New Jersey Administrative Code › Title 19 - OTHER AGENCIES › NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY › Chapter 31O - SALES AND USE TAX EXEMPTION PROGRAM › Subchapter 1 - SALES AND USE TAX EXEMPTION PROGRAM › Section 19:31O-1.2 - Definitions

Current through Register Vol. 56, No. 14, July 15, 2024
The following words and terms, when used in this
					 subchapter, shall have the following meanings, unless the context clearly
					 indicates otherwise.
"Act" means the Business Retention and Relocation
					 Assistance Act,
					 P.L.
					 2004, c. 65.
"Agreement" or "project approval agreement" means the
					 project approval agreement between a business and the Authority governing the
					 terms and conditions of the project approval for the sales tax exemption
					 program. The Agreement describes the project, the date the commitment duration
					 shall commence, the extent of sales tax exemption, the conditions and
					 limitations of the sales tax exemption, the representations and reporting
					 obligations of the business, and other such provisions which further the
					 purposes of P.L. 2004, c.
					 65, §§19 through 22 (34:1B-185 through
					 188).
"Application" means the application submitted by a business
					 for the sales tax exemption program, pursuant to
					 P.L.
					 2004, c. 65
										§§19 through 22.
"Approved site" means the site of the project in the New
					 Jersey Development and Redevelopment Plan designated Planning Area 1 or 2
					 locations; however, if the site of the project is not located in either of such
					 Planning Areas, the project involves renovation or expansion of an existing
					 facility, and the project satisfies all other criteria of the program, as
					 determined by the Secretary, the site may also be an approved site.
"Authority" means the New Jersey Economic Development
					 Authority established under section 4 of P.L. 1974, c. 80 (34:1B-4 ).
"Board" means the Board of the New Jersey Economic
					 Development Authority.
"Business" means an employer located in this State that has
					 operated continuously in the State, in whole or in part, in its current form or
					 as a predecessor entity for at least 10 years prior to filing an application to
					 the program and which is subject to the provisions of 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, such as a group of organizations under common control as
					 defined in Section 414(b) or (c) of
					 the Internal Revenue Code of 1986 and Federal Treasury regulations thereunder.
					 For purposes of identifying full-time employees in eligible positions and
					 retained State tax revenue, any such employees hired by or taxes paid by a
					 professional employer organization (PEO) with which the business has entered
					 into an employee leasing agreement shall be allocable to the business.
"BEIP grant" means the grant made to a business by the New
					 Jersey Economic Development Authority pursuant to the provisions of
					 P.L.
					 1996, c. 26 (34:1B-124
					 et al).
"Capital investment" means expenses that the business
					 incurs following its submission of an application to the Authority pursuant to
					 section
					 21 of
					 P.L.
					 2004, c. 65 (34:1B-186
					 ) for:
1. The site preparation and construction, renovation,
					 improvement, equipping of or obtaining and installing fixtures and machinery,
					 apparatus or equipment, in a newly constructed, renovated or improved building,
					 structure, facility or improvement to real property in this State; and
2. Obtaining and installing fixtures and machinery,
					 apparatus or equipment in a building, structure or facility in this
					 State.
Provided however that "capital investment" shall not
					 include soft costs, such as financing and design, furniture, or decorative
					 items, such as artwork or plants or office equipment, if the office equipment
					 is property with a recovery period of less than five years. The recovery period
					 of any property, for purposes of this definition, shall be determined as of the
					 date such property is first placed in service or use in this State by the
					 business, determined in accordance with section 168 of the Federal Internal
					 Revenue Code of 1986 (26 U.S.C. § 168). For the purposes of this
					 definition, cubicles and cubicles that include office equipment shall
					 constitute capital investment. If the business is a tenant, expenses incurred
					 on behalf of the tenant by the landlord and financed through the lease shall
					 constitute capital investment expenses incurred by the tenant provided that the
					 capital investment shall relate solely to the tenant's leasehold space and not
					 the common areas of the building and shall be supported by the documentation
					 referenced in N.J.A.C. 19:31O-1.5(a)2xiii and 1.7(a).
"Chief Executive Officer" means the Chief Executive Officer
					 of the New Jersey Economic Development Authority.
"Commitment duration" means five years from the later of
					 the relocation of all of the retained full-time jobs included in the project,
					 which shall not be more than one year from the issuance of a temporary
					 certificate of occupancy, or the completion date specified in the project
					 approval agreement entered into pursuant to
					 sections
					 19 through
					 22 of
					 P.L.
					 2004, c. 65 (34:1B-185
					 through 188).
"Completion date" generally means the earlier of the date
					 of the issuance of a temporary certificate of occupancy with respect to an
					 approved site or in cases where no temporary certificate of occupancy is
					 issued, one year from the project commencement date, as specifically set forth
					 in the project approval agreement.
