ASSEMBLY BUDGET COMMITTEE
STATEMENT TO
ASSEMBLY, No. 1753
with committee amendments
STATE OF NEW JERSEY
DATED: JUNE 18, 2018
The Assembly Budget Committee reports favorably Assembly Bill No. 1753, with committee amendments.
As amended, the bill imposes the sales and use tax and the State hotel and motel occupancy fee on charges for the occupancy of a transient accommodation in this State, and permits municipalities authorized to impose the Meadowlands regional hotel use assessment, the sports and entertainment facility tax, the Atlantic City luxury tax, the Atlantic City promotion fee, the hotel occupancy tax, the municipal hotel and motel occupancy tax, and the Cape May County tourism tax and assessment to similarly require the collection of tax on charges for the occupancy of a transient accommodation.
Under current law, the sales and use tax and the State hotel and motel occupancy fee are generally imposed on charges for the occupancy of a room or rooms in a hotel in this State. Current law also permits certain municipalities to impose, through the adoption of a municipal ordinance, similar taxes, fees, and assessments on charges for the occupancy of a room or rooms in a hotel that is located in the municipality electing to impose the tax.
Current law does not, however, impose, or permit municipalities to require the collection of, taxes, fees, and assessments on charges for the rental of real property. As a result, charges for occupancies that occur in other types of real property, such as the rental of a spare bedroom in an apartment or the lease of living or sleeping spaces in a single-family house, are not subject to tax.
This bill amends the sales and use tax, the State hotel and motel occupancy fee, and the various other municipal taxes, fees, and assessments that apply to hotel room occupancies to extend those taxes, fees, and assessments to certain occupancies that occur in some of these other types of real property. Under the bill, charges for the occupancy of a transient accommodation will be subject to tax in the same form and manner as charges for the occupancy of a room or rooms in a hotel.
For purposes of the bill, a transient accommodation is a room, group of rooms, or other living or sleeping space for the lodging of occupants, including but not limited to residences or buildings used as residences. The bill defines a residence as a house, condominium, or other residential dwelling unit in a building or structure or part of a building or structure that is designed, constructed, leased, rented, let or hired out, or otherwise made available for use as a residence.
The bill excludes from the definition of a transient accommodation and, therefore, does not impose, or permit municipalities to require the collection of, taxes, fees, and assessments on charges for the occupancy of:
-- a hotel or hotel room;
-- a room, group of rooms, or other living or sleeping space used as a place of assembly;
-- a dormitory or other similar residential facility of an elementary or secondary school or a college or university;
-- a hospital, nursing home, or other similar residential facility of a provider of services for the care, support and treatment of individuals that is licensed by the State;
-- a campsite, cabin, lean-to, or other similar residential facility of a campground or an adult or youth camp; or
-- a furnished or unfurnished private residential property where no maid service, room service, linen changing service or other common hotel services are made available by the lessor and where the keys to the furnished or unfurnished private residential property are provided to the lessee at the location of an offsite real estate broker.
The bill does not impose occupancy or sales and use taxes on leases of real property with a term of at least 90 consecutive days.
Under the bill, permanent residents (i.e. any occupant of a transient accommodation for at least 90 consecutive days) and charitable, non-profit organizations that lease or rent transient accommodations are to be treated consistent with how those residents and organizations are treated for purposes of hotel room occupancies under the sales and use tax. The bill provides that charges of rent for providing transient accommodations to a permanent resident are not subject to tax, and provides that charitable, non-profit organizations (that have been granted tax immunity authorization) are exempt from tax collection responsibilities when providing transient accommodations in furtherance of the purposes for which the entity was organized.
The bill requires transient space marketplaces to collect and pay on behalf of persons engaged in the business of providing transient accommodations or hotel rooms located in this State the tax for transactions solely consummated through the transient space marketplace. For not less than three years following the end of the calendar year in which the transaction occurred, the transient space marketplace is required to maintain and provide, on a quarterly basis, the Division of Taxation with the following data for those transactions consummated through the transient space marketplace:
(1) The name of the person who provided the transient accommodation or hotel room;
(2) The name of the customer who procured occupancy of the transient accommodation or hotel room;
(3) The address, including any unit designation, of the transient accommodation or hotel room;
(4) The dates and nightly rates for which the consumer procured occupancy of the transient accommodation or hotel room;
(5) The municipal transient accommodation registration number, if applicable;
(6) A statement as to whether such booking services will be provided in connection with (i) short-term rental of the entirety of such unit, (ii) short-term rental of part of such unit, but not the entirety of such unit, and/or (iii) short-term rental of the entirety of such unit, or part thereof, in which a non-short-term occupant will continue to occupy such unit for the duration of such short-term rental;
(7) The individualized name or number of each such advertisement or listing connected to such unit and the uniform resource locator (URL) for each such listing or advertisement, where applicable; and
(8) Such other information as the Division of Taxation may by rule require.
The Division of Taxation will audit transient space marketplaces as necessary to ensure data accuracy and enforce tax compliance.
The bill permits the Director of the Division of Taxation in the Department of the Treasury, in consultation with the Director of the Division of Local Government Services in the Department of Community Affairs, to adopt rules and regulations necessary to effectuate the purposes of the bill, and permits the immediate filing of those rules and regulations with the Office of Administrative Law, effective for a period not to exceed 360 days following the substitute’s effective date.
The bill takes effect immediately upon enactment, but provides for the provisions that impose, or permit municipalities to require the collection of, taxes, fees, and assessments on charges for the occupancy of transient accommodations to remain inoperative until the first day of the first full calendar quarter beginning at least 90 days following the date of enactment.
COMMITTEE AMENDMENTS
The amendments clarify that leases of real property with a term of at least 90 consecutive days are exempt.
The amendments require a transient space marketplace to collect and pay on behalf of persons engaged in the business of providing transient accommodations or hotel rooms.
The amendments provide for certain quarterly reporting requirements.
The amendments revise the definition of hotel in certain sections to reflect prior enacted definitions.
FISCAL IMPACT:
The Office of Legislative Services (OLS) expects that the enactment of the bill will produce a recurring annual increase in State and local tax and fee revenues, but lacks sufficient information to determine the magnitude of the gain in fiscal years following enactment. In large part, data concerning the number and types of rental properties which would qualify as a transient accommodation under the bill, and the rates that are or may be charged for occupancies of those accommodations in the future are unknown and preclude the OLS from producing a quantitative estimate regarding the overall impact of the bill on State and local revenues.