New Jersey 2018-2019 Regular Session Status: Introduced

A543 —

  1. 1
    Introduced
  2. 2
    In Committee
  3. 3
    Passed General Assembly
  4. 4
    Passed Senate
  5. 5
    To Executive
  6. 6
    Enacted

This bill died with 2018-2019 Regular Session. It reached “Introduced” and never advanced before the session ended, so it can no longer move — a new version would have to be reintroduced in the current session.

This bill is no longer active — its legislative session has ended, so there is no live prognosis. It would have to be reintroduced in the current session to move again.

Identical bill: S1082 w/c (not yet in our corpus)

Bill Text

What changed in the latest version

190 added · 494 removed

Plain-language change summary

The amendments to Bill A543 include the addition of a fiscal estimate that outlines the potential financial impacts of the proposed tax credits for vineyards and wineries. This estimate indicates a possible direct revenue loss to the State of up to $30,000,000, as well as an indeterminate indirect revenue gain for the state and potential revenue increase for affected local governments. It also specifies the agencies that will be involved, namely the Department of the Treasury and certain local governments.

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A543 ASSEMBLY, No.
A543 FISCAL ESTIMATE   LEGISLATIVE FISCAL ESTIMATE ASSEMBLY, No.
543 STATE OF NEW JERSEY 218th LEGISLATURE   PRE-FILED FOR INTRODUCTION IN THE 2018 SESSION     Sponsored by:
543 STATE OF NEW JERSEY 218th LEGISLATURE   DATED:
Assemblyman  VINCENT MAZZEO District 2 (Atlantic) Assemblyman  ERIC HOUGHTALING District 11 (Monmouth) Assemblyman  BOB ANDRZEJCZAK District 1 (Atlantic, Cape May and Cumberland) Assemblywoman  ELIZABETH MAHER MUOIO District 15 (Hunterdon and Mercer) Assemblyman  RONALD S.
JANUARY 16,     SUMMARY   Synopsis:
DANCER District 12 (Burlington, Middlesex, Monmouth and Ocean)         SYNOPSIS      Provides tax credits to vineyards and wineries for qualified capital expenses.
Provides tax credits to vineyards and wineries for qualified capital expenses.
  CURRENT VERSION OF TEXT      Introduced Pending Technical Review by Legislative Counsel.
Type of Impact:
   An Act providing tax credits to vineyards and wineries for qualified capital expenses and supplementing Title 54A of the New Jersey Statutes and P.L.1945, c.162 (C.54:10A-1 et seq.).
Potential negative fiscal net impact on State General Fund and Property Tax Relief Fund;
       Be It Enacted by the Senate and General Assembly of the State of New Jersey:
potential revenue increase to affected local governments.
        1.   As used in sections 2 through 4 of P.L.    , c.    (C.      ) (pending before the Legislature as this bill):
Agencies Affected:
      “Director” means the Director of the Division of Taxation in the Department of the Treasury.
Department of the Treasury and certain local governments.
      “Qualified capital expense” means any expenditure made by the taxpayer for the purchase and installation of equipment or agricultural materials for use in the production of agricultural products at a vineyard or winery,  including:
    Office of Legislative Services Estimate Fiscal Impact Multi-Year Lifespan of Tax Credit Awards    Direct State Revenue Loss Up to $30,000,000   Indirect State Revenue Gain Indeterminate   State Opportunity Cost Indeterminate   Indirect Local Revenue Gain Indeterminate         ·         The Office of Legislative Services (OLS) expects the ten-year tax credit program for qualified capital expenses by vineyards and wineries to produce a negative fiscal net impact of indeterminate magnitude to the State.  The absence of data regarding the amount and attributes of qualified capital expenses prevent the OLS from quantifying the overall impact of tax credits on State revenues.
a.       barrels;
  ·         The OLS projects that this bill will lower State revenue collections by up to $30 million over the lifetime of the tax credit program.  The total revenue loss may accrue over more than ten years to the extent that taxpayers carry unused portions of their tax credit awards forward to future tax years.
