A762

An Act allowing for the electronic submission of bulk sale notifications, amending P.L.1966, c.30, and amending and supplementing P.L.2007, c.100.

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

1. Section 22 of P.L.1966, c.30 (C.54:32B-22) is amended to read as follows:

22. (a) Whenever any person required to collect tax shall fail to collect or pay over any tax, penalty, or interest imposed by this act as therein provided, or whenever any customer shall fail to pay any such tax, penalty or interest, the Attorney General shall, upon the request of the director, bring or cause to be brought an action to enforce the payment of the same on behalf of the State of New Jersey in any court of the State of New Jersey or of any other State or of the United States.

(b) As an additional or alternate remedy, the director may issue a warrant, directed to the sheriff of any county commanding [him] the sheriff to levy upon and sell the real and personal property of any person liable for the tax, which may be found within [his] the sheriff’s county, for the payment of the amount thereof, with any penalties and interest, and the cost of executing the warrant, and to return such warrant to the director and to pay to [him] the sheriff the money collected by virtue thereof within 60 days after the receipt of such warrant. The sheriff shall within [5] five days after the receipt of the warrant file with the county clerk a copy thereof, and thereupon such clerk shall enter in the judgment docket the name of the person mentioned in the warrant and the amount of the tax, penalties and interest for which the warrant is issued and the date when such copy is filed. Thereupon the amount of such warrant so docketed shall become a lien upon the title to and interest in real and personal property of the person against whom the warrant is issued. The sheriff shall then proceed upon the warrant, in the same manner, and with like effect, as that provided by law in respect to executions issued against property upon judgments of a court of record and for services in executing the warrant [he] the sheriff shall be entitled to the same fees, which [he] the sheriff may collect in the same manner. In the discretion of the director a warrant of like terms, force, and effect may be issued and directed to any officer or employee of the Division of Taxation, and in the execution thereof such officer or employee shall have all the powers conferred by law upon sheriffs, but shall be entitled to no fee or compensation in excess of the actual expenses paid in the performance of such duty. If a warrant is returned not satisfied in full, the director may from time to time issue new warrants and shall also have the same remedies to enforce the amount due thereunder as if the State had recovered judgment therefor and execution thereon had been returned unsatisfied.

(c) Whenever a person required to collect tax shall make a sale, transfer, or assignment in bulk of any part or the whole of [his] the person’s business assets, otherwise than in the ordinary course of business, the purchaser, transferee, or assignee shall at least 10 days before taking possession of the subject of said sale, transfer, or assignment, or paying therefor, notify the director by registered mail, electronic submission pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), or other such method as the director may prescribe, of the proposed sale and of the price, terms, and conditions thereof whether or not the seller, transferrer, or assignor, has represented to, or informed the purchaser, transferee, or assignee that [he] the person owes any tax pursuant to this act, and whether or not the purchaser, transferee, or assignee has knowledge that such taxes are owing, and whether any such taxes are in fact owing.

Whenever the purchaser, transferee, or assignee shall fail to give notice to the director as required by the preceding paragraph, or whenever the director shall inform the purchaser, transferee, or assignee that a possible claim for such tax or taxes exists, any sums of money, property, or choses in action, or other consideration, which the purchaser, transferee, or assignee is required to transfer over to the seller, transferrer, or assignor shall be subject to a first priority right and lien for any such taxes theretofore or thereafter determined to be due from the seller, transferrer, or assignor to the State, and the purchaser, transferee, or assignee is forbidden to transfer to the seller, transferrer, or assignor any such sums of money, property, or choses in action to the extent of the amount of the State's claim. For failure to comply with the provisions of this section the purchaser, transferee, or assignee, in addition to being subject to the liabilities and remedies imposed under the provisions of the uniform commercial code, Title 12A of the New Jersey Statutes, shall be personally liable for the payment to the State of any such taxes theretofore or thereafter determined to be due to the State from the seller, transferrer, or assignor, and such liability may be assessed and enforced in the same manner as the liability for tax under this act.

(d) Subsection (c) of this section shall not apply to the sale, transfer, or assignment of a grant, tax credit, or tax credit transfer certificate that has been awarded, issued, or otherwise made available to a person required to collect tax in connection with a State or local business assistance or incentive program or activity authorized by law in effect on the effective date of P.L.2017, c.12.

For purposes of this subsection, "State or local business assistance or incentive program or activity" includes but shall not be limited to: the corporation business tax credit and insurance premiums tax credit certificate transfer program established by section 17 of P.L.2004, c.65 (C.34:1B-120.2); the Business Retention and Relocation Assistance Program established by P.L.1996, c.25 (C.34:1B-112 et seq.); the Business Employment Incentive Program established by P.L.1996, c.26 (C.34:1B-124 et al.); the Urban Transit Hub Tax Credit Program established by P.L.2007, c.346 (C.34:1B-207 et seq.); the Grow New Jersey Assistance Program established by section 3 of P.L.2011, c.149 (C.34:1B-244); and the State or local Economic Redevelopment and Growth Grant program established by section 4 or section 5 of P.L.2009, c.90 (C.52:27D-489d or C.52:27D-489e).

