Bill Text: NJ S114 | 2024-2025 | Regular Session | Introduced
Bill Title: Provides tax credits to vineyards and wineries for qualified capital expenses.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced) 2024-01-09 - Introduced in the Senate, Referred to Senate Economic Growth Committee [S114 Detail]
Download: New_Jersey-2024-S114-Introduced.html
STATE OF NEW JERSEY
221st LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2024 SESSION
Sponsored by:
Senator NILSA I. CRUZ-PEREZ
District 5 (Camden and Gloucester)
Senator JAMES BEACH
District 6 (Burlington and Camden)
SYNOPSIS
Provides tax credits to vineyards and wineries for qualified capital expenses.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act providing tax credits to vineyards and wineries for qualified capital expenses and supplementing Title 54A of the New Jersey Statutes and P.L.1945, c.162 (C.54:10A-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. As used in sections 2 through 4 of P.L. , c. (C. ) (pending before the Legislature as this bill):
"Director" means the Director of the Division of Taxation in the Department of the Treasury.
"Qualified capital expense" means any expenditure made by the taxpayer for the purchase and installation of equipment or agricultural materials for use in the production of agricultural products at a vineyard or winery, including:
a. barrels;
b. bins;
c. bottling equipment;
d. canopy management machines;
e. capsuling equipment;
f. chemicals;
g. corkers;
h. crushers;
i. deer control fencing;
j. destemmers;
k. fermenters or other recognized fermentation devices;
l. fertilizer and soil amendments;
m. filters;
n. fruit harvesters;
o. fruit plants;
p. hoses;
q. irrigation equipment;
r. labeling equipment;
s. lugs;
t. mowers;
u. poles;
v. posts;
w. presses;
x. pruning equipment;
y. pumps;
z. refractometers;
aa. refrigeration equipment;
bb. seeders;
cc. soil;
dd. small tools;
ee. tanks;
ff. tractors;
gg. vats;
hh. weeding and spraying equipment;
ii. wine tanks;
jj. wire; and
kk. any other items as approved by the director in consultation with the Secretary of Agriculture.
"Vineyard" means agricultural lands located in the State consisting of at least one contiguous acre dedicated to the growing of grapes or other fruit that are used or are intended to be used in the production of wine by a winery as well as any other plants or other improvements located thereon.
"Winery" means a commercial farm where the owner or operator of the commercial farm has been issued and is operating in compliance with a plenary winery license or farm winery license pursuant to R.S.33:1-10.
2. a. For taxable years beginning on or after January 1, 2018, but before January 1, 2028, a taxpayer that is a vineyard or winery shall be allowed a credit against the tax imposed pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. in an amount equal to 25 percent of the qualified capital expenses made in connection with the establishment of a new vineyard or winery or the capital improvements made to an existing vineyard or winery during each taxable year in which the qualified vineyard or winery is operated for a profit by the taxpayer.
b. The total value of the grants of tax credits approved by the director, pursuant to subsection a. of this section and subsection a. of section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill), that may be applied against tax liability for a taxable year shall not exceed an aggregate annual limit of $3,000,000. The total amount of tax credits allowed for a taxpayer by this subsection shall not exceed $250,000, to be applied for over no more than a period of 10 tax years. The amount applied against a tax liability for a taxable year for an individual vineyard or winery may not exceed $50,000. If the amount of tax credits applied for by taxpayers in a taxable year, pursuant to sections 3 and 7 of P.L. , c. (C. ) (pending before the Legislature as this bill), exceeds the aggregate annual limit of $3,000,000, then a taxpayer who has first applied for and has not been allowed a tax credit amount for that reason shall be allowed, in the order in which they have submitted an application, their approved amount of tax credit on the first day of the next succeeding taxable year in which tax credits are issued pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) and are not in excess of the amount of credits available.