"Construction contract" means for purposes of undertaking
					 the project, any contract for the acquisition, construction, improvement or
					 installation of those portions of the project subject to sales tax or
					 installation of eligible property. For purposes of this definition, the term
					 "installation" means installation by a contractor, which involves access to
					 pipes or wires within walls or any other alteration or modification of the
					 project, but shall not include the delivery, locating, relocating, moving,
					 assembling or setting up or eligible property by the provider of such property
					 or the business's employees or any installation of such eligible property
					 (including, but not limited to, machinery, apparatus and equipment) if such
					 installation is made pursuant to a purchase contract by the provider of such
					 property.
"Director" means the Director of the Division of Taxation
					 in the Department of the Treasury.
"Eligible affiliate" means any person with respect to which
					 the business:
1. Possesses, directly or indirectly, the power to direct
					 or cause the direction of the management or policies of such person, whether
					 through the ownership of voting securities, by contract or otherwise;
					 and
2. Owns, either directly or indirectly, at least 51 percent
					 of the voting stock or other equity or ownership interest of such
					 person.
"Eligible property" means machinery, equipment, furniture
					 and furnishings, fixtures, and building materials, but "eligible property"
					 shall not include "motor vehicles" as defined pursuant to section 2 of P.L.
					 1966, c.30 (54:32B-2 ), parts with a useful life of one year or less, or tools
					 or supplies used in connection with the eligible property. Eligible property
					 does not include machinery or equipment purchased, rented or leased by a
					 project participant construction manager, contractor, or subcontractor under
					 contract with the business for their own use on the project.
"Full-time employee" means a person who is employed for
					 consideration for at least 35 hours a week, or who renders any other standard
					 of service generally accepted by custom or practice as full-time employment, as
					 determined by the Authority, or a person who is employed by a professional
					 employer organization pursuant to an employee leasing agreement between the
					 business and the professional employer organization, in accordance with
					 P.L.
					 2001, c. 260 (34:8-67
					 et seq.) for at least 35 hours a week, or who renders any other standard of
					 service generally accepted by custom or practice as full-time employment, as
					 determined by the Authority. "Full-time employee" shall not include any person
					 who works as an independent contractor or on a consulting basis for the
					 business. "Full-time employee" shall not include a child, grandchild, parent or
					 spouse of an individual who has direct or indirect ownership of at least five
					 percent of the profits, capital, or value of the business.
"Headquarters" means the single location that serves as the
					 national administrative center of a business or the worldwide administrative
					 center of a key division of the business, at which the primary office of the
					 chief executive officer or chief operating officer of the business or the key
					 division of the business, as well as the offices of the management officials
					 responsible for key businesswide functions such as finance, legal, marketing,
					 and human resources, are located.
"Life sciences business" means a business engaged
					 principally in the production of medical equipment, ophthalmic goods, medical
					 or dental instruments, diagnostic substances, biopharmaceutical products; or
					 physical and biological research; or biotechnology.
"Manufacturing facility" means a business location at which
					 more than 50 percent of the business personal property that is housed in the
					 facility is eligible for the sales tax exemption pursuant to subsection a. of
					 section 25 of P.L. 1980, c.105 (54:32B-8.1 3) for machinery, apparatus or
					 equipment used in the production of tangible personal property.
"New business location" means the premises that the
					 business has either purchased or built or for which the business has entered
					 into a purchase agreement or a written lease for a period of no less than eight
					 years from the date of relocation. A new business location may also include the
					 premises from which the business moves on a temporary basis due to the
					 rehabilitation of permanent premises that also qualifies as reconstruction as
					 "reconstruction" is defined in the Uniform Construction Code, 5:23-6.3.
"Program" means the sales and use tax exemption program
					 established under the jurisdiction of the Commission and administered by the
					 Secretary, pursuant to
					 P.L.
					 2004, c. 65
										§§19 through 22 and this subchapter.
"Project" means the construction, renovation or expansion
					 of facilities at the approved site as described in the project description in
					 the application and the agreement that will become the business's new business
					 location and that will be related to retained full-time jobs. The eligible
					 scope of the project shall accommodate no more than 20 percent above the number
					 of retained full-time jobs. In the event that the new business location will be
					 at more than one location, the business may evidence that the application is
					 for a single project through factors showing interrelatedness, such as the same
					 business event driving the relocation, moves timed together, and full-time jobs
					 relocated from the same business location.
"Project participant" means an eligible affiliate of the
					 business or any construction manager, contractor or subcontractor that performs
					 acquisition, construction, equipping, installation or improvements for the
					 project and any other entities working on the project that use the sales tax
					 certificate.
"Research and development facility" means a business
					 location at which more than 50 percent of the business personal property that
					 is purchased for the facility is eligible for the sales tax exemption pursuant
					 to section 26 of P.L. 1980, c.105 (54:32B-8.1 4) for property used in research
					 and development.
"Retained full-time jobs" means an eligible position that
					 currently exists in New Jersey and is filled by a full-time employee but which,
					 because of a relocation by the business, is at risk of being lost to another
					 state or country. For the purposes of determining a number of retained
					 full-time jobs, the eligible positions of the members of a "controlled group of
					 corporations" as defined pursuant to section 1563 of the Federal Internal
					 Revenue Code of 1986, 26 U.S.C. § 1563, shall be considered the eligible
					 positions of a single employer. A retained full-time job is one that will not
					 be included in the calculation of a BEIP grant subsequent to being moved to the
					 approved project site.
