Bill Text: NJ S2200 | 2024-2025 | Regular Session | Introduced
Bill Title: Creates pilot program to provide corporation business tax and gross income tax credits for value of certain fruit and vegetable donations made by commercial farm operators.
Spectrum: Moderate Partisan Bill (Democrat 5-1)
Status: (Introduced) 2024-06-10 - Referred to Senate Budget and Appropriations Committee [S2200 Detail]
Download: New_Jersey-2024-S2200-Introduced.html
STATE OF NEW JERSEY
221st LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2024 SESSION
Sponsored by:
Senator M. TERESA RUIZ
District 29 (Essex and Hudson)
Co-Sponsored by:
Senators Singleton and Turner
SYNOPSIS
Provides corporation business tax and gross income tax credits for value of certain fruit and vegetable donations made by commercial farm operators.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act providing credits against the corporation business tax and the gross income tax for the value of certain fruit and vegetable donations made by commercial farm operators, 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. For privilege periods beginning on or after January 1, 2024 but before January 1, 2029, a commercial farm operator that makes a donation of fruits or vegetables fit for human consumption to a charitable organization located in this State shall be allowed credit against the corporation business tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), in an amount equal to 10 percent of the wholesale value of the fruits or vegetables that are donated to the charitable organization during the privilege period of donation.
b. In order to claim the credit allowed pursuant to this section, a commercial farm operator shall obtain a written statement from the charitable organization substantiating each donation of fruits or vegetables made during the privilege period for which the credit is allowed. At the time a donation is made, the commercial farm operator shall provide to the charitable organization the wholesale value of the donated fruits or vegetables and information identifying the location where the fruits or vegetables were grown. The charitable organization, upon receipt of the donated fruits or vegetables, shall issue to the commercial farm operator making the donation a written statement, signed and dated by an individual authorized to accept the donation on behalf of the charitable organization, that contains the variety, grade, and quantity of the donated fruits or vegetables, the name and address of the commercial farm operator making the donation, the name and address of the charitable organization, and, as provided by the commercial farm operator, the wholesale value of and the location where the donated fruits or vegetables were grown. When filing a return that includes a claim for the credit allowed pursuant to this section, the commercial farm operator shall include a copy of each written statement issued to the commercial farm operator by a charitable organization during the privilege period for which the credit is allowed.
c. The order of priority of the application of the credit allowed pursuant to 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 corporation business tax liability of the taxpayer for a privilege period, together with any other credits allowed by law, shall not exceed 50 percent 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.54:10A-5). The amount of the credit allowable under this section which cannot be used to reduce the taxpayer's corporation business tax liability for the privilege period due to the limitations of this section may be carried forward and applied to the earliest available use within the five privilege periods immediately following the privilege period for which the credit is allowed. The wholesale value of any donated fruits or vegetables that are included in the calculation of the credit allowed pursuant to this section shall not be allowed as an amount calculated or claimed pursuant to any other deduction or credit allowed under the corporation business tax.
d. As used in this section:
"Charitable organization" includes any organization that is incorporated under the provisions of Title 15 or Title 16 of the Revised Statutes or Title 15A of the New Jersey Statutes, any organization that is exempt from taxation under section 501(c)(3) of the Internal Revenue Code, any entity to which a charitable contribution as defined under subsection (c) of section 170 of the Internal Revenue Code is deductible under section 170, and any food bank as defined in section 2 of P.L.1982, c.178 (C.24:4A-2).
"Commercial farm" means "commercial farm" as that term is defined by section 3 of P.L.1983, c.31 (C.4:1C-3).
"Commercial farm operator" means the taxpayer primarily responsible for the on-site, day-to-day operation of a commercial farm, at which farm fruits or vegetables are planted, managed, and harvested for donation.
