New Jersey Senate Bill S1865

New Jersey 2022-2023 Regular Session

• Introduced: 2/28/22
• Refer: 2/28/22

Caption

Establishes credit under sales and use tax for certain small businesses that collect and remit sales and use tax.

Impact

The enactment of S1865 is expected to significantly affect state laws in terms of how sales and use taxes are structured for qualifying small businesses. By providing this tax relief, the bill aims to lessen the financial strain on small businesses, allowing them to retain more capital for operations and growth. Furthermore, this measure is seen as a mechanism to encourage the development of small businesses, which are vital to the state's economy, especially in the wake of economic challenges faced during recent years.

Summary

Bill S1865, introduced in New Jersey, establishes a sales and use tax credit for small businesses that meet specific criteria. This credit is calculated as 10% of the seller's monthly tax remittance or $100 per month, whichever is lower. The purpose of this bill is to provide financial relief to small businesses during challenging economic conditions, thereby stimulating local economies by easing the tax burden on smaller enterprises. The bill defines a small business as one that is independently owned and operated with fewer than 20 full-time employees.

Contention

Opponents of S1865 may argue that while the intent is noble, establishing such tax credits can complicate the state tax code and may lead to unintended consequences, such as enabling tax evasion if stringent verification processes are not in place. The bill authorizes the Director of the Division of Taxation to demand proper documentation from businesses claiming the credit, which may introduce administrative burdens for small businesses. Additionally, scrutiny may center around whether the definition of a small business is sufficiently inclusive to capture the varied landscape of small enterprises in New Jersey.