(cf: P.L.2017, c.12, s.2)

2. Section 5 of P.L.2007, c.100 (C.54:50-38) is amended to read as follows:

5. a. (1) Whenever a person shall make a sale, transfer, or assignment in bulk of any part or the whole of the person's business assets, except as provided by paragraphs (2) and (3) of this subsection, otherwise than in the ordinary course of business, the purchaser, transferee, or assignee shall, at least 10 days before taking possession of the subject of the sale, transfer, or assignment, or paying therefor, notify the director by registered mail, electronic submission pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), or other such method as the director may prescribe, of the proposed sale and of the price, terms, and conditions thereof whether or not the seller, transferrer, or assignor has represented to, or informed the purchaser, transferee, or assignee that the seller, transferrer, or assignor owes any State tax and whether or not the purchaser, transferee, or assignee has knowledge that such taxes are owing, and whether any such taxes are in fact owing. Within 10 days of receiving such notice, the director shall notify the purchaser, transferee, or assignee by such means as the director may prescribe that a possible claim for State taxes exists and include the amount of the State's claim, which means shall include, but need not be limited to, the use of the electronic system established pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).

(2) (a) Paragraph (1) of this subsection shall not apply to the sale, transfer, or assignment of a simple dwelling house if the seller, transferrer, or assignor is an "individual," "estate," or "trust" as those terms are used for the purposes of the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. or any combination thereof owning the simple dwelling house as joint tenants, tenants in common, or tenancy by the entirety; paragraph (1) shall apply to the sale, transfer, or assignment of a simple dwelling house if the seller, transferrer, or assignor is a business entity, including but not limited to a corporation or a partnership. "Simple dwelling house" means a dwelling unit, attached or detached, and land appurtenant thereto, including but not limited to a one-family or two-family building or structure, a unit of a horizontal property regime established pursuant to the "Horizontal Property Act," P.L.1963, c.168 (C.46:8A-1 et seq.), a unit in a housing cooperative as defined under "The Cooperative Recording Act of New Jersey," P.L.1987, c.381 (C.46:8D-1 et seq.), or a unit of a condominium property established pursuant to the "Condominium Act," P.L.1969, c.257 (C.46:8B-1 et seq.), but does not include a structure or structures containing more than two units of dwelling space or containing, according to the records of the municipal property tax assessor, commercial property including, or in addition to, the units of dwelling space.

(b) Paragraph (1) of this subsection shall not apply to the sale, transfer, or assignment of a seasonal rental unit or the sale, transfer, or assignment of a lease for the seasonal use or rental of real property if the seller, transferrer, or assignor is an "individual," "estate," or "trust" as those terms are used for the purposes of the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. or any combination thereof owning the seasonal rental unit or lease for the seasonal use or rental of real property as joint tenants, tenants in common, or tenancy by the entirety; paragraph (1) shall apply to the sale, transfer, or assignment of a seasonal rental unit or the sale, transfer, or assignment of a lease for the seasonal use or rental of real property if the seller, transferrer, or assignor is a business entity, including but not limited to a corporation or a partnership.

For the purposes of this paragraph:

"seasonal rental unit" means

(i) a "timeshare estate" as that term is defined by section 2 of P.L.2006, c.63 (C.45:15-16.51); and

(ii) a dwelling unit rented for a term of not more than 125 consecutive days for residential purposes by a person having a permanent residence elsewhere; and

"lease for the seasonal use or rental of real property" means

(i) a "timeshare use" as that term is defined by section 2 of P.L.2006, c.63 (C.45:15-16.51); and

(ii) the use or rental for a term of not more than 125 consecutive days for residential purposes by a person having a permanent place of residence elsewhere.

(c) Paragraph (1) of this subsection shall not apply to transactions entered into on and after January 1, 2021 that are intercompany transfers between combined group members as part of the unitary business, as those terms are used in section 4 of P.L.1945, c.162 (C.54:10A-4).

(3) Paragraph (1) of this subsection shall not apply to the sale, transfer, or assignment of a grant, tax credit, or tax credit transfer certificate that has been awarded, issued, or otherwise made available to a person in connection with a State or local business assistance or incentive program or activity authorized by law in effect on the effective date of P.L.2017, c.12.

For purposes of this paragraph, "State or local business assistance or incentive program or activity" includes but shall not be limited to: the corporation business tax credit and insurance premiums tax credit certificate transfer program established by section 17 of P.L.2004, c.65 (C.34:1B-120.2); the Business Retention and Relocation Assistance Program established by P.L.1996, c.25 (C.34:1B-112 et seq.); the Business Employment Incentive Program established by P.L.1996, c.26 (C.34:1B-124 et al.); the Urban Transit Hub Tax Credit Program established by P.L.2007, c.346 (C.34:1B-207 et seq.); the Grow New Jersey Assistance Program established by section 3 of P.L.2011, c.149 (C.34:1B-244); and the State or local Economic Redevelopment and Growth Grant program established by section 4 or section 5 of P.L.2009, c.90 (C.52:27D-489d or C.52:27D-489e).

