Bill Text: NJ S2297 | 2024-2025 | Regular Session | Introduced

New Jersey Senate Bill 2297

Introduced

Bill Title: Provides corporation business tax and gross income tax credits for certain solar energy system expenditures.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Introduced) 2024-01-25 - Introduced in the Senate, Referred to Senate Environment and Energy Committee [S2297 Detail]

Download: New_Jersey-2024-S2297-Introduced.html

SENATE, No. 2297

STATE OF NEW JERSEY

221st LEGISLATURE

INTRODUCED JANUARY 25, 2024

Sponsored by:

Senator BOB SMITH

District 17 (Middlesex and Somerset)

SYNOPSIS

Provides corporation business tax and gross income tax credits for certain solar energy system expenditures.

CURRENT VERSION OF TEXT

As introduced.

An Act providing tax credits for certain solar energy system expenditures, 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) 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 35 percent of the taxpayer's qualified solar energy system expenditures, provided that the expenditures are certified by the commissioner pursuant to this section.

(2) The amount of the tax credit allowed to a taxpayer annually pursuant to this section shall not exceed:

(a) $5,000 per taxpayer for residential property;

(b) $350 per residential unit per taxpayer for apartment buildings; and

b. (1) To qualify for the tax credit allowed pursuant to this section, the taxpayer shall file an application for a certification from the commissioner that expenditures made by the taxpayer are qualified solar energy system expenditures. The commissioner may require the submission of any additional information the commissioner deems necessary to make a certification. The application and certification shall specify the amount paid for the purchase and installation of the solar energy system equipment, the terms of the leasing agreement under which the taxpayer leases the equipment, or the terms of a power purchase agreement, as applicable. The application and certification shall also include the date of installation, a description of the solar energy system equipment, and how it is used by the taxpayer. The certification shall specify the amount of credit available to the taxpayer.

(2) The commissioner shall have 90 days from the date of receipt of a complete application to make a determination as to the issuance of a certification.

(3) Upon certification, the commissioner shall submit a copy thereof to the taxpayer and the director. In filing a tax return that includes a claim for the credit allowed pursuant to this section, the taxpayer shall include a copy of the certification.

c. The first privilege period in which a taxpayer may use a credit allowed under this section is the privilege period for which the taxpayer's application made and filed for a certification from the commissioner is granted.

d. The amount of any unused credit may be carried forward, if necessary, for use in each of the seven privilege periods following the privilege period for which the credit is allowed.

e. 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 tax imposed pursuant to section 5 of P.L.1945, c.162 for a privilege period, together with any other credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162, 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.

f. A credit shall not be allowed pursuant to this section for qualified solar energy system expenditures which are included in the calculation of any other credit allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162.

g. The commissioner shall establish a tax credit pre-certification process through which a taxpayer can determine if expected expenditures would qualify for a credit allowed pursuant to this section. The tax credit pre-certification process established by the commissioner may require the submission of written information describing the solar energy system equipment and how it is used by the taxpayer, the amount paid for the purchase and installation of the equipment, the terms of the leasing agreement under which the taxpayer leases the equipment, or the terms of a power purchase agreement, as applicable. The commissioner may also require the submission of any other information deemed relevant by the commissioner to make a determination. Obtaining pre-certification from the commissioner shall not be required to qualify for a credit allowed pursuant to this section.

h. The commissioner, in consultation with the director, shall adopt rules and regulations in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), establishing technical specifications and certification requirements for the designation of qualified solar energy system expenditures pursuant to this section. Such rules and regulations shall include, but need not be limited to, examples of qualified solar energy system expenditures and the procedures and forms to apply for a certification.

i. The value of credits approved by the director and the commissioner pursuant to this section and section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall not exceed a cumulative total of $25,000,000 in any fiscal year to apply against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), and the tax imposed pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq.

If the cumulative total amount of credits allowed to taxpayers for privilege periods or taxable years commencing during a single fiscal year under this section and section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) exceeds the amount of credits available in that year, then taxpayers who have first applied for and have not been allowed a credit amount for that reason shall be allowed, in the order in which they have submitted an application, the amount of the tax credit or certificate on the first day of the next succeeding fiscal year in which tax credits under this section and section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) are not in excess of the amount of credits available.

j. As used in this section:

"Apartment building" means "Class 4C: Apartments," as that term is defined by N.J.A.C.18:12-2.2.

"Commercial property" means "Class 4A: Commercial property," as that term is defined by N.J.A.C.18:12-2.2.

"Commissioner" means the Commissioner of Environmental Protection.

"Industrial property" means "Class 4B: Industrial property," as that term is defined by N.J.A.C.18:12-2.2.