c. The amount of credit allowed pursuant to subsection a. of this section shall be taken by the taxpayer to reduce the tax otherwise due and required to be paid for the taxable year to which the credit applies. The amount of credit otherwise allowable pursuant to this section which cannot be applied for the taxable year against the tax liability otherwise due for that taxable year may either be carried over, if necessary, for the 10 taxable years following the taxable year for which the credit was allowed or, at the election of the taxpayer, be claimed as and treated as an overpayment for the purposes of N.J.S.54A:9-7, provided, however, that subsection (f) of that section shall not apply. A credit allowed pursuant to subsection a. of this section shall only be taken by the taxpayer to reduce the tax otherwise due and required to be paid for the taxable year in which the vineyard or winery is conducted or operated for a profit by the taxpayer.
d. A vineyard or winery that is classified as a partnership for federal income tax purposes shall not be allowed a credit directly, but the amount of credit of a 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 distributed, of the total distributive income or gain of the partnership for its taxable year ending within or with the taxpayer's taxable year except as otherwise provided by law. A qualified vineyard or winery that is a New Jersey S Corporation shall not be allowed a credit directly, 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 except as otherwise provided by law.
3. a. Notwithstanding the provisions of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) to the contrary, a taxpayer shall not be permitted to take any credits pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) to reduce or offset the New Jersey gross income tax liability that is incurred and required to be paid by the taxpayer in connection with the conduct or operation of a vineyard or winery unless the taxpayer has obtained prior written authorization from the director pursuant to this section.
b. The director shall establish an application process and prescribe the form and manner through which a taxpayer may make and file an application to obtain the director's written authorization for the allowance of a credit. The application shall, at minimum, require the taxpayer to demonstrate, in a form and manner as shall be prescribed by the director, that the qualified vineyard or winery for which the taxpayer is seeking the director's written authorization for the allowance of a credit is unrelated to the conduct or operation of any other business that was, or is currently, conducted or operated by the taxpayer. If the vineyard or winery and any other business that was, or is currently, conducted or operated by the taxpayer are determined by the director to be related by common ownership, the use of similar business names, trademarks, or service marks, or the conduct of similar business activities or operations, then the taxpayer shall demonstrate that the vineyard or winery was not established or acquired for the purpose of enjoying the benefit of the credit.
c. The director shall review each application made and filed by a taxpayer pursuant to subsection b. of this section and make a determination regarding the approval of an application seeking the director's written authorization for the allowance of a credit within 90 calendar days of the date a completed application is received.
d. The director shall issue a written authorization for the allowance of a credit to each taxpayer that made and filed a complete application that has been reviewed and approved by the director pursuant to subsection c. of this section within five calendar days of the date the director's determination is made. Each taxpayer issued a written authorization for the allowance of a credit shall include a copy of the director's authorization when filing a return that includes a claim for the credit allowed pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill).
e. If the director fails to make a determination regarding the approval of an application seeking the director's written authorization for the allowance of a credit within 90 calendar days of the date a complete application is received, or if the director fails to issue a written authorization for the allowance of a credit within five calendar days of the date the director's determination is made, the application shall be deemed to have been approved and the written authorization shall be deemed to have been issued by the director. Each taxpayer that made and filed a complete application pursuant to subsection b. of this section but fails to receive a determination from the director within 90 calendar days of the date a complete application is received, or fails to receive a written authorization for the allowance of a credit within five calendar days of the date the director's determination is made, shall include a copy of the taxpayer's application when filing a return that includes a claim for the credit pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill).
4. Notwithstanding any
provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1
et seq.), the director may adopt immediately upon filing with the Office of
Administrative Law, rules and regulations as the director determines to be
necessary to effectuate the purposes of P.L. , c. (C. ) (pending
before the Legislature as this bill), which shall be effective for a period not
to exceed 360 calendar days following the effective date of P.L. , c.