"Wholesale value" means:
the value calculated by using a quantity-weighted average wholesale sales price of the donated fruits or vegetables as determined based on the wholesale sales price paid for each wholesale sale of fruits or vegetables made by the commercial farm operator during the calendar month of the commercial farm operator's donation that are the same variety and grade as the donated fruits or vegetables and the respective weight, volume, or other standard unit of measure of each wholesale sale; or
if no wholesale sales of fruits or vegetables that are the same variety and grade as the donated fruits and vegetables are made by the commercial farm operator during the calendar month of the commercial farm operator's donation, the wholesale value shall be equal to the overall average price paid for fruits or vegetables that are the same variety and grade as the donated fruits or vegetables at the nearest terminal market located the fewest miles from the commercial farm operator's commercial farm during the calendar month of the commercial farm operator's donation as determined using the Fruit and Vegetable Market News Custom Average Tool maintained by the United States Department of Agriculture's Agricultural Marketing Service, or another similar source of average price data as may be prescribed by the director.
2. a. For taxable years beginning on or after January 1 2024 but before January 1, 2029, a commercial farm operator that makes a donation of fruits or vegetables fit for human consumption to a charitable organization located in this State shall be allowed 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 10 percent of the wholesale value of the fruits or vegetables that are donated to the charitable organization during the taxable year of donation.
b. In order to claim the credit allowed pursuant to this section, a commercial farm operator shall obtain a written statement from the charitable organization substantiating each donation of fruits or vegetables made during the taxable year for which the credit is allowed. At the time a donation is made, the commercial farm operator shall provide to the charitable organization the wholesale value of the donated fruits or vegetables and information identifying the location where the fruits or vegetables were grown. The charitable organization, upon receipt of the donated fruits or vegetables, shall issue to the commercial farm operator making the donation a written statement, signed and dated by an individual authorized to accept the donation on behalf of the charitable organization, that contains the variety, grade, and quantity of the donated fruits or vegetables, the name and address of the commercial farm operator making the donation, the name and address of the charitable organization, and, as provided by the commercial farm operator, the wholesale value of and the location where the donated fruits or vegetables were grown. When filing a return that includes a claim for the credit allowed pursuant to this section, the commercial farm operator shall include a copy of each written statement issued to the commercial farm operator by a charitable organization during the taxable year for which the credit is allowed.
c. (1) The order of priority of the application of the credit allowed pursuant to 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 gross income tax liability of the taxpayer for a taxable year, together with any other credits allowed by law, shall not exceed 50 percent of the tax liability otherwise due. The amount of the credit allowable under this section which cannot be used to reduce the taxpayer's gross income tax liability for the taxable year due to the limitations of this section may be carried forward and applied to the earliest available use within the five taxable years immediately following the taxable year for which the credit is allowed. The wholesale value of any donated fruits or vegetables that are included in the calculation of the credit allowed pursuant to this section shall not be allowed as an amount calculated or claimed pursuant to any other deduction or credit allowed under the gross income tax.
(2) A business entity classified as a partnership for federal income tax purposes shall not be allowed a credit directly under the gross income tax, but a taxpayer shall be allowed a credit in proportion to the taxpayer's distributive share of the business entity's donation of fruits or vegetables during the taxable year. A New Jersey S corporation shall not be allowed a credit directly under the gross income tax, but a taxpayer shareholder shall be allowed a credit in proportion to the taxpayer's distributive share of the New Jersey S corporation's donation of fruits or vegetables during the taxable year.
d. As used in this section:
"Charitable organization" includes any organization that is incorporated under the provisions of Title 15 or Title 16 of the Revised Statutes or Title 15A of the New Jersey Statutes, any organization that is exempt from taxation under section 501(c)(3) of the Internal Revenue Code, any entity to which a charitable contribution as defined under subsection (c) of section 170 of the Internal Revenue Code is deductible under section 170, and any food bank as defined in section 2 of P.L.1982, c.178 (C.24:4A-2).
"Commercial farm" means "commercial farm" as that term is defined by section 3 of P.L.1983, c.31 (C.4:1C-3).
"Commercial farm operator" means the taxpayer primarily responsible for the on-site, day-to-day operation of a commercial farm, at which farm fruits or vegetables are planted, managed, and harvested for donation.
