A 4077 — Imposes various taxes and fees on correctional service businesses to offset social costs of incarceration.*

A4077 2R3R [Second[Third Reprint] ASSEMBLY, No.

Assemblywoman  MITCHELLE DRULIS District 16 (Hunterdon, Mercer, Middlesex and Somerset) Assemblyman  GABRIEL RODRIGUEZ District 33 (Hudson) Assemblywoman  ANNETTE QUIJANO District 20 (Union) Assemblywoman  MARISA SWEENEY District 25 (Morris and Passaic)   Co-Sponsored by:

Assemblywoman Haider, Assemblyman Danielsen, Assemblywoman Brennan, Assemblymen DeAngelo, Freiman, Assemblywoman ParkPark, Assemblymen Bhalla, Kearney and AssemblymanAssemblywoman BhallaSpeight         SYNOPSIS      Imposes various taxes and fees on operatorscorrectional ofservice privatebusinesses prisons to offset social costs of incarceration.

  CURRENT VERSION OF TEXT      As reported by the Assembly CommunityAppropriations Development and Women's Affairs Committee on June 8,23, 2026, with amendments.

   An Act imposing taxes and fees on operators3[operators of private prisonsprisons] correctional service businesses3 and supplementing Title 54 of the Revised Statutes.

       1.    Sections 1 through 4 of P.L.    , c.    (C.        ) (pending before the Legislature as this bill) shall be known and may be cited as the “Knowledge, Accountability, and Rights in Incarceration Markets Act.”             2.  2.    a.  For the purposes of this section:

          “Director”3“Correctional service business” means theany Directorfor-profit ofentity thethat Divisionprovides ofservices Taxationincluding, inbut thenot Departmentlimited ofto, dining or food services, laundry, maintenance, or transportation for any criminal or civil detention facility operating within the Treasury.State.

      The “Publicterm entity”does meansnot anyinclude federal,reentry State,services, county,inmate services, or municipalpass-through entity.contracts, such as telecommunications services including telephone calls and video visitation, electronic communications including email, or commissary services.3      “Director” means the Director of the Division of Taxation in the Department of the Treasury.

          b.  “Public Aentity” taxpayermeans thatany operatesfederal, aState, privatecounty, correctional facility in the State and has entered into a contract with a public entity for the provision of correctional services, shall be subject to a fee based on the value of 1[such] the1 contract with the public entity during each year in which the contract is in effect.  The amount of the fee shall be equal to eight percent of the consideration given, or contractedmunicipal toentity. be given, by the public entity to the taxpayer for the provision of correctional services.

          c.  b.    EveryA taxpayer that operates a 3[private]3 correctional 3[facility] service business3 in the State 3[and has entered into a contract with a public entity for the provision of correctional services,]3 shall be subject to 3[a] an annual operations3 fee based on the value of 1[such] the1 3gross receipts or the3 contract with 3[the] a3 public entity during each year in which the contract is in effect.  The amount of the fee imposedshall pursuantbe equal to subsectioneight b.percent of the consideration given, 3gross receipts,3 or contracted to be given, by the public entity to the taxpayer for the provision of correctional services.

of     thisc.     sectionEvery shall annually file a return for the preceding calendar year with the director on such forms as the director shall prescribe.  The return shall indicate the total dollar value of the contract entered into by the taxpayer forsubject theto provision of correctional services and include a copy of 1[such] the1 contract.  At the timefee aimposed return is filed pursuant to thissubsection subsection,b. a taxpayer shall remit the full amount of the fee due.

     of d.  this Asection taxpayershall thatannually fails to file a return whenfor duethe orpreceding failscalendar toyear paywith the amountdirector ofon such forms as the feedirector whenshall dueprescribe.  The return shall beindicate subjectthe tototal suchdollar penaltiesvalue of the contract entered into by the taxpayer 3or the gross reciepts3 for the provision of correctional services and interestinclude asa copy of 1[such] the1 contract 3or gross receipts3.  At the time a return is filed pursuant to this subsection, a taxpayer shall beremit providedthe byfull amount of the director.fee due.

          e.  d.    ThereA istaxpayer establishedthat afails special,to nonlapsingfile accounta withinreturn thewhen Generaldue Fund,or fails to bepay known as the “Detentionamount andof Deportationthe Defensefee Initiativewhen Supportdue Fund,”shall intobe whichsubject allto revenuessuch generatedpenalties fromand theinterest feeas imposedshall pursuantbe toprovided 1subsectionby b.the director.

of1      thise.   section3[There shallis beestablished credited. a Thespecial, moniesnonlapsing in the account shallwithin bethe dedicatedGeneral andFund, annuallyto appropriatedbe byknown theas Legislature to the Department“Detention ofand HumanDeportation ServicesDefense toInitiative supportSupport theFund,” provisioninto ofwhich legalall] servicesAll3 byrevenues accreditedgenerated institutionsfrom of higher education through the Detentionfee andimposed Deportationpursuant Defenseto Initiative,1subsection orb. any other successor initiative or program.

    of1 3.   this a. section Forshall be credited 3[.  The monies in the purposesaccount shall be dedicated and annually appropriated by the Legislature to the Department of thisHuman sectionServices 2[1[:to support the provision of legal services by accredited institutions of higher education through the Detention and Deportation Defense Initiative, or any other successor initiative or program] to the “Societal Rehabilitation Support Fund” established pursuant to subsection e.

of section 3 of P.L.    , c.    (C.       ) (pending before the Legislature as this bill)3.