b.      bins;
  ·         The fiscal net impact is calculated by adding the direct revenue loss from awarding tax credit amounts and their opportunity costs (the fiscal benefits the State forgoes as spending is redirected from one economic activity to another) and subtracting from that sum the indirect revenue gain that will accrue from additional economic activity that the tax credit amounts will catalyze.  The OLS expects that the bill’s direct State revenue loss will exceed its indirect State revenue gain because tax-credit receiving capital investments are not required to yield a net fiscal benefit to the State.
c.       bottling equipment;
  ·         The bill might accrue an indeterminate revenue gain to affected local governments if the bill results in the awarding of tax credits to vineyard and winery projects that would not be undertaken absent the assistance and if the projects involve value-increasing improvements to taxable real estate.
d.      canopy management machines;
    BILL DESCRIPTION         This bill establishes a ten-year tax credit program for qualified capital expenses of vineyards and wineries.  Specifically, the bill provides a credit against the gross income tax and corporation business tax, as applicable, for vineyards and wineries in an amount equal to 25 percent of the qualified capital expenses made in connection with the establishment of a new vineyard or winery or the capital improvements made to an existing vineyard or winery during each tax year in which the qualified vineyard or winery is operated for a profit by the taxpayer.  Tax credits are available for qualified capital expenses made in tax years beginning on and after January 1, but before January 1, 2027.
e.       capsuling equipment;
      The Division of Taxation is to approve tax credit applications before taxpayers may claim a credit.  In all, the division may approve up to $3 million annually in tax credits.  Each taxpayer is allowed a total of $250,000 in tax credits to be taken over a period not to exceed 10 years, and no more than $500,000 per tax year.  If the amount of tax credits applied for by taxpayers exceeds the aggregate annual limit of $3 million, then a taxpayer who has first applied for and not been allowed a tax credit amount due to the cap would be allowed the approved tax credit amount in the next succeeding tax year in which tax credit cap space remains available.
f.       chemicals;
      The bill permits a taxpayer who is allowed a gross income tax credit, but whose gross income tax liability in the taxable year in which the credit is received is less than the amount of the credit, to either:  (1) carry forward the unapplied portion of the credit and apply the credit to the gross income tax liability of the taxpayer in the next 10 taxable years;
g.      corkers;
or (2) receive the unapplied portion of the credit as a refund.
h.      crushers;
      The bill requires the division to establish an application process and prescribe the form and manner through which a taxpayer may apply for the division’s credit authorization.
i.        deer control fencing;
    FISCAL ANALYSIS   EXECUTIVE BRANCH         None received.
j.        destemmers;
  OFFICE OF LEGISLATIVE SERVICES         The OLS expects the bill to produce a negative fiscal net impact of indeterminate magnitude on the State, and a potential revenue gain to affected local governments.  Conceptually, the State fiscal net impact is calculated by adding the direct revenue loss from awarding tax credit amounts and their opportunity costs (the fiscal benefits the State forgoes as spending is redirected from one economic activity to another) and subtracting from that sum the indirect revenue gain that will accrue from additional economic activity that the tax credits will catalyze.
k.      fermenters or other recognized fermentation devices;
  Direct Fiscal Impact:  The legislation’s direct revenue loss to the State General Fund or Property Tax Relief Fund could be as high as $30 million.  The bill authorizes the Division of Taxation to approve up to $3 million in tax credits annually for qualified capital expenses of vineyards and wineries over a ten-year period, or a maximum of $30 million over the duration of the tax credit program.  In order to reach the $30 million total program cap, taxpayers would have to have $120 million in qualified capital expenses over the program’s eligibility period.
l.        fertilizer and soil amendments;
      Any revenue loss, however, will be:
m.    filters;
a) temporally limited, as the division will only consider tax credit applications for qualified capital expenses made in tax years beginning before January 1, 2027;
n.      fruit harvesters;
and b) spread out over several years, for tax credit awards are to be used up in ten annual installments following the division’s approval and approved tax credit amounts may be carried forward up to 10 subsequent tax years.
o.      fruit plants;
      The OLS is unable to pinpoint the bill’s exact revenue loss.  This inability is rooted in the lack of information regarding the amount of qualified capital expenses associated with either the establishment of a new vineyard or winery or the improvement of an existing vineyard of winery.