(C. ) (pending before the Legislature as this bill) and may thereafter be
amended, adopted, or readopted by the director pursuant to the requirements of "Administrative
Procedure Act," P.L.1968, c.410
(C.52:14B-1 et seq.).
5. As used in sections 6 through 8 of P.L. , c. (C. ) (pending before the Legislature as this bill):
"Acquiring corporation" means the constituent corporation the stockholders of which own the largest proportion of the total voting power in the surviving or consolidated corporation after the merger or consolidation.
"Director" means the Director of the Division of Taxation in the Department of the Treasury.
"Qualified capital expense" means any expenditure made by the taxpayer for the purchase and installation of equipment or agricultural materials for use in the production of agricultural products at a vineyard or winery, including:
a. barrels;
b. bins;
c. bottling equipment;
d. canopy management machines;
e. capsuling equipment;
f. chemicals;
g. corkers;
h. crushers;
i. deer control fencing;
j. destemmers;
k. fermenters or other recognized fermentation devices;
l. fertilizer and soil amendments;
m. filters;
n. fruit harvesters;
o. fruit plants;
p. hoses;
q. irrigation equipment;
r. labeling equipment;
s. lugs;
t. mowers;
u. poles;
v. posts;
w. presses;
x. pruning equipment;
y. pumps;
z. refractometers;
aa. refrigeration equipment;
bb. seeders;
cc. soil;
dd. small tools;
ee. tanks;
ff. tractors;
gg. vats;
hh. weeding and spraying equipment;
ii. wine tanks;
jj. wire; and
kk. any other items as approved by the director in consultation with the Secretary of Agriculture.
"Vineyard" means agricultural lands located in the State consisting of at least 1 contiguous acre dedicated to the growing of grapes or other fruit that are used or are intended to be used in the production of wine by a winery as well as any other plants or other improvements located thereon.
"Winery" means a commercial farm where the owner or operator of the commercial farm has been issued and is operating in compliance with a plenary winery license or farm winery license pursuant to R.S.33:1-10.
6. a. For privilege periods beginning on or after January 1, 2018, but before January 1, 2028, a taxpayer that is a vineyard or winery shall be allowed a credit against the tax imposed pursuant to the "Corporation Business Tax Act," P.L.1945, c.162 (C.54:10A-1 et seq.) in an amount equal to 25 percent of the qualified capital expenses made in connection with the establishment of a new vineyard or winery or the capital improvements made to an existing vineyard or winery during each privilege period in which the qualified vineyard or winery is operated for a profit by the taxpayer.
b. The total value of the grants of tax credits approved by the director, pursuant to subsection a. of this section and subsection a. of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill), that may be applied against tax liability for a privilege period shall not exceed an aggregate annual limit of $3,000,000. The total amount of tax credits allowed for an individual vineyard or winery shall not exceed $250,000, to be applied for over no more than a period of 10 privilege periods. The amount applied against a tax liability for a privilege period for an individual vineyard or winery may not exceed $50,000. If the amount of tax credits applied for by taxpayers, pursuant to sections 3 and 7 of P.L. , c. (C. ) (pending before the Legislature as this bill), exceeds the aggregate annual limit of $3,000,000, then a taxpayer who has first applied for and has not been allowed a tax credit amount for that reason shall be allowed, in the order in which they have submitted an application, their approved amount of tax credit on the first day of the next succeeding privilege period in which tax credits are issued pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) and are not in excess of the amount of credits available.
c. The amount of credit allowed pursuant to subsection a. of this section shall be taken by the taxpayer to reduce the tax otherwise due and required to be paid for the privilege period to which the credit applies. A credit allowed pursuant to subsection a. of this section shall only be taken by the taxpayer to reduce the tax otherwise due and required to be paid for the privilege period in which the vineyard or winery is conducted or operated for a profit by the taxpayer.
