New Jersey Enacts Exemption for Energy and Utility Services Provided to Recovered Materials Manufacturing Facilities

Effective January 21, 2020, New Jersey has enacted a sales and use tax exemption for the sale or use of energy and utility services provided to or by a recovered materials manufacturing facility for use or consumption directly and primarily in the production of tangible personal property. The exemption applies to receipts from the sale or use of energy and utility services made on or after January 21, 2020. Providers of energy and utility services are required to collect and remit taxes due; the tax will be refunded to the purchaser only when the purchaser files a claim within 30 days of the close of the calendar quarter in which the sale or use is made or rendered. Proof of claim for refund shall be made by the submission of auditable receipts and such other documentation as the state may require. The tax exemption applies for seven years, beginning on a date specified by the owner of a recovered materials manufacturing facility following consultation and filing of notice with the New Jersey Division of Taxation. The beginning date must occur after December 31, 2019 and before January 1, 2023. “Recovered materials manufacturing facility” means a facility that:

• Received service under an electric public utility rate that applied only to the owner of the facility on January 1, 2004;
• Manufactures products made from recovered materials, provided that not less than 50% of the content of such products produced in New Jersey meet the definition of recovered materials;
• Completed a comprehensive energy audit no more than 48 months before and no later than 90 days after the effective date (January 21, 2020) of the bill; and
• Employed, individually or collectively with an affiliated facility, no less than 250 employees in New Jersey on January 1, 2019.

”Recovered materials“ means the same as defined in 40 C.F.R. s.247.3, which defines them as “waste materials and byproducts which have been recovered or diverted from solid waste, but such term does not include those materials and byproducts generated from, and commonly reused within, an original manufacturing process.” (Ch. 437 (S.B. 3920), Laws 2019, effective January 21, 2020)