"Wholesale value" means:
the value calculated by using quantity-weighted average wholesale sales price of the donated fruits or vegetables as determined based on the wholesale sales price paid for each wholesale sale of fruits or vegetables made by the commercial farm operator during the calendar month of the commercial farm operator's donation that are the same variety and grade as the donated fruits or vegetables and the respective weight, volume, or other standard unit of measure of each wholesale sale; or
if no wholesale sales of fruits or vegetables that are the same variety and grade as the donated fruits and vegetables are made by the commercial farm operator during the calendar month of the commercial farm operator's donation, the wholesale value shall be equal to the overall average price paid for fruits or vegetables that are the same variety and grade as the donated fruits or vegetables at the nearest terminal market located the fewest miles from the commercial farm operator's commercial farm during the calendar month of the commercial farm operator's donation as determined using the Fruit and Vegetable Market News Custom Average Tool maintained by the United States Department of Agriculture's Agricultural Marketing Service, or another similar source of average price data as may be prescribed by the director.
3. a. The Director of the Division of Taxation in the Department of the Treasury shall prepare an annual report regarding the utilization of the tax credits allowed pursuant to section 1 and 2 of P.L. , c. (C. ) (pending before the Legislature as this bill), on or before December 1, 2025 and on or before that date each year thereafter for each of the four immediately following calendar years.
b. The annual report shall be separate and in addition to the report required to be prepared pursuant to section 1 of P.L.2009, c.189 (C.52:27B-20a), and shall, at a minimum, describe the following for tax periods that begin in the calendar year immediately preceding the calendar year in which the report is required to be prepared:
(1) the number of taxpayers claiming the tax credits allowed pursuant to section 1 and 2 of P.L. , c. (C. ) (pending before the Legislature as this bill);
(2) the total dollar value of tax credits claimed by commercial farm operators;
(3) the wholesale value of all fruits and vegetables donated to charitable organizations;
(4) the counties in which the greatest percentage of donated fruits or vegetables were grown by commercial farm operators;
(5) the months in which the greatest percentage of fruits and vegetables were donated to charitable organizations; and
(6) the charitable organizations benefiting from the donated fruits and vegetables.
c. The annual report shall be submitted to the Governor and the Legislature, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), and shall be made available to the public in electronic form through a link prominently displayed on the official Internet website of the Division of Taxation in the Department of the Treasury, within 10 calendar days of the date the report is required to be prepared.
d. If the Director of the
Division of Taxation in the Department of the Treasury fails to prepare the
annual report on or before the dates required under subsection a. of this
section, the director shall testify before the Senate Economic Growth Committee
or the Assembly Agriculture and Food Security Committee, or their successor
committees, or any other legislative committee determined by the President of
the Senate or the Speaker of the General Assembly. At a minimum, the director
shall explain why the annual report was not prepared before the required date
of completion and describe all actions taken by the division to prepare the
annual report.
4. This act shall take effect immediately.
STATEMENT
This bill would provide a temporary credit against the corporation business tax and the gross income tax based on the value of certain donated fruits and vegetables. Specifically, the tax credit would be made available to commercial farm operators who donate fruits or vegetables that are fit for human consumption to a charitable organization located in this State during tax periods beginning on or after January 1, 2024, but before January 1, 2029. The amount of the credit would equal 10 percent of the wholesale value of the fruits or vegetables donated during the tax period. However, if a commercial farm operator were unable to claim any portion of the credit otherwise permitted for a tax period, the unused credits could be carried forward for the earliest available use during the five tax periods following the period for which the credits were allowed.
Under the bill, a commercial farm operator would be required to obtain a written statement from the charitable organization before claiming the tax credit. In addition to certain other information, this statement would specify the variety, grade, and quantity of the donated fruits and vegetables and the wholesale value of the fruits and vegetables, as provided by the commercial farm operator. The bill would require a commercial farm operator to include a copy of each statement issued by a charitable organization when filing a tax return that claims the credit.
The bill would also require the Director of the Division of Taxation in the Department of the Treasury to prepare an annual report on the utilization of the credits provided by the bill. Under the bill, the director would be required to prepare this report by December 1, 2025, and on or before that same date in each of the following four years. However, if the director fails to prepare the annual report before the required date of completion, the director would be required to testify before the Senate Economic Growth Committee, the Assembly Agriculture and Food Security Committee, or any other legislative committee determined by the President of the Senate or the Speaker of the General Assembly, to explain the delay.
