TRENTON – A bill, S-5, sponsored by Senator Brian P. Stack to help more small businesses in urban enterprise zones qualify for on-site exemptions from paying the sales tax cleared two Senate committees today.
“This bill will help small businesses eliminate red tape and help them grow by encouraging community investments,” said Senator Stack, D-Hudson. “By expanding the definition of a qualified small business, this bill will help generate economic growth in a more timely manner.
Under Senator Stack’s bill, small businesses with annual gross receipts of up to $7 million would be able to purchase property and needed services without paying a sales tax up front and then having to file for a rebate with the Division of Taxation. The existing qualifying limit on annual gross receipts is $3 million.
“The on-site sales tax exemption at the point of sale will speed up the process by which small businesses in enterprise zones can generate growth,” Senator Stack.
The rebate process requirement for the sales taxes of small businesses in enterprise zones was enacted in 2006 to prevent abuses of exemptions applied to goods purchased for use outside the UEZs.
“The same restrictions apply for limiting the exemptions to purchases used within the urban enterprise zones,” Senator Stack said. “We are just expanding the list of those eligible for the exemption from a process that bogs down small businesses. The Division of Taxation will continue to apply its due diligence in pursuing anyone who would abuse the sales tax exemption rules.”
The bill first cleared the Senate Economic Growth Committee before being approved by the Senate Budget & Appropriations Committee. It now awaits action by the full Senate.