p.      hoses;
  Indirect Fiscal Impact:  The bill may generate an indeterminate indirect revenue gain to the State and local governments that may partially offset the direct State revenue loss from awarding the credits.  The OLS, however, does not have the capacity to quantify the bill’s secondary effects, since it cannot estimate the volume of investments that the tax credit program will directly spur and their ensuing effect on State government tax receipts.  But, for reasons explained below, the OLS anticipates that the bill’s indirect State and local government revenue gain to fall below its direct revenue loss of up to $30 million.
q.      irrigation equipment;
      In general, like any government expenditure, economic development incentive awards inject new spending into the economy.  Once businesses and individuals receive payments they would not receive absent the incentive awards, at least a portion of these payments will newly circulate in New Jersey’s economy and produce so-called “multiplier effects.”  As the additional financial resources flow through the economy they generate, as a byproduct, additional State and local revenue collections – the indirect revenue gain discussed in this section.  Examples are enhanced local property tax collections accruing when an incentive recipient invests the incentive amount in facility improvements, which then appreciate the property’s value;
r.        labeling equipment;
or additional State sales and use tax collections from construction workers employed in the facility improvement spending their resultant income on taxable goods and services.        Nonetheless, not all of the economic and fiscal feedback effects of investments benefitting from the credit may represent a gain to the State.  Only the ripple effects caused by credit-induced purchases should enter the fiscal estimate, while those from investments that would also be made absent the credit must be excluded.  The exclusion of investments that will happen with or without the credit takes into account that the tax incentive has no economic impact whenever it benefits taxpayers who would have made capital improvements to a vineyard or winery anyway.  In such a scenario, the State will only incur the direct cost of the subsidy, while the investment’s secondary effects cannot be attributed to the bill.
s.       lugs;
      Lastly, the OLS notes that any estimate of the credit’s New Jersey fiscal feedback effects must also exclude from the total feedback effect the portion of the credit-induced spending that would leak into other jurisdictions.  For example, a Pennsylvania resident who works as a winemaker for a subsidized winery in New Jersey will pay Pennsylvania, not New Jersey, income tax on the compensation earned in accordance with the State of New Jersey and Commonwealth of Pennsylvania Reciprocal Personal Income Tax Agreement.        The OLS expects that the bill’s direct State revenue loss will exceed its indirect State and local government revenue gain because the bill authorizes the Division of Taxation to make tax credit awards after eligible vineyards and wineries made their capital investments and because credit-receiving capital investments are not required to generate a fiscal net benefit to the State.  Therefore, the bill allows for capital investments to receive tax credits that will happen irrespective of the receipt of the State financial assistance.  As explained above, investments that receive the tax credit but that also would be made without the credit represent a State expense without a State benefit.
t.        mowers;
  State Opportunity Costs:  Given the State’s finite resources and its balanced budget requirement, the decision to award the tax credits will invariably divert resources from policy alternatives to which they would have been applied absent the inducements.  These policy alternatives also produce direct State costs and indirect State revenue collections.  The concept of opportunity costs captures the value of the fiscal benefits the State forgoes as it redirects cash flows.  Once opportunity costs are factored into the analysis, it is therefore possible for a bill to produce a net fiscal loss to the State even if its indirect fiscal benefit exceeds its direct cost.
u.      poles;
      For example, if, instead of this legislation, the State invested in road construction the bill would produce a net fiscal benefit equal to the difference between the total fiscal impact of the tax credit awards and that of the forgone road construction investment.
v.      posts;
    Section:
w.    presses;
Revenue, Finance, and Appropriations Analyst:
x.      pruning equipment;
Scott A.
y.      pumps;
Brodsky Principal Fiscal Analyst Approved:
z.       refractometers;
Frank W.
aa.   refrigeration equipment;
Haines III Legislative Budget and Finance Officer     This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.
bb.  seeders;
  This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).
cc.   soil;
dd.
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small tools;
ee.   tanks;
ff.    tractors;
gg.  vats;
hh.  weeding and spraying equipment;
ii.      wine tanks;
jj.      wire;
and kk.  any other items as approved by the director in consultation with the Secretary of Agriculture.
“Vineyard” means agricultural lands located in the State consisting of at least 1 contiguous acre dedicated to the growing of grapes or other fruit that are used or are intended to be used in the production of wine by a winery as well as any other plants or other improvements located thereon.
