New Jersey-2010-A1399-Introduced

An Act allowing a credit under the corporation business tax and the gross income tax for the costs of installing certain alternative energy systems, 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. A taxpayer shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), in an amount equal to the purchase price and installation costs for a solar, wind or geothermal energy system put into use in the privilege period for a residential or commercial structure.

b. The order of priority of the application of the credit allowed under this section and any other credits allowed by law shall be as prescribed by the director. The amount of the credit applied under this section against the tax imposed pursuant to section 5 of P.L.1945, c.162 for a privilege period, together with any other credits allowed by law, shall not exceed 50% of the tax liability otherwise due and 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. An unused credit may be carried forward, if necessary, for use in the seven privilege periods following the privilege period for which the credit is allowed.

d. A taxpayer shall not be granted a credit pursuant to this section for expenses that are included in the calculation of another credit allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162 or pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq.

e. If the purchase or installation of a solar, wind or geothermal energy system gives rise to a credit under this section and a rebate under the clean energy program administered by the Board of Public Utilities, the credit shall be reduced by the amount of the rebate received.

f. If a solar, wind or geothermal energy system gives rise to a credit under this section, the energy system may not again give rise to a credit under this section for any taxpayer.

g. In consultation with the Commissioner of Environmental Protection and the Board of Public Utilities' Clean Energy Council, the Director shall develop, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), technical criteria for determining eligibility under this section for solar, wind and geothermal energy systems.

h. As used in this section:

"Solar energy system" means an installation which converts the electromagnetic energy emitted by the sun into electricity or heat.

"Wind energy system" means an installation which converts the kinetic energy of wind into electricity.

"Geothermal energy system" means an installation which converts geothermal energy into electricity or heat.

2. a. A taxpayer 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., in an amount equal to the sum expended to install a solar, wind or geothermal energy system in the taxable year for use of a residential or commercial structure.

b. If the credit allowed pursuant to subsection a. of this section reduces the tax liability otherwise due to zero, any amount of credit remaining shall be paid to the taxpayer as a refund of an overpayment of tax pursuant to N.J.S.54A:9-7, provided however, subsection (f) of that section, concerning the allowance of interest, shall not apply. The director shall determine the form and manner by which a taxpayer shall apply for and receive a refund of an overpayment pursuant to this section.

c. If a sum expended to install a solar, wind or geothermal energy system gives rise to a credit under this section and a rebate under the clean energy program administered by the Board of Public Utilities, the credit shall be reduced by the amount of the rebate received.

d. If a solar, wind or geothermal energy system gives rise to a credit under this section, the energy system may not again give rise to a credit under this section for any taxpayer.

e. In consultation with the Commissioner of Environmental Protection and the Board of Public Utilities' Clean Energy Council, the Director shall develop, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), technical criterion for determining eligibility under this section for solar, wind and geothermal energy systems.

f. As used in this section:

"Solar energy system" means an installation which converts the electromagnetic energy emitted by the sun into electricity or heat.

"Wind energy system" means an installation which converts the kinetic energy of wind into electricity.

"Geothermal energy system" means an installation which converts geothermal energy into electricity or heat.

3. This act shall take effect immediately. Section 1 shall apply to privilege periods beginning after the date of enactment. Section 2 shall apply to taxable years beginning after the date of enactment.

STATEMENT

This bill gives corporation business taxpayers and gross income taxpayers a credit for expenses incurred in purchasing or installing a solar, wind or geothermal energy system. The purpose of this bill is to encourage taxpayers to install alternative energy systems to increase energy efficiency and the environmental friendliness of New Jersey's homes and businesses.

Under this bill, a corporation business taxpayer can take a credit for the full cost of purchasing and installing a solar, wind or geothermal energy system. However, the credit together with all other credits may not exceed 50 percent of the taxpayer's liability. If the 50 percent limit precludes a taxpayer from using the full sum of their alternative energy system credit, the taxpayer may apply the leftover credit in the next seven privilege periods.

The bill also provides a similar credit for gross income taxpayers. The full cost of purchasing and installing a solar, wind or geothermal energy system can be taken as a gross income tax credit. If the credit reduces the taxpayer's liability beyond zero by a specified amount, a gross income taxpayer may receive a refund in that amount.

It should be noted that expenses which give rise to a credit under this bill, may not be used in a duplicative manner to secure a credit under both the gross income tax and the corporation business tax. The bill also limits the number of times an alternative energy system may generate a credit to one. Additionally, the bill features a reduction for credits which arise from expenses that also generate rebates under the Board of Public Utilities Clean Energy Program.

To ensure the technical expertise necessary to administer this bill, the Director of the Director of the Division of Taxation is authorized to consult with the Commissioner of Environmental Protection and the Board of Public Utilities' Clean Energy Council to promulgate technical eligibility specifications for alternative energy systems.