Imposes various taxes and fees on operators of private prisons to offset social costs of incarceration.

S3630

SENATE, No. 3630

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED FEBRUARY 19, 2026

Sponsored by:

Senator� ANDREW ZWICKER

District 16 (Hunterdon, Mercer, Middlesex and Somerset)

Senator� RAJ MUKHERJI

District 32 (Hudson)

SYNOPSIS

���� Imposes various taxes and fees on operators of
private prisons to offset social costs of incarceration.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
imposing taxes and fees on operators of private prisons
and supplementing Title 54 of the Revised Statutes.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� Sections 1 through 4 of
P.L.��� , c.��� (C.������� ) (pending before the Legislature as this bill)
shall be known and may be cited as the �Knowledge, Accountability, and Rights
in Incarceration Markets Act.�

���� 2.��� a.� For the purposes of
this section:

���� �Director� means the Director
of the Division of Taxation in the Department of the Treasury.

���� �Public entity� means any
federal, State, county, or municipal entity.

���� b.��� A taxpayer that operates
a private correctional facility in the State and has entered into a contract
with a public entity for the provision of correctional services, shall be
subject to a fee based on the value of such contract with the public entity during
each year in which the contract is in effect.� The amount of the fee shall be
equal to eight percent of the consideration given, or contracted to be given,
by the public entity to the taxpayer for the provision of correctional
services.

���� c.���� Every taxpayer subject
to the fee imposed pursuant to subsection b. of this section shall annually
file a return for the preceding calendar year with the director on such forms
as the director shall prescribe.� The return shall indicate the total dollar value
of the contract entered into by the taxpayer for the provision of correctional
services and include a copy of such contract.� At the time a return is filed
pursuant to this subsection, a taxpayer shall remit the full amount of the fee
due.

���� d.��� A taxpayer that fails to
file a return when due or fails to pay the amount of the fee when due shall be
subject to such penalties and interest as shall be provided by the director.

���� e.���� There is established a
special, nonlapsing account within the General Fund, to be known as the
�Detention and Deportation Defense Initiative Support Fund,� into which all
revenues generated from the fee imposed pursuant to this section shall be
credited.� The monies in the account shall be dedicated and annually
appropriated by the Legislature to the Department of Human Services to support
the provision of legal services by accredited institutions of higher education
through the Detention and Deportation Defense Initiative, or any other
successor initiative or program.

���� 3.��� a.� For the purposes of
this section:

���� �Director� means the Director
of the Division of Taxation in the Department of the Treasury.

���� b.��� A taxpayer that operates
a private correctional facility in the State shall be subject to a fee based on
the number of inmates who are detained at the taxpayer�s private correctional
facility.� The amount of the fee shall be $15 per inmate for each day such
inmate is detained at the taxpayer�s private correctional facility in a month.

���� c.���� Every taxpayer subject
to the fee imposed pursuant to subsection b. of this section shall file a
return for the preceding month with the director on such forms as the director
shall prescribe.� The return shall indicate the total number of inmates detained
at the taxpayer�s private correctional facility during the preceding month and
the number of days during that month in which such inmates were detained by the
taxpayer.� At the time a return is filed pursuant to this subsection, a
taxpayer shall remit the full amount of the fee due.

���� d.��� A taxpayer that fails to
file a return when due or fails to pay the amount of the fee when due, shall be
subject to such penalties and interest as shall be provided by the director.

���� e.���� There is established a
special, nonlapsing account within the General Fund, to be known as the
�Private Prison Societal Rehabilitation Support Fund,� into which all revenues
generated from the fee imposed pursuant to this section shall be credited.� The
monies in the account shall be dedicated and annually appropriated by the
Legislature to support community-based programs related to food security,
housing, recreation, job training, and youth mentorship.

���� 4.��� a.� For the purposes of
this section:

���� �Allocated taxable net income�
means taxable net income as defined in subsection (w) of section 4 of P.L.1945,
c.162 (C.54:10A-4).

���� �Combined group� means a
combined group as defined in subsection (z) of section 4 of P.L.1945, c.162
(C.54:10A-4).

���� �S corporation� shall mean a
New Jersey S corporation, as defined in subsection (p) of section 4 of
P.L.1945, c.162 (C.54:10A-4), which does not make an election to be taxed as a
C corporation pursuant to either subsection (ff) of P.L.1945, c.162 (C.54:10A-4)
or subsection d. of section 3 of P.L.1993, c.173 (C.54:10A-5.22).