d. 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), for a privilege period, when taken together with any other credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) shall not reduce the tax liability of a taxpayer 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). Except as provided in subsection e. of this section, the amount of credit otherwise allowable under this section which cannot be used to reduce the taxpayer's corporation business tax liability for the privilege period may either be carried over, if necessary, for the 10 privilege periods following the privilege period for which the credit was allowed or, at the election of the taxpayer, be claimed as and treated as an overpayment for the purposes of R.S.54:49-15, provided, however, that section 7 of P.L.1992, c.175 (C.54:49-15.1) shall not apply.
e. A taxpayer may not carry over any amount of credit allowed under subsection a. of this section to a privilege period during which a corporate acquisition with respect to which the taxpayer was a target corporation occurred or during which the taxpayer was a party to a merger or a consolidation, or to any subsequent privilege period, if the credit was allowed for a privilege period prior to the year of acquisition, merger, or consolidation, except that if in the case of a corporate merger or corporate consolidation, the taxpayer can demonstrate, through the submission of a copy of the plan of merger or consolidation and any other evidence that may be required by the director, the identity of the constituent corporation which was the acquiring corporation, a credit allowed to the acquiring person may be carried over by the taxpayer.
7. a. Notwithstanding the provisions of section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill) to the contrary, a taxpayer shall not be permitted to take any credits pursuant to section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill) to reduce or offset the New Jersey corporation tax liability that is incurred and required to be paid by the taxpayer in connection with the conduct or operation of a vineyard or winery unless the taxpayer has obtained prior written authorization from the director pursuant to this section.
b. The director shall establish an application process and prescribe the form and manner through which a taxpayer may make and file an application to obtain the director's written authorization for the allowance of a credit. The application shall, at minimum, require the taxpayer to demonstrate, in a form and manner as shall be prescribed by the director, that the qualified vineyard or winery for which the taxpayer is seeking the director's written authorization for the allowance of a credit is unrelated to the conduct or operation of any other business that was, or is currently, conducted or operated by the taxpayer. If the vineyard or winery and any other business that was, or is currently, conducted or operated by the taxpayer are determined by the director to be related by common ownership, the use of similar business names, trademarks, or service marks, or the conduct of similar business activities or operations, then the taxpayer shall demonstrate that the vineyard or winery was not established or acquired for the purpose of enjoying the benefit of the credit.
c. The director shall review each application made and filed by a taxpayer pursuant to subsection b. of this section and make a determination regarding the approval of an application seeking the director's written authorization for the allowance of a credit within 90 calendar days of the date a completed application is received.
d. The director shall issue a written authorization for the allowance of a credit to each taxpayer that made and filed a complete application that has been reviewed and approved by the director pursuant to subsection c. of this section within five calendar days of the date the director's determination is made. Each taxpayer issued a written authorization for the allowance of a credit shall include a copy of the director's authorization when filing a return that includes a claim for the credit allowed pursuant to section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill).
e. If the director fails to make a determination regarding the approval of an application seeking the director's written authorization for the allowance of a credit within 90 calendar days of the date a complete application is received, or if the director fails to issue a written authorization for the allowance of a credit within five calendar days of the date the director's determination is made, the application shall be deemed to have been approved and the written authorization shall be deemed to have been issued by the director. Each taxpayer that made and filed a complete application pursuant to subsection b. of this section but fails to receive a determination from the director within 90 calendar days of the date a complete application is received, or fails to receive a written authorization for the allowance of a credit within five calendar days of the date the director's determination is made, shall include a copy of the taxpayer's application when filing a return that includes a claim for the credit pursuant to section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill).
8. Notwithstanding any
provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1
et seq.), the director may adopt immediately upon filing with the Office of
Administrative Law, rules and regulations as the director determines to be
necessary to effectuate the purposes of
P.L. , c. (C. ) (pending before the Legislature
as this bill), which shall be effective for a period not to exceed 360 calendar
days following the effective date of P.L. , c. (C. ) (pending before
the Legislature as this bill) and may thereafter be amended, adopted, or
readopted by the director pursuant to the requirements of "Administrative
Procedure Act," P.L.1968, c.410
(C.52:14B-1 et seq.).