      “Winery” means a commercial farm where the owner or operator of the commercial farm has been issued and is operating in compliance with a plenary winery license or farm winery license pursuant to R.S.33:1-10.
        2.   a.  A taxpayer that is a vineyard or winery shall be allowed a credit against the tax imposed pursuant to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq.
in an amount equal to 25 percent of the qualified capital expenses made in connection with the establishment of a new vineyard or winery or the capital improvements made to an existing vineyard or winery during each taxable year in which the qualified vineyard or winery is operated for a profit by the taxpayer.        b.   The total value of the grants of tax credits approved by the director, pursuant to subsection a.
of this section and subsection a.
of section 6 of P.L.    , c.    (C.      ) (pending before the Legislature as this bill), that may be applied against tax liability for a taxable year shall not exceed an aggregate annual limit of  $3,000,000.  The total amount of tax credits allowed for a taxpayer by this subsection shall not exceed $250,000, to be applied for over no more than a period of 10 tax years.  The amount applied against a tax liability for a taxable year for an individual vineyard or winery may not exceed $50,000.  If the amount of tax credits applied for by taxpayers in a taxable year, pursuant to sections 3 and 7 of P.L.    , c.    (C.      ) (pending before the Legislature as this bill), exceeds the aggregate annual limit of  $3,000,000, then a taxpayer who has first applied for and has not been allowed a tax credit amount for that reason shall be allowed, in the order in which they have submitted an application, their approved amount of tax credit on the first day of the next succeeding taxable year in which tax credits are issued pursuant to P.L.    , c.    (C.      ) (pending before the Legislature as this bill) and are not in excess of the amount of credits available.
      c.   The amount of credit allowed pursuant to subsection a.
of this section shall be taken by the taxpayer to reduce the tax otherwise due and required to be paid for the taxable year to which the credit applies.
A credit allowed pursuant to subsection a.
of this section shall only be taken by the taxpayer to reduce the tax otherwise due and required to be paid for the taxable year in which the vineyard or winery is conducted or operated for a profit by the taxpayer.
      d.   A vineyard or winery that is classified as a partnership for federal income tax purposes shall not be allowed a credit directly, but the amount of credit of a taxpayer in respect of a distributive share of partnership income shall be determined by allocating to the taxpayer that proportion of the credit acquired by the partnership that is equal to the taxpayer’s share, whether distributed, of the total distributive income or gain of the partnership for its taxable year ending within or with the taxpayer’s taxable year except as otherwise provided by law.
A qualified vineyard or winery that is a New Jersey S Corporation shall not be allowed a credit directly, but the amount of credit of a taxpayer in respect of a pro rata share of S Corporation income shall be determined by allocating to the taxpayer that proportion of the credit acquired by the New Jersey S Corporation that is equal to the taxpayer’s share, whether or not distributed, of the total pro rata share of S Corporation income of the New Jersey S Corporation for its privilege period ending within or with the taxpayer’s taxable year except as otherwise provided by law.
       3.    a.  Notwithstanding the provisions of section 2 of P.L.    , c.    (C.      ) (pending before the Legislature as this bill) to the contrary, a taxpayer shall not be permitted to take any credits pursuant to section 2 of P.L.    , c.    (C.      ) (pending before the Legislature as this bill) to reduce or offset the New Jersey gross income tax liability that is incurred and required to be paid by the taxpayer in connection with the conduct or operation of a vineyard or winery unless the taxpayer has obtained prior written authorization from the director pursuant to this section.
     b.    The director shall establish an application process and prescribe the form and manner through which a taxpayer may make and file an application to obtain the director’s written authorization for the allowance of a credit.  The application shall, at minimum, require the taxpayer to demonstrate, in a form and manner as shall be prescribed by the director, that the qualified vineyard or winery for which the taxpayer is seeking the director’s written authorization for the allowance of a credit is unrelated to the conduct or operation of any other business that was, or is currently, conducted or operated by the taxpayer.
