ASSEMBLY, No. 1676
STATE OF NEW JERSEY
PRE-FILED FOR INTRODUCTION IN THE 2010 SESSION
Assemblyman LOUIS D. GREENWALD
District 6 (Camden)
Assemblyman MATTHEW W. MILAM
District 1 (Cape May, Atlantic and Cumberland)
Assemblywoman L. GRACE SPENCER
District 29 (Essex and Union)
Assemblyman GARY R. CHIUSANO
District 24 (Sussex, Hunterdon and Morris)
Assemblywoman NELLIE POU
District 35 (Bergen and Passaic)
Assemblyman JAY WEBBER
District 26 (Morris and Passaic)
Assemblywomen McHose, Vainieri Huttle, Wagner, Assemblymen Coutinho, DiCicco, Gusciora, Caputo, Johnson, Fuentes, Assemblywoman Watson Coleman, Assemblyman Schaer, Assemblywoman Riley, Assemblymen Chivukula, Giblin, Burzichelli, Assemblywomen Quigley, Lampitt, Assemblymen Coughlin, Moriarty, Conners, Rudder, Delany, Senators Oroho, Sweeney, Kyrillos, Stack, A.R.Bucco and Gordon
Provides single sales fraction for corporation business tax income allocation formula and establishes airline-specific sales fraction.
CURRENT VERSION OF TEXT
As amended by the Senate on January 6, 2011.
An Act modifying the allocation of the entire net income of corporation business taxpayers, amending and supplementing P.L.1945, c.162.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 6 of P.L.1945, c.162 (C.54:10A-6) is amended to read as follows:
6. The portion of [its] a taxpayer’s entire net worth to be used as a measure of the tax imposed by subsection (a) of section 5 of P.L.1945, c.162 (C.54:10A-5), and the portion of its entire net income to be used as a measure of the tax imposed by subsection (c) of section 5 of P.L.1945, c.162 (C.54:10A-5), shall be determined by multiplying such entire net worth and entire net income, respectively, by an allocation factor which, for privilege periods ending before 1[July 1, 2010] July 1, 20111 , is the property fraction, plus twice the sales fraction plus the payroll fraction and the denominator of which is four, and which, for privilege periods ending on or after 1[July 1, 2010] July 1, 20111, is the sum of the portions of the property fraction, the sales fraction, and the payroll fraction determined in accordance with the following schedule:
for privilege periods ending on or after 1[July 1, 2010] July 1, 20111 but before 1[July 1, 2011] July 1, 20121 , 15% of the property fraction plus 70% of the sales fraction plus 15% of the payroll fraction,
for privilege periods ending on or after 1[July 1, 2011] July 1, 20121 but before 1[July 1, 2012] July 1, 20131 , 5% of the property fraction plus 90% of the sales fraction plus 5% of the payroll fraction, and
for privilege periods ending on or after 1[July 1, 2012] July 1, 20131 , 100% of the sales fraction;
except as the director may determine pursuant to section 8 of P.L.1945, c.162 (C.54:10A-8), that is:
(A) The property fraction is the average value of the taxpayer's real and tangible personal property within the State during the period covered by its report divided by the average value of all the taxpayer's real and tangible personal property wherever situated during such period; provided, however, that for the purpose of determining average value, the provisions with respect to depreciation as set forth in subparagraph (F) of paragraph (2) of subsection (k) of section 4 of P.L.1945, c.162 (C.54:10A-4) shall be taken into account for arriving at such value.
(B) The sales fraction is the receipts of the taxpayer, computed on the cash or accrual basis according to the method of accounting used in the computation of its net income for federal tax purposes, arising during such period from
(1) sales of its tangible personal property located within this State at the time of the receipt of or appropriation to the orders where shipments are made to points within this State,
(2) sales of tangible personal property located without the State at the time of the receipt of or appropriation to the orders where shipment is made to points within the State,
(3) (Deleted by amendment.)
(4) services performed within the State,
(5) rentals from property situated, and royalties from the use of patents or copyrights, within the State,
(6) all other business receipts (excluding dividends excluded from entire net income by paragraph (1) of subsection (k) of section 4 of P.L.1945, c.162 (C.54:10A-4)) earned within the State,
divided by the total amount of the taxpayer's receipts, similarly computed, arising during such period from all sales of its tangible personal property, services, rentals, royalties and all other business receipts, whether within or without the State.
(C) The payroll fraction is the total wages, salaries and other personal service compensation, similarly computed, during such period of officers and employees within the State divided by the total wages, salaries and other personal service compensation, similarly computed, during such period of all the taxpayer's officers and employees within and without the State.
In the case of a banking corporation which maintains a regular place of business outside this State other than a statutory office, and which elects to take the exclusion from net worth provided in subsection (d) of section 4 of P.L.1945, c.162 (C.54:10A-4) or the deduction from entire net income provided in paragraph (4) of subsection (k) of section 4 of P.L.1945, c.162 (C.54:10A-4), the allocation factor shall be computed and applied in accordance with section 6 of P.L.1945, c.162 (C.54:10A-6); provided, however, that the numerators and the denominators of the fractions described in (A), (B) or (C) above shall include all amounts attributable, directly or indirectly, to the production of the eligible net income of an international banking facility as defined in paragraph (4) of subsection (k) of section 4 of P.L.1945, c.162 (C.54:10A-4), whether or not such amounts are otherwise attributable to this State.
(cf: P.L.2008, c.120, s.2)
2. (New Section) Notwithstanding the provisions of section 6 of P.L.1945, c.162 (C.54:10A-6), the sales fraction for the transportation revenues of a taxpayer that is an airline shall be determined as the ratio of revenue miles in this State divided by total revenue miles; provided however, that if a taxpayer that is an airline is engaged in the transportation of passengers, the transportation of freight, or the rental of aircraft, the ratio under this section shall be determined by means of an average of a passenger revenue mile fraction, freight revenue mile fraction, and rental revenue mile fraction weighted to reflect the person’s relative gross receipts from passenger transportation, freight transportation, and rentals.
3. This act shall take effect immediately; provided however, that section 2 shall apply to privilege periods ending on or after 1[July 1, 2010] July 1, 20111.