"Sales tax certificate" means the sales and use tax
					 exemption certificate issued by the Director to the business upon approval by
					 the Secretary of the terms and conditions of the agreement.
"Sales tax exemption" means the sales and use tax exemption
					 approved under an agreement pursuant to the Act, and for purposes of this
					 program, the sales tax exemption shall be administered pro rata to reflect the
					 eligible scope of the project, based on the number of retained full-time jobs
					 increased no more than 20 percent (eligible scope) relative to the sum of the
					 number of all of the jobs of all employers located at an approved project site
					 during the commitment duration period.
"Sales tax recapture amount" means either:
1. If the event of recapture occurs during the commitment
					 duration, provided the reduction of retained full-time jobs in the aggregate
					 from execution of the project approval agreement until the event of recapture
					 does not exceed 20 percent of the number of the retained full-time jobs: the
					 sum of 1i, ii and iii below. To the extent the reduction of retained full-time
					 jobs in the aggregate exceeds 20 percent of the number of retained full-time
					 jobs, penalties pursuant to the State Uniform Tax Procedure Law, 54:49-1 et
					 seq., may also be imposed.
i. A portion of the amount of the sales and use taxes,
					 which would have been payable on all eligible property purchased for the
					 project if the property was not purchased with the sales tax certificate based
					 upon the proportionate value of such amount that corresponds to the reduction
					 of retained full-time jobs and the period of noncompliance;
ii. Interest on the amount referred to in 1i above at the
					 rate equal to the statutory rate for sales tax deficiencies; and
iii. All costs incurred by the Chief Executive Officer and
					 the Division of Taxation in connection with the pursuit of the sales tax
					 recapture amount (including, but not limited to, counsel fees, court costs and
					 other costs of collection);
2. If the event of recapture occurs prior to the commitment
					 duration, provided the reduction of retained full-time jobs in the aggregate
					 from execution of the project approval agreement until the event of recapture
					 does not exceed 20 percent of the number of retained full-time jobs: the sum of
					 2i, ii and iii below. To the extent the reduction of retained full-time jobs in
					 the aggregate exceeds 20 percent of the number of retained full-time jobs,
					 penalties pursuant to the State Uniform Tax Procedure Law, 54:49-1 et seq., may
					 also be imposed.
i. A portion of the amount of the sales and use taxes,
					 which would have been payable on all eligible property purchased for the
					 project if the property was not purchased with the sales tax certificate based
					 upon the proportionate value of such amount that corresponds to the reduction
					 of retained full-time jobs and the failure to comply for any portion of the
					 commitment duration;
ii. Interest on the amount referred to in 2i above at the
					 rate equal to the statutory rate for sales tax deficiencies; and
iii. All costs incurred by the Chief Executive Officer and
					 the Division of Taxation in connection with the pursuit of the sales tax
					 recapture amount (including, but not limited to, counsel fees, court costs and
					 other costs of collection); or
3. If the event of recapture, pursuant to N.J.A.C.
					 19:31O-1.12(a)3, occurs during or prior to the commitment duration: the sum of
					 paragraphs 3i, ii, and iii below and penalties pursuant to the State Uniform
					 Tax Procedure Law,
					 N.J.S.A.
					 54:49-1 et seq., may also be imposed.
i. Repayment of the amount of the sales and use taxes,
					 which would have been payable on the property purchased for the project if the
					 property was not purchased with the sales tax certificate that is no longer
					 eligible as a result of the calculation at N.J.A.C. 19:31O-1.12(a)3;
ii. Interest on the amount referred to in 3i above at the
					 rate equal to the statutory rate for sales tax deficiencies; and
iii. All costs incurred by the Chief Executive Officer and
					 the Division of Taxation in connection with the pursuit of the sales tax
					 recapture amount (including, but not limited to, counsel fees, court costs and
					 other costs of collection).
"Sales tax repayment amount" means the sum of:
1. The amount of sales and use taxes which would have been
					 payable on all eligible property purchased for the project if the property was
					 not purchased with the sales tax certificate; provided that if repayment is the
					 result of a default of the agreement during the commitment duration, this
					 amount shall be reduced by an amount allocable to the proportionate amount of
					 the sales and use tax that corresponds to the period of time in which the
					 business was in compliance measured from the completion date until the date of
					 default;
2. Interest on the repayment amount referred to in
					 paragraph 1 above at the rate equal to the statutory rate for sales tax
					 deficiencies plus any penalties pursuant to the State Uniform Tax Procedure
					 Law, 54:49-1 et seq.; and
3. All costs incurred by the Chief Executive Officer and
					 the Division of Taxation in connection with the pursuit of the sales tax
					 repayment amount (including, but not limited to, counsel fees, court costs and
					 other costs of collection).