If the vineyard or winery and any other business that was, or is currently, conducted or operated by the taxpayer are determined by the director to be related by common ownership, the use of similar business names, trademarks, or service marks, or the conduct of similar business activities or operations, then the taxpayer shall demonstrate that the vineyard or winery was not established or acquired for the purpose of enjoying the benefit of the credit.
     c.     The director shall review each application made and filed by a taxpayer pursuant to subsection b.
of this section and make a determination regarding the approval of an application seeking the director's written authorization for the allowance of a credit within 90 calendar days of the date a completed application is received.
     d.    The director shall issue a written authorization for the allowance of a credit to each taxpayer that made and filed a complete application that has been reviewed and approved by the director pursuant to subsection c.
of this section within five calendar days of the date the director’s determination is made.  Each taxpayer issued a written authorization for the allowance of a credit shall include a copy of the director’s authorization when filing a return that includes a claim for the credit allowed pursuant to section 2 of P.L.    , c.    (C.      ) (pending before the Legislature as this bill).
     e.     If the director fails to make a determination regarding the approval of an application seeking the director’s written authorization for the allowance of a credit within 90 calendar days of the date a complete application is received, or if the director fails to issue a written authorization for the allowance of a credit within five calendar days of the date the director’s determination is made, the application shall be deemed to have been approved and the written authorization shall be deemed to have been issued by the director.
 Each taxpayer that made and filed a complete application pursuant to subsection b.
of this section but fails to receive a determination from the director within 90 calendar days of the date a complete application is received, or fails to receive a written authorization for the allowance of a credit within five calendar days of the date the director’s determination is made, shall include a copy of the taxpayer’s application when filing a return that includes a claim for the credit pursuant to section 2 of P.L.    , c.    (C.      ) (pending before the Legislature as this bill).
       4.    Notwithstanding any provisions of the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), the director may adopt immediately upon filing with the Office of Administrative Law, rules and regulations as the director determines to be necessary to effectuate the purposes of P.L.    , c.    (C.      ) (pending before the Legislature as this bill), which shall be effective for a period not to exceed 360 calendar days following the effective date of P.L.    , c.    (C.      ) (pending before the Legislature as this bill) and may thereafter be amended, adopted, or readopted by the director pursuant to the requirements of “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.).
        5.   As used in sections 6 through 8 of P.L.    , c.    (C.      ) (pending before the Legislature as this bill):
      “Acquiring corporation” means the constituent corporation the stockholders of which own the largest proportion of the total voting power in the surviving or consolidated corporation after the merger or consolidation.
      “Director” means the Director of the Division of Taxation in the Department of the Treasury.
      “Qualified capital expense” means  any expenditure made by the taxpayer for the purchase and installation of equipment or agricultural materials for use in the production of agricultural products at a vineyard or winery,  including:
a.       barrels;
b.      bins;
c.       bottling equipment;
d.      canopy management machines;
e.       capsuling equipment;
f.       chemicals;
g.      corkers;
h.      crushers;
i.        deer control fencing;
j.        destemmers;
k.      fermenters or other recognized fermentation devices;
l.        fertilizer and soil amendments;
m.    filters;
n.      fruit harvesters;
o.      fruit plants;
p.      hoses;
q.      irrigation equipment;
r.        labeling equipment;
s.       lugs;
t.        mowers;
u.      poles;
v.      posts;
w.    presses;
x.      pruning equipment;
y.      pumps;
z.       refractometers;
aa.   refrigeration equipment;
bb.  seeders;
cc.   soil;
dd.
small tools;
ee.   tanks;
ff.    tractors;
gg.  vats;
hh.  weeding and spraying equipment;
ii.      wine tanks;
jj.      wire;
and kk.  any other items as approved by the director in consultation with the Secretary of Agriculture.
      “Vineyard” means agricultural lands located in the State consisting of at least 1 contiguous acre dedicated to the growing of grapes or other fruit that are used or are intended to be used in the production of wine by a winery as well as any other plants or other improvements located thereon.
      “Winery” means a commercial farm where the owner or operator of the commercial farm has been issued and is operating in compliance with a plenary winery license or farm winery license pursuant to R.S.33:1-10.
