A128

An Act providing an exemption from the petroleum products gross receipts tax and the motor fuel tax for fuel used for the operation of certain school buses, amending P.L.1991, c.181 and P.L.2010, c.22.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 7 of P.L.1991, c.181 (C.54:15B-2.1) is amended to read as follows:

7. a. "Gross receipts," as otherwise defined by section 2 of P.L.1990, c.42 (C.54:15B-2), shall not include receipts from sales of petroleum products used by marine vessels engaged in interstate or foreign commerce and receipts from sales of aviation fuels used by common carriers in interstate or foreign commerce other than the "burnout" portion which shall be taxable pursuant to rules promulgated by the director.

b. Highway fuel used for the following purposes is exempt from the tax imposed by section 3 of P.L.1990, c.42 (C.54:15B-3), and a refund of the tax imposed by that section may be claimed by the consumer providing proof the tax has been paid and no refund has been previously issued:

(1) autobuses while being operated over the highways of this State in those municipalities to which the operator has paid a monthly franchise tax for the use of the streets therein under the provisions of R.S.48:16-25 and autobuses while being operated over the highways of this State in a regular route bus operation as defined in R.S.48:4-1 and under operating authority conferred pursuant to R.S.48:4-3, or while providing bus service under a contract with the New Jersey Transit Corporation or under a contract with a county for special or rural transportation bus service subject to the jurisdiction of the New Jersey Transit Corporation pursuant to P.L.1979, c.150 (C.27:25-1 et seq.), and autobuses providing commuter bus service which receive or discharge passengers in New Jersey. For the purpose of this paragraph "commuter bus service" means regularly scheduled passenger service provided by motor vehicles whether within or across the geographical boundaries of New Jersey and utilized by passengers using reduced fare, multiple ride, or commutation tickets and shall not include charter bus operations for the transportation of enrolled children and adults referred to in subsection c. of R.S.48:4-1 and "regular route service" does not mean a regular route in the nature of special bus operation or a casino bus operation;

(2) agricultural tractors not operated on a public highway;

(3) farm machinery;

(4) ambulances;

(5) rural free delivery carriers in the dispatch of their official business;

(6) vehicles that run only on rails or tracks, and such vehicles as run in substitution therefor;

(7) highway motor vehicles that are operated exclusively on private property;

(8) motor boats or motor vessels used exclusively for or in the propagation, planting, preservation and gathering of oysters and clams in the tidal waters of this State;

(9) motor boats or motor vessels used exclusively for commercial fishing;

(10) motor boats or motor vessels, while being used for hire for fishing parties or being used for sightseeing or excursion parties;

(11) fire engines and fire-fighting apparatus;

(12) stationary machinery and vehicles or implements not designed for the use of transporting persons or property on the public highways;

(13) heating and lighting devices;

(14) motor boats or motor vessels used exclusively for Sea Scout training by a duly chartered unit of the Boy Scouts of America; [and]

(15) emergency vehicles used exclusively by volunteer first-aid or rescue squads; and

(16) school buses operated for the transportation of pupils to or from school or a school-sponsored activity or event by a religious or other charitable organization or corporation or by a person under contract with a public or governmental agency or a religious or other charitable organization or corporation. For the purpose of this paragraph “school buses” means “school bus” as that term is defined by R.S.39:1-1.

