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04 June 2018

New Jersey restores Urban Enterprise Zones with partial sales tax exemptions and other benefits for businesses in five state locations

On May 30, 2018, New Jersey Governor Phil Murphy signed into law Senate Bill 846 to restore five Urban Enterprise Zones (UEZs) that had expired on December 31, 2016. UEZs are designated areas in New Jersey in which the sales tax rate is reduced to one-half of the state rate for qualifying businesses and are state remnants of federal UEZs. Businesses also may qualify for other benefits such as complete exemption from tax on qualified purchases, financial assistance from the New Jersey Economic Development Authority, subsidized unemployment insurance, and eligibility for an energy sales tax exemption. In 2016, the UEZs located in Bridgeton, Camden, Newark, Plainfield and Trenton expired, resulting in the sales tax reverting to the state rate and the loss of the other benefits. The new law reinstates these UEZs and the associated reduced UEZ sales tax rates and benefits until December 31, 2023, effective immediately. The law also requires the New Jersey Department of Community Affairs to prepare, or have prepared, a report on the effectiveness of the UEZ program and recommend changes to the program for the future.

The state must notify qualified businesses in the five UEZs that the benefits have been extended through 2023. Qualifying businesses will be required to submit new certification applications through their New Jersey premier business accounts. Other details related to the reinstatement of the UEZs will be provided as they become available.

Implications

The new law restores the sales tax exemptions and other benefits for qualifying businesses within the UEZs in the five designated areas of the state. The restoration of the UEZs may provide an economic boost and competitive advantage to qualifying sellers in these five urban areas. Further, the municipality in which the UEZ is located may use UEZ revenue for economic development projects and to increase the level of municipal services such as policemen and firemen in the UEZ. These investments may further improve the level of economic growth within the UEZ.

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Contact Information
For additional information concerning this Alert, please contact:
 
State and Local Taxation Group
• Frank Guerino(732) 516-4156
• Ray Melone(732) 516-4049

Document ID: 2018-1152

 

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