United States

New Jersey restores UEZ benefits in five cities

INSIGHT ARTICLE  | 

Recently, New Jersey Governor Phil Murphy signed Senate Bill 846, reactivating five urban enterprise zone (UEZ) municipalities that had expired on Jan. 1, 2017.

New Jersey UEZs

New Jersey UEZs are created by the state with the intent to stimulate economic activity in certain distressed areas. Before Senate Bill 846 was enacted, the state maintained 27 UEZs.  The benefits of the UEZ include:

  • The right to purchase certain items and services free from sales tax
  • New Jersey Corporation Business Tax credits for certain businesses hiring new employees
  • Partial sales tax exemption for taxable sales of tangible personal property at half the state rate, or a rate of 3.3125 percent

The state Urban Enterprise Zone Authority determines which businesses qualify for tax exemptions and other benefits. Businesses must apply to receive UEZ certification. Certified business are required to file annual reports and apply for recertification every three years.

Senate Bill 846

Senate Bill 846 restores UEZ benefits to Bridgeton, Camden, Newark, Plainfield and Trenton, all of which previously expired. The reinstated zones are effective through Dec. 31, 2023. Additionally, any other zone scheduled to expire before that date has also been extended to Dec. 31, 2023.

The bill also mandates that the state Department of Community Affairs study the UEZ program and submit to the legislature a report and recommendations as to whether the program should continue, be amended, or expire. The bill specifies that the study will address the following: 1) the adequacy of past funding for UEZs, 2) whether changes are needed, 3) whether the criteria established for eligibility to assist fiscally distressed municipalities is appropriate, and 4) what parameters should be established to keep UEZ municipalities competitive while providing a sufficient return on state investment.

Takeaways

All businesses in the restored UEZs must certify to receive the program’s benefits. Certificates under prior certifications (before expiration) are no longer valid. New Jersey businesses with questions about receiving existing or new benefits under the UEZ program should contact their tax advisers with questions.

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