"Qualified solar energy system expenditures" means expenditures for:

(1) The purchase of solar energy system equipment which is installed in connection with:

(a) residential property that is located in the State and is used as the taxpayer's principal residence at the time the solar energy system equipment is placed into service; or

(b) commercial property, industrial property, or apartment buildings that are located in the State, provided that the solar energy system equipment is used or consumed in the taxpayer's business, trade, or occupation; or

(2) The lease of solar energy system equipment under a written agreement that spans at least 10 years and such equipment is owned by a person other than the taxpayer and is installed in connection with:

(a) residential property that is located in the State and is used as the taxpayer's principal place of residence at the time the solar energy system equipment is placed into service; or

(3) The purchase of power under a written agreement that spans at least 10 years whereunder the power purchased is generated by solar energy system equipment owned by a person other than the taxpayer which is installed in connection with:

(a) residential property that is located in the State and is used as the taxpayer's principal place of residence at the time the solar energy system equipment is placed into service; or

(b) commercial property, industrial property, or apartment buildings that are located in the State, and the energy generated by the solar energy system equipment is used or consumed in the taxpayer's business, trade, or occupation; or

(4) Materials, labor costs properly allocable to on-site preparation, assembly, and original installation, architectural and engineering services, and designs and plans directly related to the construction or installation of the solar energy system equipment.

"Residential property" means "Class 2: Residential property," as that term is defined by N.J.A.C.18:12-2.2.

"Solar energy system equipment" means an arrangement or combination of components utilizing solar radiation to produce energy designed to provide heating, cooling, hot water, or electricity as determined by the commissioner, but which shall not include materials connected to solar energy system equipment that are a component of a non-solar energy system.

"Used or consumed" means the onsite use of energy generated by solar energy system equipment or the selling of excess energy not used onsite by the operator of the system, whether or not the operator is the taxpayer.

2. a. (1) A taxpayer 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., in an amount equal to 35 percent of the taxpayer's qualified solar energy system expenditures, provided that the expenditures are certified by the commissioner pursuant to this section.

(2) The amount of the tax credit allowed to a taxpayer annually pursuant to this section shall not exceed:

(a) $5,000 per taxpayer for residential property;

(b) $350 per residential unit per taxpayer for apartment buildings; and

(2) The commissioner shall have 90 days from the date of receipt of a complete application to make a determination as to the issuance of a certification.

c. The first taxable year for which a taxpayer may use a credit allowed under this section is the taxable year in which the taxpayer's application made and filed for a certification from the commissioner is granted.

d. The amount of any unused credit may be carried forward, if necessary, for use in each of the seven taxable years following the taxable year for which the credit is allowed.

e. 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 tax imposed pursuant to N.J.S.54A:1-1 et seq. for a taxable year, together with any other credits allowed against the tax imposed pursuant to N.J.S.54A:1-1 et seq., shall not exceed 50 percent of the taxpayer's liability for tax for the taxable year.

g. The commissioner shall establish a tax credit pre-certification process through which a taxpayer can determine if expected expenditures would qualify for a credit allowed pursuant to this section. The tax credit pre-certification process established by the commissioner may require the submission of written information describing the solar energy system equipment and how it is intended to be used by the taxpayer, the amount paid for the purchase and installation of the equipment, the terms of the leasing agreement under which the taxpayer leases the equipment, or the terms of a power purchase agreement, as applicable. The commissioner may also require the submission of any other information deemed relevant by the commissioner to make a determination. Obtaining pre-certification from the commissioner shall not be required to qualify for a credit allowed pursuant to this section.

h. A business entity that is classified as a partnership for federal income tax purposes shall not be allowed the 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.

A taxpayer that is a New Jersey S corporation shall not be allowed the 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 taxable year ending within or with the taxpayer's taxable year.

i. The commissioner, in consultation with the director, shall adopt rules and regulations in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), establishing technical specifications and certification requirements for the designation of qualified solar energy system expenditures pursuant to this section. Such rules and regulations shall include, but need not be limited to, examples of qualified solar energy system expenditures and the procedures and forms to apply for a certification.

j. The value of credits approved by the director and the commissioner pursuant to this section and section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall not exceed a cumulative total of $25,000,000 in any fiscal year to apply against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), and the tax imposed pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq.

If the cumulative total amount of credits allowed to taxpayers for privilege periods or taxable years commencing during a single fiscal year under this section and section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) exceeds the amount of credits available in that year, then taxpayers who have first applied for and have not been allowed a credit amount for that reason shall be allowed, in the order in which they have submitted an application, the amount of the tax credit or certificate on the first day of the next succeeding fiscal year in which tax credits under this section and section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill)) are not in excess of the amount of credits available.

k. As used in this section;