[First Reprint]

SENATE, No. 1696

STATE OF NEW JERSEY

INTRODUCED NOVEMBER 18, 1996

By Senators LaROSSA, KENNY, Ciesla, Palaia, Matheussen, Connors, Bryant, Kosco, Littell, O'Connor, Rice, Inverso, Bennett, Singer, Kyrillos, Sinagra, Casey and McNamara

An Act providing a phase-in of the sales and use tax rate for telecommunications services for newly relocated or expanded businesses in this State, supplementing P.L.1966, c.30 (C.54:32B-1 et seq.).

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

    1. a. Notwithstanding the 6% rate of tax imposed pursuant to section 3 and section 6 of P.L.1966, c.30 (C.54:32B-3 and 54:32B-6), a new relocated business or an expanded business in this State, subject to certification pursuant to this section by the Director of the Division of Taxation in the Department of the Treasury, shall in lieu of that rate, be subject to the sales and use tax upon receipts from every purchase or use ¹[by the] of intrastate or interstate telecommunications in connection with¹ business ¹[, except for resale, of intrastate or interstate telecommunications charged to an address] activity carried on by that business¹ in this State,¹ except for resale,¹ according to the following rate schedules for a certified business located within a qualified municipality as defined in subsection d. of this section and for a certified business located elsewhere in this State:

    b. In order to claim the reduced rates of tax set forth in subsection a. of this section a new relocated business or expanded business ¹[in this State]¹ shall apply to the director for a certificate ¹[that the business is a new relocated business or an expanded business, and if applicable, that the business is located in a qualified municipality] in accordance with rules and regulations adopted pursuant to subsection c. of this section¹. ¹[Copies of the certificate shall be filed by the business] In the case of a new relocated business, the business shall file an application with the director within 12 months of commencing operations in New Jersey in order to be considered eligible for the reduced rate of tax.

    Any business which applies for and is granted a certificate shall forthwith file a copy of the certificate¹ with any vendor of intrastate or interstate telecommunications, as may be appropriate, in order to establish the rate of tax which shall be imposed and collected by the vendor upon any purchase or use ¹[by the] of intrastate or interstate telecommunications in connection with¹ business¹[, except for resale, made through the vendor, of intrastate or interstate telecommunications charged to an address] activity carried on¹ in this State ¹by that new relocated business or expanded business, except for resale¹. Application shall be in a form, and shall include such information, as the director may prescribe. ¹Failure of any business to file a copy of the certificate with any vendor, as required herein, shall render the business ineligible for the reduced tax rate to which the business may otherwise be entitled pursuant to subsection a. of this section.¹

    c. A certificate obtained pursuant to subsection b. of this section shall first be applicable to purchases or use by the certified business made in the calendar month following the issuance of the certificate by the director and the annual rates applicable pursuant to subsection a. of this section shall be applicable to the respective 12 consecutive calendar month periods following the calendar month in which the certificate is issued. No business granted an expanded business certificate shall qualify for a subsequent certificate as an expanded business covering a new series of reduced rate periods until the expiration of all reduced rate periods covered by the current, valid certificate. A certificate holder shall ¹[annually file with the director such information as the director shall prescribe that demonstrates that the business continues to be actively engaged in the conduct of business at the location at which it qualified for the certificate and has an amount of annual compensation that is at least equal to the amount of compensation paid by the business in the year in which the certificate was granted. The director shall revoke the certificate of a new relocated business or an expanded business that does not comply with this annual requirement] continue to be eligible for the reduced rates of tax set forth in subsection a. of this section so long as that certificate holder maintains a number of full-time jobs not less than that number set forth on the application originally submitted to the director pursuant to subsection b. of this section. The State Treasurer shall adopt such rules and regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) as may be necessary to govern the application process and to ensure that businesses comply with the requirements and conditions of the tax reduction. The director shall revoke the certificate of any business that does not comply with the requirements set forth herein, or any rules and regulations adopted pursuant thereto¹ .

    d. As used in this section:

    ¹["Compensation" means wages, salaries, commissions or any other form of remuneration paid to employees residing and domiciled in this State for personal services performed substantially at the new relocated business or expanded business location in this State.]

    "Business" means any employer subject to the provisions of R.S.43:21-1 et seq. and may include a sole proprietorship, a partnership, or a corporation that has made an election under Subchapter S of Chapter One of Subtitle A of the Internal Revenue Code of 1986, or any other business entity through which income flows as a distributive share to its owners, limited liability company, nonprofit corporation, or any other form of business organization located either within or outside the State, including a cooperative association. "Cooperative association" shall include financial, stock or commodities exchanges;¹

    "Expanded business" means a business enterprise actively engaged in the conduct of business from a location within this State ¹that has been in operation at the same location for at least 12 months prior to making application to the director pursuant to subsection b. of this section and¹ that during any calendar year commencing after the operative date of this act ¹[pays compensation at equal to at least 125% of the compensation paid during the previous calendar year in which the business was in operation at that location for at least 12 months, and does not reduce the number of employees of the business in this State during that calendar year.] employs a number of full-time persons in excess of 125% of that number of full-time persons employed by that business in that year;

    "Full-time" means employment for at least 140 hours per month at a wage not less than the State or federal minimum wage, if either minimum wage provision is applicable to the business but does not include employment that is temporary or seasonal;¹

    "New relocated business" means a business enterprise actively engaged in the conduct of business from a location within this State that¹: (1)¹ commences operation ¹[for the first time at any] at that¹ location ¹[within this State]¹ on or after the operative date of this act¹ [, that]; (2)¹ prior to ¹[that date] the commencement of operations in New Jersey¹ maintained a business enterprise at a location outside this State which is moved into this State ¹[on or after the operative date of this act,];¹ and ¹[that] (3)¹ during the calendar year in which it commences operation of business ¹[at that location pays compensation in excess of the compensation paid] in this State employs full-time more persons than the business employed¹ during the previous calendar year; and

    "Qualified municipality" means any municipality which at the time of the certification of a new relocated business or expanded business located in the municipality was either eligible to receive aid under the "Special Municipal Aid Act," P.L.1987, c.75 (C.52:27D-118.24 et seq.) or was coextensive with a school district which qualified for designation as a "special needs district" pursuant to the "Quality Education Act of 1990," P.L.1990, c.52 (C.18A:7D-1 et seq.).

    2. This act shall take effect immediately but section 1 shall remain inoperative until the first day of the second month after enactment.

Provides reduced sales and use tax rate on telecommunications services purchased by expanded or newly relocated businesses in New Jersey and provides phase-in to regular rate.