New Jersey-2018-A2730-Introduced

An Act providing tax relief for the State horseracing industry by establishing a racetrack property tax reimbursement program and credits against the corporation business tax and the gross income tax for certain expenses paid by permit holders and qualified racehorse owners, supplementing Title 52 of the Revised Statutes, 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. There is established in the Department of the Treasury a racetrack property tax reimbursement program for the purpose of issuing grants to reimburse a permit holder for a portion of the property tax that was due and paid on a qualified racetrack facility during tax year 2017 and each tax year thereafter.

b. Each permit holder seeking a grant for reimbursement under the program shall submit an application in such form and manner as shall be prescribed by the State Treasurer. The application shall include all information and documentation in support of the application that the State Treasurer determines to be necessary and appropriate to administer the program. All applications shall be submitted on an annual basis on or before July 1 of the tax year immediately following the tax year during which the property tax was due and paid on the qualified racetrack facility.

c. The State Treasurer shall review each application submitted pursuant to subsection b. of this section, and shall approve the issuance of a grant of reimbursement to each permit holder that:

(1) has paid the property tax on a qualified racetrack facility during the tax year to which the grant applies;

(2) has been issued a tax clearance certificate by the Director of the Division of Taxation pursuant to section 1 of P.L.2007, c.101 (C.54:50-39) and is not otherwise delinquent or deficient with respect to any payment of property tax on the qualified racetrack facility to which the grant applies; and

(3) certifies to the State Treasurer that the permit holder will not claim a tax credit allowed pursuant to subsection a. of section 2 or subsection a. of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill) during a privilege period or taxable year that begins or ends during the tax year to which the grant applies.

d. The value of each grant for reimbursement authorized to be issued pursuant to subsection c. of this section shall be equal to 30 percent of the property tax that was due and paid by the permit holder on the qualified racetrack facility during the tax year to which the grant applies. Each grant for reimbursement shall be made in the form of a lump-sum payment to the permit holder, or, at the discretion of the State Treasurer, shall be made in installments on a monthly basis over a period not to exceed 12 consecutive months beginning with the first month an installment is paid. Each grant for reimbursement shall be paid only from such funds as shall be appropriated by law to the department for the purposes of the program.

e. For the purposes of this section:

"Permit holder" means the holder of an annual permit to conduct a horse race meeting issued by the New Jersey Racing Commission.

"Property tax" means payments to municipalities for which an assessment by a municipality has been made on an ad valorem basis on both land and improvements thereto, and shall include payments made in lieu of taxes. "Property tax" shall not include interest, penalties, fines, fees, or other charges paid for delinquent or deficient taxes.

"Qualified racetrack facility" means the physical facility within this State where a permit holder conducts horse race meetings and parimutuel wagering in the manner and subject to compliance with the standards set forth in P.L.1940, c.17 (C. 5:5-22 et seq.).

"Tax year" means the calendar year in which property taxes are due and payable.

f. Notwithstanding any provision of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the State Treasurer may adopt immediately upon filing with the Office of Administrative Law such rules and regulations as the State Treasurer determines to be necessary and appropriate to effectuate the purposes of the program established by this section, which rules and regulations shall be effective for a period not to exceed 360 days following the date of filing and may thereafter be amended, adopted, or readopted by the State Treasurer in accordance with the requirements of P.L.1968, c.410 (C.52:14B-1 et seq.).

2. a. (1) A taxpayer that is a permit holder 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 30 percent of either: the qualified wages paid by the taxpayer during the privilege period to each qualified employee or, at the discretion of the taxpayer, the property tax that was due and paid by the taxpayer on a qualified racetrack facility during the privilege period; provided, however, that a taxpayer shall not be allowed a credit pursuant to this subsection if the taxpayer is approved for the issuance of a grant of reimbursement pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) during the privilege period for which the credit is allowed.

(2) A taxpayer that is the owner of a qualified racehorse 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 30 percent of the amount due and paid by the taxpayer during the privilege period to each licensed person for services rendered in connection with the care and maintenance of the taxpayer's qualified racehorse.

b. 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, added together with any other credit allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), shall not exceed 50 percent of the tax liability otherwise due for the privilege period and shall not reduce the 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. Unused credit resulting from the limitations of this subsection may be carried forward, if necessary, for use in the seven privilege periods following the privilege period for which the credit is allowed.

c. As used in this section:

"Licensed person" means a person who is required to be licensed by the New Jersey Racing Commission at a qualified racetrack facility in connection with the conduct of horse race meetings.

"Permit holder" means the holder of an annual permit to conduct a horse race meeting issued by the New Jersey Racing Commission.

"Qualified employee" means an individual employed at a qualified racetrack facility by a permit holder.

"Qualified racehorse" means a standardbred or thoroughbred horse that runs in two or more races held at a qualified racetrack during the privilege period for which the credit is allowed pursuant to this section.

"Qualified wages" means salary, wages and remuneration subject to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., paid to a qualified employee for labor rendered in service to or on behalf of a permit holder at a qualified racetrack facility.

3. a. (1) A taxpayer that is a permit holder shall be allowed a credit against the tax due pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., in an amount equal to 30 percent of either: the qualified wages paid by the taxpayer during the taxable year to each qualified employee or, at the discretion of the taxpayer, the property tax that was due and paid by the taxpayer on a qualified racetrack facility during the taxable year; provided, however, that a taxpayer shall not be allowed a credit pursuant to this subsection if the taxpayer is approved for the issuance of a grant of reimbursement pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) during the taxable year for which the credit is allowed.