(cf: P.L.2016, c.57, s.13)

2. Section 12 of P.L.2010, c.22 (C.54:39-112) is amended to read as follows:

12. a. Fuel used for the following purposes is exempt from the tax imposed by the "Motor Fuel Tax Act," P.L.2010, c.22 (C.54:39-101 et seq.), and a refund of the tax imposed by subsection a. of section 3 of P.L.2010, c.22 (C.54:39-103) may be claimed by the consumer providing proof the tax has been paid and no refund has been previously issued:

(1) Autobuses while being operated over the highways of this State in those municipalities to which the operator has paid a monthly franchise tax for the use of the streets therein under the provisions of R.S.48:16-25 and autobuses while being operated over the highways of this State in a regular route bus operation as defined in R.S.48:4-1 and under operating authority conferred pursuant to R.S.48:4-3, or while providing bus service under a contract with the New Jersey Transit Corporation or under a contract with a county for special or rural transportation bus service subject to the jurisdiction of the New Jersey Transit Corporation pursuant to P.L.1979, c.150 (C.27:25-1 et seq.), and autobuses providing commuter bus service which receive or discharge passengers in New Jersey. For the purpose of this paragraph "commuter bus service" means regularly scheduled passenger service provided by motor vehicles whether within or across the geographical boundaries of New Jersey and utilized by passengers using reduced fare, multiple ride or commutation tickets and shall not include charter bus operations for the transportation of enrolled children and adults referred to in subsection c. of R.S.48:4-1 and "regular route service" does not mean a regular route in the nature of special bus operation or a casino bus operation,

(2) agricultural tractors not operated on a public highway,

(3) farm machinery,

(4) aircraft,

(5) ambulances,

(6) rural free delivery carriers in the dispatch of their official business,

(7) vehicles that run only on rails or tracks, and such vehicles as run in substitution therefor,

(8) highway motor vehicles that are operated exclusively on private property,

(9) motor boats or motor vessels used exclusively for or in the propagation, planting, preservation and gathering of oysters and clams in the tidal waters of this State,

(10) motor boats or motor vessels used exclusively for commercial fishing,

(11) motor boats or motor vessels, while being used for hire for fishing parties or being used for sightseeing or excursion parties,

(12) cleaning,

(13) fire engines and fire-fighting apparatus,

(14) stationary machinery and vehicles or implements not designed for the use of transporting persons or property on the public highways,

(15) heating and lighting devices,

(16) motor boats or motor vessels used exclusively for Sea Scout training by a duly chartered unit of the Boy Scouts of America,

(17) emergency vehicles used exclusively by volunteer first-aid or rescue squads, [and]

(18) three cents per gallon, the difference between the rate of tax on diesel fuel and the rate of tax on gasoline, for diesel fuel used by passenger automobiles and motor vehicles of less than 5,000 pounds gross weight, and

(19) school buses operated for the transportation of pupils to or from school or a school-sponsored activity or event by a religious or other charitable organization or corporation or by a person under contract with a public or governmental agency or a religious or other charitable organization or corporation. For the purpose of this paragraph “school buses” means “school bus” as that term is defined by R.S.39:1-1.

b. Subject to the procedural requirements and conditions set out in the "Motor Fuel Tax Act," P.L.2010, c.22 (C.54:39-101 et seq.), the following uses are exempt from the tax imposed by section 3 of P.L.2010, c.22 (C.54:39-103) on fuel, and a deduction or a refund may be claimed by the supplier, permissive supplier or licensed distributor:

(1) fuel for which proof of export, satisfactory to the director, is available and is either:

(a) removed by a licensed supplier for immediate export to a state in which the supplier has a valid license;

(b) removed from a terminal by a licensed distributor for immediate export as evidenced by the terminal issued shipping papers; or

(c) acquired by a licensed distributor and which the tax imposed by P.L.2010, c.22 (C.54:39-101 et al.) has previously been paid or accrued either as a result of being stored outside of the terminal transfer system immediately prior to loading or as a diversion across state boundaries properly reported in conformity with P.L.2010, c.22 (C.54:39-101 et al.) and was subsequently exported from this State on behalf of the distributor.

