New Jersey-2014-S3035-Introduced

An Act providing credits against corporation business and gross income taxes for qualified farmers in the State that develop housing for their agricultural workforce, 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, 2016, a taxpayer that is a qualified farmer shall be allowed a credit against the tax due pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) in an amount equal to 50 percent of the qualified costs paid or incurred by the taxpayer to construct, install, acquire, or rehabilitate agricultural workforce housing in the State, provided, however, that the qualified costs paid or incurred by the taxpayer do not exceed the estimate of qualified costs approved by the Commissioner of Labor and Workforce Development, in consultation with the Director of the Division of Taxation in the Department of the Treasury.

b. To be eligible for a tax credit pursuant to this section, a taxpayer shall submit an application, in writing, prior to completion of the agricultural workforce housing, to the Commissioner of Labor and Workforce Development for review and approval of the estimate of qualified costs of the agricultural workforce housing. The commissioner shall review the application, and shall approve or deny the estimate of qualified costs on a timely basis.

c. Following approval of the estimate of qualified costs for the agricultural workforce housing, a taxpayer may claim a portion of the available credit for the privilege period in which the construction, installation, acquisition, or rehabilitation of the agricultural workforce housing is completed, provided, however, that no more than 20 percent of the total credit shall be claimed in any one privilege period. Unused credit may be carried forward if necessary to any of the nine following privilege periods, provided that the agricultural workforce housing continues to operate as such during the privilege period for which the credit is claimed.

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 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 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 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).

e. If the director determines that a taxpayer has obtained a credit pursuant to this section by fraud or misrepresentation or has failed to comply with the provisions of this section, the director shall deny the taxpayer the credit and shall issue a tax assessment for the recapture of credit previously allowed to the taxpayer pursuant to this section.

f. As used in this section:

"Agricultural worker" means any person who, for compensation, performs temporary or permanent labor for a qualified farmer in the production, processing, planting, cultivating, handling, or harvesting of agricultural or horticultural crops or products.

"Agricultural workforce housing" means housing that is occupied, on a seasonal or permanent basis, exclusively by agricultural workers or farm employees and their immediate families, whether or not rent is paid, and is in compliance with all applicable laws, regulations, requirements, and standards.

"Qualified costs" mean costs of acquisition, finance, construction, installation, materials, permits, and capital expenditures for rehabilitation, but exclude costs of purchasing the land on which the housing is situated, routine maintenance expenses, and reserves.

"Qualified farmer" means a taxpayer that owns or operates a "commercial farm" as that term is defined by section 3 of P.L.1983, c.31 (C.4:1C-3).

g. The commissioner, in consultation with the director, shall adopt rules in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), as are necessary to effectuate the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).

2. a. For taxable years beginning on or after January 1, 2016, a taxpayer that is a qualified farmer shall be allowed a credit against the New Jersey gross income tax due pursuant to N.J.S.54A:1-1 et seq. in an amount equal to 50 percent of the qualified costs paid or incurred by the taxpayer to construct, install, acquire, or rehabilitate agricultural workforce housing in the State, provided, however, that the qualified costs paid or incurred by the taxpayer do not exceed the estimate of qualified costs approved by the Commissioner of Labor and Workforce Development, in consultation with the Director of the Division of Taxation in the Department of the Treasury.

c. Following approval of the estimate of qualified costs for the agricultural workforce housing, a taxpayer may claim a portion of the available credit for the taxable year in which the construction, installation, acquisition, or rehabilitation of the agricultural workforce housing is completed, provided, however, that no more than 20 percent of the total credit shall be claimed in any one taxable year. Unused credit may be carried forward if necessary to any of the nine following taxable years, provided that the agricultural workforce housing continues to operate as such during the taxable year for which the credit is claimed.

d. The order of priority of the application of the credit allowed pursuant to this section and any other credits allowed against the New Jersey gross income tax due pursuant to N.J.S.54A:1-1 et seq. in a taxable year shall be as prescribed by the director. A credit allowed pursuant to this section shall not reduce the tax liability otherwise due pursuant to N.J.S.54A:1-1 et seq., for a taxable year to an amount less than zero.

e. A business entity 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 entity income, shall be determined by allocating to the taxpayer that proportion of the credit acquired by the entity that is equal to the taxpayer's share, whether or not distributed, of the total distributive income or gain of the entity for its taxable year ending within or with the taxpayer's taxable year.

A New Jersey S Corporation shall not be allowed a credit directly under the gross income tax, 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.

f. If the director determines that a taxpayer has obtained a credit pursuant to this section by fraud or misrepresentation or has failed to comply with the provisions of this section, the director shall deny the taxpayer the credit and shall issue a tax assessment for the recapture of credit previously allowed to the taxpayer pursuant to this section.

g. As used in this section:

"Qualified farmer" means a taxpayer that owns or operates a "commercial farm" as that term is defined by section 3 of P.L.1983, c.31 (C.4:1C-3).

h. The commissioner, in consultation with the director, shall adopt rules in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), as are necessary to effectuate the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).

3. This act shall take effect immediately.

STATEMENT

This bill establishes credits against the corporation business and gross income taxes for qualified farmers that develop housing for their agricultural workforce in the State. The amount of the available credit is 50 percent of the approved qualified costs incurred and paid by the taxpayer to construct, install, acquire, or rehabilitate the housing.

A taxpayer intending to claim the credit must apply in advance of completion of the housing to the Commissioner of Labor and Workforce Development. Following approval of an estimate of qualified costs by the commissioner, a taxpayer may claim a portion of the available credit for the taxable year or privilege period in which the housing is completed, and in any of the nine subsequent taxable years or privilege periods, subject to the provisions of the bill. No more than 20 percent of the total credit may be claimed in any one taxable year or privilege period. The agricultural workforce housing must continue to be used as agricultural workforce housing during any taxable year or privilege period for which the credit is claimed.

The bill defines agricultural workforce housing as housing that is exclusively occupied either seasonally or permanently by agricultural workers or farm employees and their immediate families, whether or not rent is paid, and that complies with all applicable laws, regulations, requirements, and standards.

Agricultural workers are defined as those who, for compensation, work on a temporary or permanent basis, in the production, processing, planting, cultivating, handling, or harvesting of agricultural or horticultural crops or products. Under the bill, qualified costs include the costs of acquisition, finance, construction, installation, materials, permits, and capital expenditures for rehabilitation but do not include costs for the purchase of land on which the housing is located, routine maintenance expenses, and reserves.

The bill also contains provisions aimed at preventing misuse of the credit and provides for disallowance, or recapture of a credit previously allowed, in certain circumstances.