        3.   a.  For the purposes of this section 2[1[:

     3“Correctional service business” means any for-profit entity that provides services including, but not limited to, dining or food services, laundry, maintenance, or transportation for any criminal or civil detention facility operating within the State.  The term does not include reentry services, inmate services, or pass-through contracts, such as telecommunications services including telephone calls and video visitation, electronic communications including email, or commissary services.3      Director2 means the Director of the Division of Taxation in the Department of the Treasury.

501(c)(3)).2           b.   b.   A3[A taxpayer that operates a private correctional facility in the State shall be subject to a fee based on the number of inmates who are detained at the taxpayer’s private correctional facility.  The amount of the fee shall be $15 per inmate for each day 1[such] an1 inmate is detained at the taxpayer’s private correctional facility in a month.month.] The director shall assess a regulatory cost-recovery on all correctional service businesses, set annually, based on costs to the State, which include, but are not limited to, costs attributable to inspection, oversight, emergency response, and public health services related to detention facilities3.

of this section shall file a return for the preceding month3[month] year3 with the director on such forms as the director shall prescribe.  The3[The return shall indicate the total number of inmates detained at the taxpayer’s private correctional facility during the preceding month and the number of days during that month in which such inmates were detained by the taxpayer. taxpayer.]3  At the time a return is filed pursuant to this subsection, a taxpayer shall remit the full amount of the fee due.

     e.     There is established a special, nonlapsing account within the General Fund, to be known as the “Private3[“Private Prison SocietalSocietal] “Societal3 Rehabilitation Support Fund,” into which all revenues generated from the fee imposed pursuant to 1subsection b.

     3“Correctional service business” means any for-profit entity that provides services including, but not limited to, dining or food services, laundry, maintenance, or transportation for any criminal or civil detention facility operating within the State.  The term does not include reentry services, inmate services, or pass-through contracts, such as telecommunications services including telephone calls and video visitation, electronic communications including email, or commissary services.3       “S corporation” shall mean a New Jersey S corporation, as defined in subsection (p) of section 4 of P.L.1945, c.162 (C.54:10A-4), which does not make an election to be taxed as a C corporation pursuant to either subsection (ff) 1of section 41 of P.L.1945, c.162 (C.54:10A-4) or subsection d.

      b.   In addition to the tax paid by each taxpayer determined pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), a taxpayer that operates a private3[private correctional facilityfacility] correctional service business3 in the State shall be assessed a private3[private prisonprison] correctional service business3 surtax equal to three percent of the taxpayer’s allocated taxable net income during each privilege period.  The private3[private prisonprison] correctional service business3 surtax shall be due and payable in accordance with section 15 of P.L.1945, c.162 (C.54:10A-15), and the private3[private prisonprison] correctional service business3 surtax shall be administered pursuant to the provisions of 1the Corporation Business Tax Act (1945),1 P.L.1945, c.162 (C.54:10A-1 et seq.).  Notwithstanding the provisions of any other law to the contrary, no credits shall be allowed against the private3[private prisonprison] correctional service business3 surtax liability computed under this section except for credits for installment payments, estimated payments made with a request for an extension of time for filing a return, or overpayments from prior privilege periods.

      c.   The gross amount of all revenues generated from the private3[private prisonprison] correctional service business3 surtax imposed pursuant to this section shall be credited to the “Private3[“Private Prison SocietalSocietal] “Societal3 Rehabilitation Support Fund” established pursuant to subsection e.

of section 3 of P.L.    , c.    (C.        )P.L.    , c.    (C.        ) (pending before the Legislature as this bill), except for amounts credited to the special account in the General Fund created pursuant to Article VIII, Section II, paragraph 6 of the New Jersey Constitution.  The monies credited to the fund pursuant to this section shall be used for the fund’s authorized purposes, provided that one percent of the private3[private prisonprison] correctional service business3 surtax revenues shall be appropriated to support programs provided by the State, one percent of 1[such] the private3[private prisonprison] correctional service business3 surtax1 revenues shall be appropriated to support programs provided by the county in which the private3[private]3 correctional facility of3[of the taxpayertaxpayer] that is being provided services by the correctional service business3 is located, and one percent of 1[such] the private3[private prisonprison] correctional service business3 surtax1 revenues shall be appropriated to support 1[programs] police and fire services1 provided by the municipality in which the private3[private]3 correctional facility of3[of the taxpayertaxpayer] that is being provided services by the correctional service business3 is located.

            5.  35. The Director of the Division of Taxation 1in the Department of the Treasury1 shall, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations as necessary to implement the provisions of P.L.    , c.    (C.        ) (pending before the Legislature as this bill).

    a. 6.    This act shall take effect immediately and shall apply to taxable years and privilege periods beginning on or after January of the year next following the date of enactment.

Nothing in this act shall be construed or applied to discriminate against, or directly regulate, the United States, its agencies, or instrumentalities.

 The fees and taxes imposed by this act shall be applied in a manner that is neutral as to the identity of the payer and shall not be measured by, or conditioned upon, the existence or value of a contract with the United States or any other public entity.

     b.

 To the extent any provision is determined to impose a direct tax on the United States or its instrumentalities, the provision shall not apply to receipts or consideration paid by the United States;

the remaining provisions shall continue to apply to other receipts.

     c.

 If any part of this act is found by a court of competent jurisdiction to be invalid, unconstitutional, or otherwise in violation of federal law or regulations, that portion of the act shall be of no force and effect, and all other portions of the act shall be in full force and effect so long as the remaining portion of the act continues to be in compliance with federal law.3         3[5.] 6.3    The Director of the Division of Taxation 1in the Department of the Treasury1 shall, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations as necessary to implement the provisions of P.L.    , c.    (C.        ) (pending before the Legislature as this bill).

        3[6.] 7.3    This act shall take effect immediately and shall apply to 3months,3 taxable years 3,3 and privilege periods beginning on or after January of the year next following the date of enactment.