Andrew Musick, NJBIA Vice President
Earlier today, Governor Murphy took action on a number of bills. He issued a conditional veto on the following pieces of legislation:
A-4262/S-2795 (Pintor Marin/Sweeney) – Decouples certain provisions of corporation business tax from Internal Revenue Code; alters dividends received deduction; revises tax base of surtax on corporation business income; repeals tax on certain dividends.
As you may remember, A-4262 was initially passed after A-4202, to address and correct a number of issues in that original CBT bill related to the taxation of dividends and the decoupling of certain provisions from the Internal Revenue Code. Ultimately, A-4202 was conditionally vetoed by Governor Murphy and signed into law in conjunction with the FY 2019 Budget, after the Legislature concurred with the Governor’s recommendations.
In the conditional veto of A-4262, Governor Murphy recommended a number of technical changes, as well as a number of recommendations related to the new combined reporting law in New Jersey. These recommendations include the implementation of the “Finnegan” rather than the “Joyce” approach, and recommendations to clarify the “Waters Edge election.”
For a copy of the Governor’s full statement on the bill, please click here.
A-4261/S-2794 (Burzichelli, Moriarty, Conaway/Sweeney, Singleton) – Provides for collection of sales tax from certain remote sellers.
After the Supreme Court ruling in South Dakota v. Wayfair, Inc., the Legislature introduced and passed legislation that provided for the collection of sales tax from certain remote sellers. This requires a seller with no physical presence in New Jersey to collect sales tax on the purchase.
In a statement, Governor Murphy recommended revisions to assist the Division of Taxation in the administration of the new law’s requirements. Specifically, the recommended changes would clarify that the law should include tangible property, as well as digital products (such as electronic books, music, movies and ringtones), and services, which are all subject to the sales tax under current law. Additional recommendations would allow the Division of Taxation to audit marketplace facilitators to ensure proper compliance with the new law.
For a copy of the Governor’s full statement on the bill, please click here.
Additionally, Governor Murphy issued an absolute veto on the following bill:
S-878/A-3084 (Madden, Sweeney, Singleton/Greenwald, Moriarty, Jones) – Restricts authority to terminate reciprocal personal income tax agreements with other states.
The bill would have required the termination of any reciprocal personal income tax agreement to be done through legislative approval and signed by the Governor. Currently, the Governor can end such an agreement without legislative approval.
Governor Murphy stated that the Executive Branch has greater access to confidential tax collection data and can better assess whether a withdrawal from the agreement might be necessary in challenging fiscal times. Additionally, the statement noted that withdrawing the authority from the Executive Branch, weakens the ability of the state to adapt to extraordinary circumstances, and raises potential legal problems by changing the terms of an existing contract.
NJBIA is disappointed with the Governor’s veto of the bill, as we supported the legislation throughout the Legislative process.
For a copy of the Governor’s full statement on the bill, please click here.
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