SENATE, No. 1304
STATE OF NEW JERSEY
209th LEGISLATURE
INTRODUCED MAY 18, 2000
Sponsored by:
Senator ROBERT W. SINGER
District 30 (Burlington, Monmouth and Ocean)
Co-Sponsored by:
Senator Kosco
SYNOPSIS
The Death Tax Elimination Act; repeals the transfer inheritance tax.
CURRENT VERSION OF TEXT
As introduced.
(Sponsorship Updated As Of: 5/19/2000)
An Act eliminating the transfer inheritance tax and designated the Death Tax Elimination Act, repealing various parts of the statutory law and amending R.S.54:38-1 and P.L.1944, c.220.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. The following are repealed:
R.S.54:33-1 through R.S.54:36-7;
Section 1 of P.L.1940, c.220 (C.54:33-9.1);
Section 2 of P.L.1985, c.57 (C.54:33-14);
Section 1 of P.L.1955, c.135 (C.54:34-1.1);
Section 4 of P.L.1978, c.172 (C.54:35-4.1);
Sections 1 and 2 of P.L.1947, c.369 (C.54:35-5.1 and 54:35-5.2)
Section 2 of P.L.1956, c.54 (C.54:35-10.1);
Section 1 of P.L.1939, c.122 (C.54:35-23);
R.S.54:38-4; and
Sections 1 through 4 of P.L.1945, c.127 (C.54:38A-3 through 54:38A-6);
provided, however, that this repeal shall not affect any obligation, lien or duty to pay taxes, interest or penalties which have accrued or may accrue by virtue of any taxes imposed pursuant to the provisions of the law repealed by this act, or which may be imposed with respect to any redetermination, correction, recomputation or deficiency assessment; and provided that all taxes and returns which would have been due and payable under the provisions of the law repealed shall be due and payable as if the law were in effect; and provided that this repeal shall not affect the legal authority of the State to audit records and assess and collect taxes due or which may be due, together with such interest and penalties as have accrued or would have accrued thereon under the provisions of the law repealed; and provided that this repeal shall not affect any determination of, or affect any proceeding for, the enforcement thereof.
2. R.S.54:38-1 is amended to read as follows:
54:38-1. Imposition of tax; amount. [In addition to the inheritance, succession or legacy taxes imposed by this state under authority of chapters 33 to 36 of this title (s. 54:33-1 et seq.), or hereafter imposed under authority of any subsequent enactment, there] There is hereby imposed an estate or transfer tax upon the transfer of the estate of every resident decedent which is subject to an estate tax payable to the United States under the provisions of the federal revenue act of one thousand nine hundred and twenty-six and the amendments thereof and supplements thereto or any other federal revenue act in effect as of the date of death of the decedent, the amount of which tax shall be the sum by which the maximum credit allowable against any federal estate tax payable to the United States under any federal revenue act on account of taxes paid to any state or territory of the United States or the District of Columbia, shall exceed the aggregate amount of all estate, inheritance, succession or legacy taxes actually paid to any state or territory of the United States or the District of Columbia, including inheritance, succession or legacy taxes actually paid this state, in respect to any property owned by such decedent or subject to such taxes as a part of or in connection with his estate.
In any estate where [no inheritance, succession or legacy tax is due this state under the provisions of said chapters 33 to 36 or under authority of any subsequent enactment imposing taxes of a similar nature, but] an estate tax is due the United States under the provisions of any federal revenue act in effect as of the date of death, wherein provision is made for a credit on account of taxes paid the several states or territories of the United States, or the District of Columbia, the tax imposed by this chapter shall be the maximum amount of such credit less the aggregate amount of such estate, inheritance, succession or legacy taxes actually paid to any state or territory of the United States or the District of Columbia.
(cf: R.S.54:38-1)
3. Section 1 of P.L.1944, c.220 (C.54:38A-1) is amended to read as follows:
l. Where the [State Tax Commissioner] Director of the Division of Taxation claims that a decedent was domiciled in this State at the time of death and the taxing authorities of another state or states make a similar claim with respect to their state or states, and investigation discloses a reasonable doubt regarding domicile, the [State Tax Commissioner] director may, in [his] the director's discretion, enter into a written agreement with such taxing authorities and the executor, administrator or trustee, fixing the sum acceptable to this State in full settlement of the [transfer inheritance]estate tax imposable under [chapters thirty-three to thirty-six, inclusive,]chapter 38 of Title 54 of the Revised Statutes; provided, that said agreement also fixes the sum acceptable to such other state or states in full settlement of the death taxes imposable by such state or states; and provided further, that said agreement has the approval of the ordinary of this State. [If the aggregate amount payable under such agreement to the States involved is less than the maximum sum allowable as a credit to the estate against the Federal estate tax imposed thereon, then the executor, administrator or trustee shall also pay to the State Tax Commissioner so much of the difference between such aggregate amount and the amount of such credit as the amount payable to the State Tax Commissioner under the agreement bears to such aggregate amount, and the agreement aforesaid shall so provide.] Payment of the sum or sums fixed by said agreement shall be accepted by the [State Tax Commissioner] director in full satisfaction of this State's claim for [transfer inheritance and] estate taxes which would otherwise be chargeable under [subtitle five] chapter 38 of Title 54 of the Revised Statutes, and the executor, administrator or trustee is hereby empowered to enter into the agreement provided for herein.
(cf: P.L.1944, c.220, s.1)
4. This act shall take effect immediately, and apply to estates of decedents who die on or after the first day of first month following enactment.
STATEMENT
This bill enacts a Death Tax Elimination Act, repealing the New Jersey transfer inheritance tax.
The New Jersey transfer inheritance tax is one of the State's oldest taxes, originating in 1892 and imposed in roughly its present form since 1909. The tax is imposed on the transfer of all personal and real property in the estates of New Jersey resident decedents and of all tangible and real property located in New Jersey in the estates of nonresident decedents. The tax was extensively revised in 1985 to exempt from taxation transfers to spouses, ancestors and descendants of the decedent, but "lateral" transfers, bequests to brothers and sisters of the decedent or their children, and to nonrelatives are taxed at rates up to 16%.
The bill does not eliminate the New Jersey "estate tax." The federal government imposes an estate tax, but allows a credit, calculated as a percentage of the federal liability, for any state estate taxes paid. New Jersey imposes a tax on the estates of resident decedents in the amount of the available federal credit. That New Jersey tax does not increase the liability of taxpayers, it just allows some taxes to be paid to New Jersey, for New Jersey use, instead of to the federal government for federal use.