(2) A taxpayer that is the owner of a qualified racehorse shall be allowed a credit against the tax due pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., in an amount equal to 30 percent of the amount due and paid by the taxpayer during the taxable year to each licensed person for services rendered in connection with the care and maintenance of the taxpayer's qualified racehorse.

b. The order of priority of the application of the credit allowed pursuant to this section and any other credits allowed against the tax due pursuant to the "New Jersey Gross Income Tax Act," 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, added together with any other credit allowed against the tax imposed pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., shall not reduce the tax liability otherwise due for a taxable year to an amount less than zero. Unused credit resulting from the limitations of this subsection may be carried forward, if necessary, for use in the seven taxable years following the taxable year for which the credit is allowed.

c. (1) A business entity classified as a partnership for federal income tax purposes shall not be allowed a credit directly under N.J.S.54A:1-1 et seq., but the amount of credit of the taxpayer in respect of a distributive share of partnership income shall be determined by allocating to the taxpayer that proportion of the credit acquired by the partnership that is equal to the taxpayer's share, whether or not distributed, of the total distributive income or gain of the partnership for its taxable year ending within or with the taxpayer's taxable year.

(2) A New Jersey S corporation shall not be allowed a credit directly under N.J.S.54A:1-1 et seq., but the amount of 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 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.

d. As used in this section:

"Licensed person" means a person who is required to be licensed by the New Jersey Racing Commission at a qualified racetrack facility in connection with the conduct of horse race meetings.

"Permit holder" means the holder of an annual permit to conduct a horse race meeting issued by the New Jersey Racing Commission.

"Qualified employee" means an individual employed at a qualified racetrack facility by a permit holder.

"Qualified racehorse" means a standardbred or thoroughbred horse that runs in two or more races held at a qualified racetrack during the taxable year for which the credit is allowed pursuant to this section.

4. This act shall take effect immediately; provided, however, that section 2 and section 3 of this act shall apply retroactively to privilege periods and taxable years beginning on or after January 1, 2017.

STATEMENT

This bill establishes a racetrack property tax reimbursement program in the Department of the Treasury and provides credits against the corporation business tax and the gross income tax for certain expenses paid by permit holders and qualified racehorse owners as a means to provide tax relief to the State's horseracing industry.

Under the bill, the property tax reimbursement program is established in the department to issue grants to reimburse each holder of an annual permit to conduct a horse race meeting for 30 percent of the property tax that was due and paid on a qualified racetrack facility during tax year 2017 and each tax year thereafter. To receive a grant of reimbursement under the program, the bill requires each permit holder to submit an application to the State Treasurer and to include all information and documentation in support of the application that the State Treasurer determines to be necessary and appropriate to administer the program.

The bill directs the State Treasurer to review each application submitted, and to approve the issuance of a grant of reimbursement to each permit holder that: (1) has paid all or a portion of the property tax on a qualified racetrack facility during the tax year to which the grant applies; (2) has been issued a tax clearance certificate by the Director of the Division of Taxation and is not otherwise delinquent or deficient with respect to any payment of property tax on the qualified racetrack facility to which the grant applies; and (3) certifies to the State Treasurer that the permit holder will not claim the tax credit allowed pursuant to subsection a. of section 2 or subsection a. of section 3 of the bill during a privilege period or taxable year that begins or ends during the tax year to which the grant applies.

The bill provides for each grant for reimbursement to be made in the form of a lump-sum payment to the permit holder, or, at the discretion of the State Treasurer, to be made in installment payments on a monthly basis over a period not to exceed 12 consecutive months beginning with the first month an installment is paid. The bill requires each grant for reimbursement to be paid only from funds appropriated by law to the department for the purposes of the program.

In addition, the bill provides credits against the corporation business tax and the gross income tax for certain expenses paid by permit holders and qualified racehorse owners. With respect to credits for permit holders, the bill allows a permit holder a tax credit equal to 30 percent of either: the qualified wages paid by the taxpayer during the tax accounting period of the taxpayer to each qualified employee or, at the discretion of the taxpayer, the property tax that was due and paid by the taxpayer on a qualified racetrack facility during the tax accounting period. The bill specifies that the credit for permit holders is allowed only to the extent that the permit holder has not been approved for the issuance of a grant of reimbursement pursuant to section 1 of the bill during the tax accounting period of the taxpayer for which the credit is allowed.

In terms of credits for qualified racehorse owners, the bill allows a taxpayer that is the owner of a qualified racehorse a tax credit equal to 30 percent of the amount due and paid by the taxpayer during the taxable year to each licensed person for services rendered in connection with the care and maintenance of the taxpayer's qualified racehorse. The bill defines a "qualified racehorse" as a standardbred or thoroughbred horse that runs in two or more races held at a qualified racetrack during the tax accounting period of the taxpayer for which the credit is allowed, and defines a "licensed person" as a person who is required to be licensed by the New Jersey Racing Commission at a qualified racetrack facility in connection with the conduct of horse race meetings.

The bill is scheduled to take effect immediately upon enactment, but provides for the sections of the bill establishing corporation business tax and gross income tax credits for certain expenses paid by permit holders and qualified racehorse owners to apply retroactively to tax accounting periods beginning on or after January 1, 2017.