        6.   a.  A taxpayer that is a vineyard or winery shall be allowed a credit against the tax imposed pursuant to the “Corporation Business Tax Act,” P.L.1945, c.162 (C.54:10A-1 et seq.) in an amount equal to 25 percent of the qualified capital expenses made in connection with the establishment of a new vineyard or winery or the capital improvements made to an existing vineyard or winery during each  privilege period in which the qualified vineyard or winery is operated for a profit by the taxpayer.        b.   The total value of the grants of tax credits approved by the director, pursuant to subsection a.
of this section and subsection a.
of section 2 of P.L.    , c.    (C.      ) (pending before the Legislature as this bill), that may be applied against tax liability for a  privilege period shall not exceed an aggregate annual limit of  $3,000,000.  The total amount of tax credits allowed for an individual vineyard or winery shall not exceed $250,000, to be applied for over no more than a period of 10 privilege periods.  The amount applied against a tax liability for a privilege period for an individual vineyard or winery may not exceed $50,000.  If the amount of tax credits applied for by taxpayers, pursuant to sections 3 and 7 of P.L.    , c.    (C.      ) (pending before the Legislature as this bill), exceeds the aggregate annual limit of  $3,000,000, then a taxpayer who has first applied for and has not been allowed a tax credit amount for that reason shall be allowed, in the order in which they have submitted an application, their approved amount of tax credit on the first day of the next succeeding  privilege period in which tax credits are issued pursuant to P.L.    , c.    (C.      ) (pending before the Legislature as this bill) and are not in excess of the amount of credits available.
      c.   The amount of credit allowed pursuant to subsection a.
of this section shall be taken by the taxpayer to reduce the tax otherwise due and required to be paid for the  privilege period to which the credit applies.
A credit allowed pursuant to subsection a.
of this section shall only be taken by the taxpayer to reduce the tax otherwise due and required to be paid for the  privilege period in which the vineyard or winery is conducted or operated for a profit by the taxpayer.
      d.   Except as provided in subsection e.
of this section, the amount of tax year credit otherwise allowable under this section which cannot be applied for the  privilege period against tax liability otherwise due for that tax year may either be carried over, if necessary, for the  10 privilege periods following the  privilege period for which the credit was allowed or, at the election of the taxpayer, be claimed as and treated as an overpayment for the purposes of R.S.54:49-15, provided, however, that section 7 of P.L.1992, c.175 (C.54:49-15.1) shall not apply.
      e.   A taxpayer may not carry over any amount of credit allowed under subsection a.
of this section to a  privilege period during which a corporate acquisition with respect to which the taxpayer was a target corporation occurred or during which the taxpayer was a party to a merger or a consolidation, or to any subsequent  privilege period, if the credit was allowed for a  privilege period prior to the year of acquisition, merger, or consolidation, except that if in the case of a corporate merger or corporate consolidation, the taxpayer can demonstrate, through the submission of a copy of the plan of merger or consolidation and any other evidence that may be required by the director, the identity of the constituent corporation which was the acquiring corporation, a credit allowed to the acquiring person may be carried over by the taxpayer.
       7.    a.  Notwithstanding the provisions of section 6 of P.L.    , c.    (C.      ) (pending before the Legislature as this bill) to the contrary, a taxpayer shall not be permitted to take any credits pursuant to section 6 of P.L.    , c.    (C.      ) (pending before the Legislature as this bill) to reduce or offset the New Jersey corporation tax liability that is incurred and required to be paid by the taxpayer in connection with the conduct or operation of a vineyard or winery unless the taxpayer has obtained prior written authorization from the director pursuant to this section.
     b.  The director shall establish an application process and prescribe the form and manner through which a taxpayer may make and file an application to obtain the director’s written authorization for the allowance of a credit.  The application shall, at minimum, require the taxpayer to demonstrate, in a form and manner as shall be prescribed by the director, that the qualified vineyard or winery for which the taxpayer is seeking the director’s written authorization for the allowance of a credit is unrelated to the conduct or operation of any other business that was, or is currently, conducted or operated by the taxpayer.