b. If, upon receiving timely notice of a sale, transfer, or assignment from a purchaser, transferee, or assignee, the director fails to provide timely notice to the purchaser, transferee, or assignee that a possible claim for such State tax or taxes exists, the purchaser, transferee, or assignee may transfer over to the seller, transferrer, or assignor any sums of money, property, or choses in action, or other consideration to the extent of the amount of the State's claim. The purchaser, transferee, or assignee shall not be subject to the liabilities and remedies imposed under the provisions of the uniform commercial code, Title 12A of the New Jersey Statutes, and shall not be personally liable for the payment to the State of any such taxes theretofore or thereafter determined to be due to the State from the seller, transferrer, or assignor.

c. If the purchaser, transferee, or assignee shall fail to give notice to the director as required by the preceding paragraph, or if the director shall inform the purchaser, transferee, or assignee that a possible claim for such State tax or taxes exists, any sums of money, property, or choses in action, or other consideration, which the purchaser, transferee, or assignee is required to transfer over to the seller, transferrer, or assignor shall be subject to a first priority right and lien for any such State taxes theretofore or thereafter determined to be due from the seller, transferrer, or assignor to the State, and the purchaser, transferee, or assignee is forbidden to transfer to the seller, transferrer, or assignor any such sums of money, property, or choses in action to the extent of the amount of the State's claim. For failure to comply with the provisions of this section the purchaser, transferee, or assignee, in addition to being subject to the liabilities and remedies imposed under the provisions of the uniform commercial code, Title 12A of the New Jersey Statutes, shall be personally liable for the payment to the State of any such taxes theretofore or thereafter determined to be due to the State from the seller, transferrer, or assignor, and such liability may be assessed and enforced in the same manner as the liability for any State tax under the State Uniform Tax Procedure Law, R.S.54:48-1 et seq.

(cf: P.L.2020, c.118, s.14)

3. (New section) a. The Director of the Division of Taxation in the Department of the Treasury, in consultation with the Office of Information Technology and any other State agency that the director deems necessary, shall establish an Internet-based system allowing for the electronic submission of notifications required pursuant to section 5 of P.L.2007, c.100 (C.54:50-38). At a minimum, the electronic system shall allow the purchaser, transferee, or assignee of the business assets to:

(1) electronically submit the notification to the director along with any supporting documentation that the director may require;

(2) receive confirmation that such notification has been properly submitted; and

(3) receive subsequent notification related to the existence of one or more possible claims for State taxes, including the amount of the State’s claim.

b. The electronic system shall be established and fully operational no later than one year following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill). The electronic system shall be accessible on an Internet webpage on the division’s official Internet website.

4. Notwithstanding any provision of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), to the contrary, the Director of the Division of Taxation in the Department of the Treasury is authorized to adopt rules and regulations, immediately upon filing with the Office of Administrative Law, as necessary to implement this act. The rules and regulations adopted pursuant to this section shall be effective for a period not to exceed 18 months following the date of filing and may thereafter be amended, adopted, or readopted by the director in accordance with the requirements of P.L.1968, c.410 (C.52:14B-1 et seq.).

5. This act shall take effect immediately.

STATEMENT

This bill allows purchasers, transferees, and assignees involved in bulk sale transactions to provide required notices to the Division of Taxation through electronic submission. The bill also requires the Director of the Division of Taxation to establish an Internet-based system allowing for the electronic submission of bulk sale notices.

A bulk sale is the sale, transfer, or assignment of an individual or company’s business assets, in whole or in part, outside of the ordinary course of business. Examples of bulk sale transactions include: a mechanic that decides to retire and sells their auto repair business, including tools, equipment, and inventory, to another mechanic; and a baker that gives all of their business assets, such as the bakery and its equipment, to another person as a gift. An example of a transaction that would not qualify as a bulk sale transaction is a paint store that makes a retail sale of brushes and floor stain to a contractor.

Under current law, when a bulk sale occurs, the purchaser, transferee, or assignee of the business assets is required to notify the division in order to determine if there is a possible claim for State taxes. This notification is currently required to be provided at least 10 days before the transfer of goods or payment. This notification is also required to be delivered to the director by registered mail or by any other method that the director may prescribe. To date, the director has not prescribed an electronic method for the submission of bulk sale notifications.

This bill would provide an additional means by which purchasers, transferees, and assignees can submit required bulk sale notifications by allowing such submissions to occur by electronic means. In order to facilitate such submissions, the bill requires the director to establish an Internet-based system that allows for the electronic submission of bulk sale notifications. At a minimum, the electronic system would be required to allow these individuals or entities to:

(1) electronically submit the notification to the director along with any supporting documentation that may be required;

(2) receive confirmation that such notification has been properly submitted; and

(3) receive subsequent notification related to the existence of one or more possible claims for State taxes, including the amount of the State’s claim.

The bill further requires the electronic system to be established and operational within one year following the date of the bill’s enactment. This bill also requires the electronic system to be accessible on the division’s Internet website.