9. This act shall take effect immediately.
STATEMENT
This bill provides credits against the New Jersey gross income tax and corporation business tax, as applicable, to vineyards and wineries for qualified capital expenses, as defined in the bill, in an amount equal to 25 percent of the qualified capital expenses made in connection with the establishment of a new vineyard or winery or the capital improvements made to an existing vineyard or winery during each taxable year or privilege period in which the qualified vineyard or winery is operated for a profit by the taxpayer.
Under the bill, a "qualified capital expense" means all expenditures made by the taxpayer for the purchase and installation of equipment or agricultural materials for use in the production of agricultural products at a vineyard or winery, but not for use on preserved farmland, including examples of which are provided in the bill.
The amount of credit allowed is to be taken by the taxpayer to reduce the tax otherwise due and required to be paid for the taxable year to which the credit applies. A credit is only to be taken by the taxpayer to reduce the tax otherwise due and required to be paid for the taxable year in which the vineyard or winery is conducted or operated for a profit by the taxpayer.
The bill would provide that the total value of the grants of tax credits approved by the Director of Taxation (director) that may be applied against a gross income and corporation tax liability for a privilege period shall not exceed an aggregate annual limit of $3,000,000. Each gross income taxpayer or individual vineyard or winery paying corporation business tax would be allowed a total of $250,000 in tax credits to be taken over a 10 year period, and no more than $50,000 per tax year or privilege period, as applicable. If the amount of tax credits applied for by taxpayers exceeds the aggregate annual limit of $3,000,000, then a taxpayer who has first applied for and has not been allowed a tax credit amount for that reason would then be allowed, in the order in which they have submitted an application, their approved amount of tax credit on the first day of the next succeeding privilege period in which tax credits are issued and are not in excess of the amount of credits available.
The bill permits a taxpayer, who is allowed a gross income tax credit pursuant to the bill but whose gross income tax liability in the taxable year in which the credit is received is less than the amount of the credit, to either:
1) carry forward the unapplied portion of the credit and apply the credit to the gross income tax liability of the taxpayer in the next 10 taxable years; or
2) receive the unapplied portion of the credit as a refund.
The bill provides that a taxpayer who is allowed a corporation business tax credit pursuant to the bill may not reduce the taxpayer's corporation business tax liability in a privilege period to an amount less than the applicable statutory minimum provided by law.
Under the bill, a taxpayer is not to be permitted to take any credits to reduce or offset the New Jersey gross income tax liability or corporation tax liability that is incurred and required to be paid by the taxpayer in connection with the conduct or operation of a vineyard or winery unless the taxpayer has obtained prior written authorization from the director. The director is to establish an application process and prescribe the form and manner through which a taxpayer may make and file an application to obtain the director's written authorization for the allowance of a credit.
Under the bill, the director is to review each application made and filed by a taxpayer and make a determination regarding the approval of an application seeing the director's written authorization for the allowance of accredit within 90 calendar days of the date a complete application is received. The director is to issue a written authorization for the allowance of a credit to each taxpayer that made and filed a complete application that has been reviewed and approved by the director within five calendar days of the date the director's determination is made. Each taxpayer issued a written authorization for the allowance of a credit is to include a copy of the director's authorization when filing a return that includes a claim for the credit. If the director fails to make a determination regarding the approval of an application seeking the director's written authorization for the allowance of a credit within 90 calendar days of the date a complete application is received, or if the director fails to issue a written authorization for the allowance of a credit within five calendar days of the date the director's determination is made, the application is to be deemed to have been approved and the written authorization is to be deemed to have been issued by the director. Each taxpayer that made and filed a complete application but fails to receive a determination from the director is to include a copy of the taxpayer's application when filing a return that includes a claim for the credit allowed.