If the vineyard or winery and any other business that was, or is currently, conducted or operated by the taxpayer are determined by the director to be related by common ownership, the use of similar business names, trademarks, or service marks, or the conduct of similar business activities or operations, then the taxpayer shall demonstrate that the vineyard or winery was not established or acquired for the purpose of enjoying the benefit of the credit.
     c.  The director shall review each application made and filed by a taxpayer pursuant to subsection b.
of this section and make a determination regarding the approval of an application seeking the director's written authorization for the allowance of a credit within 90 calendar days of the date a completed application is received.
     d.  The director shall issue a written authorization for the allowance of a credit to each taxpayer that made and filed a complete application that has been reviewed and approved by the director pursuant to subsection c.
of this section within five calendar days of the date the director’s determination is made.  Each taxpayer issued a written authorization for the allowance of a credit shall include a copy of the director’s authorization when filing a return that includes a claim for the credit allowed pursuant to section 6 of P.L.    , c.    (C.      ) (pending before the Legislature as this bill).
     e.  If the director fails to make a determination regarding the approval of an application seeking the director’s written authorization for the allowance of a credit within 90 calendar days of the date a complete application is received, or if the director fails to issue a written authorization for the allowance of a credit within five calendar days of the date the director’s determination is made, the application shall be deemed to have been approved and the written authorization shall be deemed to have been issued by the director.  Each taxpayer that made and filed a complete application pursuant to subsection b.
of this section but fails to receive a determination from the director within 90 calendar days of the date a complete application is received, or fails to receive a written authorization for the allowance of a credit within five calendar days of the date the director’s determination is made, shall include a copy of the taxpayer’s application when filing a return that includes a claim for the credit pursuant to section 6 of P.L.    , c.    (C.      ) (pending before the Legislature as this bill).
       8.    Notwithstanding any provisions of the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), the director may adopt immediately upon filing with the Office of Administrative Law, rules and regulations as the director determines to be necessary to effectuate the purposes of P.L.    , c.    (C.      ) (pending before the Legislature as this bill), which shall be effective for a period not to exceed 360 calendar days following the effective date of P.L.    , c.    (C.      ) (pending before the Legislature as this bill) and may thereafter be amended, adopted, or readopted by the director pursuant to the requirements of “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.).
       9.    This act shall take effect immediately and apply to tax liabilities incurred and required to be paid in connection with qualified capital expenses first purchased in taxable years and privilege periods beginning on and after January 1, 2017 and shall expire with privilege periods and taxable years first commencing after January 1, 2027.
  STATEMENT        This bill would provide credits against the New Jersey gross income tax and corporation business tax, as applicable, to vineyards and wineries for qualified capital expenses, as defined in the bill, in an amount equal to 25 percent of the qualified capital expenses made in connection with the establishment of a new vineyard or winery or the capital improvements made to an existing vineyard or winery during each privilege period in which the qualified vineyard or winery is operated for a profit by the taxpayer.
     Under the bill a “qualified capital expense” is defined as all expenditures made by the taxpayer for the purchase and installation of equipment or agricultural materials for use in the production of agricultural products at a vineyard or winery.  The bill includes a list of items that qualify as vineyard or winery equipment or agricultural materials.
     The amount of the credit allowed would be taken by the taxpayer to reduce the tax otherwise due and required to be paid for the privilege period to which the credit applies.
The bill would authorize a credit to only be taken by the taxpayer to reduce the tax otherwise due and required to be paid for the privilege period in which the vineyard or winery is conducted or operated for a profit by the taxpayer.
     The bill would provide that the total value of the grants of tax credits approved by the Director of Taxation that may be applied against a gross income and corporation tax liability for a privilege period shall not exceed an aggregate annual limit of $3,000,000.
Each gross income taxpayer or individual vineyard or winery paying corporation business tax would be allowed a total of $250,000 in tax credits to be taken over a 10 year period, and no more than $50,000 per tax year or privilege period, as applicable.  If the amount of tax credits applied for by taxpayers exceeds the aggregate annual limit of $3,000,000, then a taxpayer who has first applied for and has not been allowed a tax credit amount for that reason would then be allowed, in the order in which they have submitted an application, their approved amount of tax credit on the first day of the next succeeding privilege period in which tax credits are issued and are not in excess of the amount of credits available.
     Under the bill a taxpayer would not be permitted to take any credits to reduce or offset the New Jersey gross income tax liability or corporation tax liability that is incurred and required to be paid by the taxpayer in connection with the conduct or operation of a vineyard or winery unless the taxpayer has obtained prior written authorization from the director.
The director would establish an application process and prescribe the form and manner through which a taxpayer could make and file an application to obtain the director’s written authorization for the allowance of a credit.
     The bill would expire with privilege periods or taxable years, as applicable, first commencing after July 1, 2027.
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