of $50 million.

f. (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 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 S Corporation income of the New Jersey S Corporation for its privilege period ending within or with the taxpayer’s taxable year.

g. The secretary, 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 as are necessary to implement the provisions of this section.

h. No later than five years after the effective date of this section, the division shall prepare and submit to the Governor, the State Treasurer, and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature, a report that, at a minimum, summarizes the effectiveness of the tax credit in incentivizing projects to construct or expand rural meat processing facilities.

3. This act shall take effect immediately.

STATEMENT

This bill establishes tax incentives for taxpayers who provide funding to certain projects to construct or expand rural meat processing facilities.

Specifically, the bill would establish a tax credit against the Corporation Business Tax (CBT) and the income tax imposed pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. The tax credit would be for 20 percent of the costs expended by the taxpayer on the project, or 30 percent of the costs, if the project includes a smokehouse, sausage line, packaging facility, or cold storage facility. Each tax credit would be capped at $5 million and the total cumulative amount of all credits authorized by the bill would be capped at $50 million. The tax credits would expire after five years.

In order to receive a tax credit, a taxpayer would be required to apply to the Secretary of Agriculture for a certification. The application would be required to include: (1) evidence that the taxpayer provided funding to a project to construct a rural meat processing facility, or a project to expand an existing rural meat processing facility; (2) evidence that the project included a smokehouse, sausage line, packaging facility, or cold storage facility, if applicable; (3) evidence that the project is coordinating with a regional agricultural innovation center for workforce alignment, producer integration, and supply chain development; and (4) the amount of the tax credit.