���� �Taxpayer� means any business
entity or combined group that is subject to tax, as provided in the Corporation
Business Tax (1945), P.L.1945, c.162 (C.54:10A-1 et seq.), except not including
any S corporation.

���� b.��� In addition to the tax
paid by each taxpayer determined pursuant to section 5 of P.L.1945, c.162
(C.54:10A-5), a taxpayer that operates a private correctional facility in the
State shall be assessed a private prison surtax equal to three percent of the
taxpayer�s allocated taxable net income during each privilege period.� The
private prison surtax shall be due and payable in accordance with section 15 of
P.L.1945, c.162 (C.54:10A-15), and the private prison surtax shall be
administered pursuant to the provisions of P.L.1945, c.162 (C.54:10A-1 et
seq.).� Notwithstanding the provisions of any other law to the contrary, no
credits shall be allowed against the private prison surtax liability computed
under this section except for credits for installment payments, estimated
payments made with a request for an extension of time for filing a return, or
overpayments from prior privilege periods.

���� c.���� The gross amount of all
revenues generated from the private prison surtax imposed pursuant to this
section shall be credited to the �Private Prison Societal Rehabilitation
Support Fund� established pursuant to subsection e. of section 3 of P.L.��� ,
c.��� (C. ) (pending before the
Legislature as this bill), except for amounts credited to the special account
in the General Fund created pursuant to Article VIII, Section II, paragraph 6
of the New Jersey Constitution.� The monies credited to the fund pursuant to this
section shall be used for the fund�s authorized purposes, provided that one
percent of the private prison surtax revenues shall be appropriated to support
programs provided by the State, one percent of such revenues shall be
appropriated to support programs provided by the county in which the private
correctional facility of the taxpayer is located, and one percent of such
revenues shall be appropriated to support programs provided by the municipality
in which the private correctional facility of the taxpayer is located.

���� 5.��� The Director of the
Division of Taxation shall, in accordance with the "Administrative
Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and
regulations as necessary to implement the provisions of P.L.��� , c.��� (C.�������
) (pending before the Legislature as this bill).

���� 6.��� This act shall take
effect immediately and shall apply to taxable years and privilege periods
beginning on or after January of the year next following the date of enactment.

STATEMENT

���� This bill, to be called the �Knowledge,
Accountability and Rights in Incarceration Markets Act,� or the �KARIM Act,�
would impose additional taxes and fees on the operators of private prisons.�

���� First, a private prison
operator that has entered into a contract with a public entity for the
provision of correctional services would be subject to a fee based on the value
of such contract with the public entity.� The amount of the fee would be equal to
eight percent of the consideration given, or contracted to be given, by the
public entity to the taxpayer for the provision of correctional services.� The
revenues collected from this fee would be credited to a special, nonlapsing
account within the General Fund, to be known as the �Detention and Deportation
Defense Initiative Support Fund,� and dedicated to the Department of Human
Services to support the provision of legal services by accredited institutions
of higher education through the Detention and Deportation Defense Initiative,
or any other successor initiative or program.

���� The bill also imposes a
monthly fee based on the number of inmates who are detained at a taxpayer�s
private correctional facility.� The amount of the fee would be $15 per inmate
for each day such inmate is detained at the taxpayer�s private correctional
facility each month.� The revenues collected from the inmate fee would be
credited to a special, nonlapsing account within the General Fund, to be known
as the �Private Prison Societal Rehabilitation Support Fund,� and dedicated to
support community-based programs related to food security, housing, recreation,
job training, and youth mentorship.

���� Finally, the bill would impose
a percent private prison surtax on corporate operators of private prisons.�
This surtax would be imposed in addition to the corporation�s tax liability
under the State�s Corporation Business Tax in an amount equal to three percent
of the corporation�s allocated taxable net income for any privilege period in
which it operates a private correctional facility in the State.� The revenues
collected from the surtax would generally be credited to the Private Prison
Societal Rehabilitation Support Fund� in support of the fund�s purposes, except
that one percent of these revenues would be required to be appropriated to
support programs provided by the State, the county in which the private
correctional facility of the taxpayer is located, and the municipality in which
the private correctional facility of the taxpayer is located respectively.