The exemption pursuant to subparagraphs (a) and (b) of this paragraph shall be claimed by a deduction on the report of the supplier which is otherwise responsible for remitting the tax upon removal of the product from a terminal or refinery in this State. The exemption pursuant to subparagraph (c) of this paragraph shall be claimed by the distributor, upon a refund application made to the director within six months of the licensed distributor's acquisition of the fuel;

(2) undyed kerosene sold to a licensed ultimate vendor - blocked pumps; if the licensed ultimate vendor - blocked pumps does not sell the kerosene through dispensers that have been designed and constructed to prevent delivery directly from the dispenser into a motor vehicle fuel supply tank, the ultimate vendor - blocked pumps shall be responsible for the tax imposed by section 3 of P.L.2010, c.22 (C.54:39-103) at the diesel fuel rate. Exempt use of undyed kerosene shall be governed by rules and regulations of the director. If rules or regulations are not promulgated by the director, then the exempt use of undyed kerosene shall be governed by rules and regulations of the Internal Revenue Service. An ultimate vendor-blocked pumps who obtained undyed kerosene upon which the tax levied by section 3 of P.L.2010, c.22 (C.54:39-103) had been paid and makes sales qualifying pursuant to this subsection may apply for a refund of the tax pursuant to an application, as provided by section 14 of P.L.2010, c.22 (C.54:39-114), to the director provided the ultimate vendor-blocked pumps did not charge that tax to the consumer;

(3) fuel sold to the United States or any agency or instrumentality thereof, and to the State of New Jersey and its political subdivisions, departments and agencies;

(4) aviation fuel sold to a licensed aviation fuel dealer;

(5) liquefied petroleum gas except when delivered to the tank of a highway vehicle;

(6) motor fuel on which tax has been paid under this act that is later contaminated in a manner making it unsuitable for taxable use. This credit or refund is limited to the remaining portion of taxed fuel in the contaminated mixture and is conditioned upon submitting to the director adequate documentation that the contaminated mixture was subsequently used in an exempt manner;

(7) fuel on which tax has been paid pursuant to P.L.2010, c.22 (C.54:39-101 et al.) that is either subsequently delivered back into the terminal transfer system for further distribution or delivered to a refinery for further processing;

(8) fuel on which tax has been previously imposed and paid pursuant to section 3 of P.L.2010, c.22 (C.54:39-103) and which is either subsequently exported, sold or distributed in this State in a manner which would result in a second tax being owed. If there is a second taxable distribution or sale, the party responsible for remittance of the second tax shall be the party eligible for claiming the refund or deduction;

(9) Fuel grade alcohol, biobased liquid fuel, or biodiesel fuel when sold to a licensed supplier and delivered to a qualified terminal.

(cf: P.L.2015, c.101, s.2)

3. This act shall take effect immediately and apply to highway fuel and fuel used on or after the first day of the first month next following the date of enactment.

STATEMENT

This bill provides an exemption from the petroleum products gross receipts tax and the motor fuel tax for fuel used for the operation of certain school buses.

Under the bill, the exemption from tax applies to fuel that is used for school buses operated for the transportation of pupils to or from school or a school-sponsored activity or event by a religious or other charitable organization or corporation or by a person under contract with a public or governmental agency or a religious or other charitable organization or corporation.

The bill defines “school buses” by reference to the definition of “school bus” under R.S.39:1-1. Under that section of law, a “school bus” is any motor vehicle operated by, or under contract with, a public or governmental agency, or religious or other charitable organization or corporation, or privately operated for the transportation of children to or from school for secular or religious education, which complies with the regulations of the New Jersey Motor Vehicle Commission affecting school buses, and includes “School Vehicle Type I” and “School Vehicle Type II.”

Under current law, consumers of fuel that are eligible for an exemption from the petroleum products gross receipts tax and the motor fuel tax must pay the tax at the point of purchase and seek a refund of the taxes paid by the filing of a claim with the Director of the Division of Taxation in the Department of the Treasury. The law provides that the claim for refund must be filed by the consumer providing proof that the tax has been paid and a refund has not been previously issued.

The bill takes effect immediately and applies to fuel used on or after the first day of the first month next following the date of enactment.