LEGISLATIVE FISCAL ESTIMATE
ASSEMBLY, No. 3486
STATE OF NEW JERSEY
216th LEGISLATURE
DATED: JULY 3, 2014
SUMMARY
Synopsis: |
Adjusts and clarifies certain State tax compliance standards and restricts certain State tax benefits. |
Type of Impact: |
A recurring revenue gain to the State General Fund and Property Tax Relief Fund. |
Agencies Affected: |
Department of the Treasury. |
Office of Legislative Services Estimate |
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Fiscal Impact |
FY 2015 |
FY 2016 |
FY 2017 |
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State Revenue Gain |
Indeterminate — See comments below |
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· The Office of Legislative Services (OLS) cannot determine the bill's impact on State revenue collections. The legislation should, however, produce a recurring State revenue gain.
· The Department of the Treasury provided the OLS with an informal projection that the bill would increase FY 2015 State revenues by $110 million. The OLS cannot independently verify the accuracy of Treasury’s estimate whose individual components are listed on the following page.
BILL DESCRIPTION
Assembly Bill No. 3486 of 2014 adjusts and clarifies certain State tax compliance standards and restricts certain State tax benefits, notably:
(i) Corporation Business Tax Operational Income Adjustment: adjusting the statutory definition of operational income under the corporation business tax to clarify that the acquisition, management or disposition of an asset may be independent factors in determining qualification rather than three necessary factors to qualification;
(ii) Conditioning Certain Nonresident Partner Tax Credits and Refunds on the Filing of New Jersey Gross Income Tax Returns: requiring certain nonresident partners to file a gross income tax return as a prerequisite to receiving tax credits and refunds related to partnership activities taxable to New Jersey;
(iii) Corporation Business Tax Net Operating Losses Reduction for Certain Debt Cancellations: reducing corporation business tax net operating losses for amounts of debt discharged and excluded from income on account of bankruptcy, insolvency or qualified farm indebtedness; and
(iv) Establishing Sales Tax Nexus through Certain Independent Contractors – i.e. “Click-Through Nexus”: denoting statutorily that sellers using commissioned physically present independent contractors to market in-State sales, online or otherwise, invoke the duty to collect sales tax if cumulative sales through those contractors exceed $10,000 for the prior four calendar quarters.
FISCAL ANALYSIS
EXECUTIVE BRANCH
The Department of the Treasury has not provided an official fiscal estimate on this bill’s tax law changes, which were originally proposed in the Executive’s FY 2015 Budget recommendation. But the department submitted to the OLS an informal estimate that the bill would increase FY 2015 State revenues by $110 million. The individual elements of the Executive's estimated revenue gain are as follows:
Tax Law Change |
Executive FY 2015 Revenue Gain Estimate |
Conditioning Certain Nonresident Partner Tax Credits and Refunds on the Filing of New Jersey Gross Income Tax Returns |
$40,000,000 |
Establishing Sales Tax Nexus through Certain Independent Contractors |
$25,000,000 |
Corporation Business Tax Operational Income Adjustment |
$25,000,000 |
Corporation Business Tax Net Operating Losses Reduction for Certain Debt Cancellations |
$20,000,000 |
OFFICE OF LEGISLATIVE SERVICES
The OLS cannot independently determine the bill's impact on State revenue collections and verify the accuracy of the Department of the Treasury estimate. The legislation should, however, produce a recurring revenue gain to the State General Fund and Property Tax Relief Fund.
Section: |
Revenue, Finance and Appropriations |
Analyst: |
Thomas Koenig Lead Fiscal Analyst |
Approved: |
David J. Rosen Legislative Budget and Finance Officer |
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).