Bill Text: NJ S1374 | 2024-2025 | Regular Session | Introduced
Bill Title: Provides CBT and gross income tax credits for replacement of abandoned commercial building with new commercial building.
Spectrum: Bipartisan Bill
Status: (Introduced) 2024-01-09 - Introduced in the Senate, Referred to Senate Economic Growth Committee [S1374 Detail]
Download: New_Jersey-2024-S1374-Introduced.html
STATE OF NEW JERSEY
221st LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2024 SESSION
Sponsored by:
Senator MICHAEL L. TESTA, JR.
District 1 (Atlantic, Cape May and Cumberland)
Senator NILSA I. CRUZ-PEREZ
District 5 (Camden and Gloucester)
SYNOPSIS
Provides CBT and gross income tax credits for replacement of abandoned commercial building with new commercial building.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act concerning the replacement of abandoned commercial buildings 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. (1) For privilege periods beginning on or after January 1 next following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), and subject to the limitations of subsection e. of this section, a taxpayer who replaces an abandoned commercial building in the State by demolishing the abandoned commercial building and constructing a new commercial building in the same location shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), as calculated pursuant to paragraph (2) of this subsection.
(2) The amount of the credit authorized pursuant to this section shall not exceed the lesser of: (a) 25 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) associated with the demolition of the abandoned commercial building and the construction of the new commercial building, or (b) $500,000.
b. To qualify for the tax credit allowed pursuant to this section, a taxpayer shall apply to the division for a certification that provides: (1) that the demolition of the abandoned commercial building and the construction of the new commercial building meet the requirements of this section; and (2) the amount of the tax credit calculated pursuant to subsection a. of this section.
c. The application shall demonstrate that the abandoned commercial building was demolished and that a new commercial building was constructed before applying for the tax credit provided in this section. The application shall include a receipt demonstrating the cost of the demolition and construction and any other information determined relevant by the division. Upon certification, the division shall submit a copy of the certification to the taxpayer.
d. 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 pursuant to this section against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) shall not reduce a taxpayer's 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 due to the limitations of this subsection or under other provisions of P.L.1945, c.162 (C.54:10A-1 et seq.) may be carried forward, if necessary, to the seven privilege periods following the privilege period for which the tax credit was allowed.
e. 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 $5 million.
f. The division 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 one year after the expiration date of the tax credits provided pursuant to 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 the replacement of abandoned commercial buildings with newly constructed commercial buildings.
h. As used in this section:
"Commercial building" means a building of at least 100,000 square feet that is used for commercial purposes.
"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.
2. a. (1) For taxable years beginning on or after January 1 next following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), and subject to the limitations of subsection e. of this section, a taxpayer who replaces an abandoned commercial building in the State by demolishing the abandoned commercial building and constructing a new commercial building in the same location shall be allowed a credit against the tax otherwise due for the taxable year under the "New Jersey Gross Income Tax Act" (N.J.S.54A:1-1 et seq.), as calculated pursuant to paragraph (2) of this subsection.
(2) The amount of the credit authorized pursuant to this section shall not exceed the lesser of: (a) 25 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) associated with the demolition of the abandoned commercial building and the construction of the new commercial building, or (b) $500,000.
b. To qualify for the tax credit allowed pursuant to this section, a taxpayer shall apply to the division for a certification that provides: (1) that the demolition of the abandoned commercial building and the construction of the new commercial building meet the requirements of this section; and (2) the amount of the tax credit calculated pursuant to subsection a. of this section.
c. The application shall demonstrate that the abandoned commercial building was demolished and that a new commercial building was constructed before applying for the tax credit provided in this section. The application shall include a receipt demonstrating the cost of the demolition and construction and any other information determined relevant by the division. Upon certification, the division shall submit a copy of the certification to the taxpayer.
d. 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 seven taxable years following the taxable year for which the tax credit was 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 $5 million.
f. The division 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 one year after the expiration date of the tax credits provided pursuant to 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 the replacement of abandoned commercial buildings with newly constructed commercial buildings.
h. As used in this section:
"Commercial building" means a building of at least 100,000 square feet that is used for commercial purposes.
"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.
3. This act shall take effect immediately.
STATEMENT
The bill provides a tax credit under the corporation business tax and the gross income tax for certain costs associated with the demolition of an abandoned commercial building and the construction of a new commercial building in its place. As defined by the bill, "commercial building" means a building of at least 100,000 square feet that is used for commercial purposes.
Specifically, the bill allows a taxpayer who replaces an abandoned commercial building in the State by demolishing the abandoned commercial building and constructing a new commercial building in the same location to receive a corporation business tax credit and gross income tax credit. The amount of the tax credits provided by the bill may not exceed the lesser of: (1) 25 percent of the total costs incurred by the taxpayer associated with the demolition of the abandoned commercial building and the construction of the new commercial building, or (2) $500,000.
To qualify for a tax credit allowed under the bill, a taxpayer would be required to apply to the Division of Taxation in the Department of the Treasury (division) for a certification that provides: (1) that the demolition of the abandoned commercial building and the construction of the new commercial building meet the requirements of the bill; and (2) the amount of the tax credit. The application would be required to demonstrate that the abandoned commercial building was demolished, and that a new commercial building was constructed in its place, prior to applying for the tax credit.
The bill requires the division to adopt rules and regulations as are necessary to implement the bill's provisions. The bill would also limit the cumulative total of tax credits awarded pursuant to the bill to $5 million.
Finally, the bill would require, no later than one year after the expiration of the tax credits provided pursuant to the bill, the division to prepare and submit to the Governor, the State Treasurer, and the Legislature a report that, at a minimum, summarizes the effectiveness of the tax credit in incentivizing the replacement of abandoned commercial buildings with newly constructed commercial buildings.
Construction of commercial buildings throughout the State has increased exponentially during recent years. Many commercial buildings have been constructed on the State's farmland, which has adversely impacted the State's farming sector. Construction of commercial buildings on farmland decreases the amount of land in the State that is able to be used for farming purposes and, in many cases, destroys prime soil, which is limited to areas where the soil naturally occurs and, once destroyed, cannot be recreated. Farmland is an important economic and environmental resource for New Jersey and, for this reason, it is important take steps to ensure farmland is used for farming purposes and not converted into commercial buildings.
Lands currently used for commercial purposes should continue to be used for commercial purposes. For this reason, abandoned commercial buildings should be replaced with newly constructed commercial buildings at the same location. This bill would encourage the development of commercial buildings throughout the State while also protecting the State's farmland.
