ASSEMBLY, No. 2878
STATE OF NEW JERSEY
INTRODUCED MAY 1, 1997
By Assemblyman WISNIEWSKI
An Act concerning the apportionment value of scheduled property under the gross receipts and franchise taxes, amending P.L.1940, c.4 and P.L.1940, c.5.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 4 of P.L.1940, c.4 (C.54:30A-19) is amended to read as follows:
4. (A) Every taxpayer shall on or before the first day of September, 1941, and the first day of September in each year thereafter return to the Director of the Division of Taxation a statement in such form and detail as the Director of the Division of Taxation shall require, showing, as of the first day of July preceding:
(1) The scheduled property of the taxpayer located in, on or over any public street, highway, road or other public place in this State; and
(2) The length of the taxpayer's lines or mains in, on, along or over any public street, highway, road or other public place in this State, exclusive of service connections; and
(3) The whole length of the taxpayer's lines or mains, exclusive of service connections.
(B) Every taxpayer shall on or before February 1, 1941, and February 1 in each year thereafter return to the Director of the Division of Taxation a statement showing its gross receipts for the preceding calendar year.
(C) The statements herein provided for shall be subscribed and sworn to by the taxpayer or the president, a vice-president, or chief officer of the corporation making such return. Any taxpayer refusing or neglecting to make the statements herein provided for shall forfeit and pay to the State of New Jersey the sum of one hundred dollars ($100.00) per day for each day of such refusal or neglect, to be recovered in an action at law in the name of the State and which, when recovered, shall be paid into the State Treasury. It shall be the duty of the Director of the Division of Taxation to certify any such default to the Attorney General of the State who, thereupon, shall prosecute an action at law for such penalty.
(D) The Director of the Division of Taxation shall audit and verify the statements filed by taxpayers whenever and in such respects as [he] the director shall deem necessary or advisable. In no case shall the director accept for apportionment purposes pursuant to section 5 of P.L.1940, c.4 (C.54:30A-20) any removal of, or reduction in unit value of, scheduled property as compared to the prior year's statement of scheduled property unless that removal or reduction has been verified and approved in writing by the Board of Public Utilities. The Director of the Division of Taxation may require any taxpayer to supply additional data and information in such form and detail as [he] the director shall request, whenever [he] the director may deem it necessary or helpful, for the proper performance of [his] the director's duties under this act.
(cf: P.L.1987, c.76, s.37)
2. Section 7 of P.L.1940, c.5 (C.54:30A-55) is amended to read as follows:
7. (A) Every taxpayer shall on or before the first day of September, 1941 and on or before the first day of September in each year thereafter return to the Director of the Division of Taxation a statement in such form and detail as the Director of the Division of Taxation shall require, showing, as of the first day of July of such year: (1) The scheduled property of the taxpayer located in, on or over any public street, highway, road or other public place in each municipality in this State and the scheduled property not so located in each municipality in this State;
(2) The length of the taxpayer's lines and mains along, in, on or over any public street, highway, road or other public place in this State, exclusive of service connections (but not including in the case of a street railway or traction company the length of the lines operated by autobuses or vehicles of the character described in R.S.48:15-41 et seq.); and
(3) The whole length of the taxpayer's lines and mains, exclusive of service connections (but not including in the case of a street railway or traction company the length of the lines operated by autobuses or vehicles of the character described in R.S.48:15-41 et seq.).
(4) Every taxpayer operating both gas and electric facilities shall supply the information required by this subsection (A) in such manner as the Director of the Division of Taxation shall require so that its gas and electric scheduled property and length of gas and electric lines shall be shown separately.
(B) Every taxpayer shall on or before February 1, 1941, and on or before February 1 in each year thereafter return to the Director of the Division of Taxation a statement showing:
(1) The gross receipts for the preceding calendar year from the business over, on, in, through or from the taxpayer's lines and mains in this State, stated separately for each class of business; and
(2) The gross receipts for the preceding calendar year from the business over, on, in, through or from the whole of the taxpayer's lines and mains. In addition, as to gas and electric light, heat and power corporation taxpayers, commencing with the statement to be returned on or before February 1, 1992, a statement of the corresponding therms of gas and the corresponding kilowatthours of electricity sold in this State in the preceding year itemized separately for classes in the residential class category and the non-residential class category.
(3) Every taxpayer operating both gas and electric facilities shall supply the information required by this subsection (B) in such manner as the Director of the Division of Taxation shall require, separating its gross receipts and sales of units from gas operations from its gross receipts and sales of units from electric operations.
(C) The statements herein provided for shall be subscribed and sworn to by the president, a vice-president or chief officer of the corporation making such return; any taxpayer refusing or neglecting to make the statements herein provided for shall forfeit and pay to the State of New Jersey the sum of one hundred dollars ($100.00) per day for each day of such refusal or neglect, to be recovered in an action at law in the name of the State and which, when recovered, shall be paid into the State Treasury. It shall be the duty of the Director of the Division of Taxation to certify any such default to the Attorney General of the State who, thereupon, shall prosecute an action at law for such penalty.
(D) The Director of the Division of Taxation shall audit and verify the statements filed by taxpayers whenever and in such respects as [he] the director shall deem necessary or advisable. In no case shall the director accept for apportionment purposes pursuant to section 8 of P.L.1940, c.5 (C.54:30A-56) any removal of, or reduction in unit value of, scheduled property as compared to the prior year's statement of scheduled property unless that removal or reduction has been verified and approved in writing by the Board of Public Utilities. The Director of the Division of Taxation may require any taxpayer to supply additional data and information in such form and detail as [he] the director shall request, whenever [he] the director may deem it necessary or helpful, for the proper performance of [his] the director's duties under this act.
(cf: P.L.1991, c.184, s.17)
3. This act shall take effect immediately and apply to statements due on or after enactment.
STATEMENT
This bill requires that any removals or reductions in value of "scheduled property" under the New Jersey gross receipts and franchise taxes on public utilities be verified and approved by the Board of Public Utilities.
Municipalities receive distributions of a percentage of the gross receipts of the public utilities that exercise their franchises by use of the public rights of way of these municipalities. Since 1940, the apportionment of these receipts among the municipalities has been accomplished through measuring the relative "scheduled property" of the utilities in each municipality. "Scheduled property" consists of the production and distribution property of the utilities, valued at uniform rates set by law and intended to ensure a uniform and fair distribution of the revenues to the municipalities. Utilities are required to report their scheduled property annually to the Director of the Division of Taxation, who uses the value of the scheduled property to calculate distributions of the revenues collected by the State.
Misreporting of scheduled property does not affect the total taxes paid by utilities, does not affect the total revenue distributed to municipalities and, absent willful fraud, does not result in any penalties being imposed. Unfortunately, misreporting of scheduled property affects specific municipalities' distributions, impacts the fairness of the distributions and may, in some cases, result in gross injustice. The unauthorized elimination or reduction of scheduled property reported in a single municipality may cause that municipality's revenue distribution for a budget cycle to plummet, causing property taxes to soar for that cycle.
This bill requires that the Director of the Division of Taxation disregard any removal of, or reduction in unit value of, scheduled property as compared to the prior year's statement of scheduled property for calculating distributions of utility revenue to municipalities unless that removal or reduction has been verified and approved in writing by the Board of Public Utilities.
Requires BPU approval to decrease or omit scheduled property for gross receipts and franchise taxes purposes.