A4111

An Act eliminating the transfer inheritance tax and repealing parts of the statutory law.

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

1. The following sections are repealed:

R.S.54:33-1 through R.S.54:33-12;

R.S.54:34-1 through R.S.54:34-10;

R.S.54:34-12;

R.S.54:34-13;

R.S.54:35-1 through R.S.54:35-22;

R.S.54:36-1 through R.S.54:36-7;

R.S.54:37-1 through R.S.54:37-8;

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);

section 1 of P.L.1947, c.369 (C.54:35-5.1);

section 2 of P.L.1956, c.54 (C.54:35-10.1); and

section 1 of P.L.1939, c.122 (C.54:35-23);

provided, however, for the transfer of the estate of every resident decedent dying before January 1, 2020, 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or penalties which have accrued or may accrue by virtue of any taxes imposed pursuant to the provisions of the laws repealed by this act, or which may be imposed with respect to any redetermination, correction, recomputation or deficiency assessment; and provided that all taxes and returns which would have been due and payable under the provisions of the laws repealed shall be due and payable as if the laws were in effect; and provided that this repeal shall not affect the legal authority of the State to audit records and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with such interest and penalties as have accrued or would have accrued thereon under the provisions of the laws repealed; and provided that this repeal shall not affect any determination of, or affect any proceeding for, the enforcement thereof.

2. This act shall take effect immediately, but section 1 shall only apply to transfers of property and estates of resident decedents dying after December 31, 2019.

STATEMENT

This bill repeals the transfer inheritance tax. This will apply to transfers of property of resident decedents dying after December 31, 2019.

Currently, New Jersey imposes a transfer inheritance tax on beneficiaries for the receipt of assets from a New Jersey resident decedent and certain New Jersey assets of nonresident decedents, as determined by the value of the assets transferred and the beneficiary's relationship to the decedent.

The transfer inheritance tax is one of the State's oldest taxes, originating in 1892. 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 of up to 16 percent.

This bill will eliminate all remaining taxable “classes” of beneficiaries and eliminate New Jersey’s distinction as being one of only six states to impose an inheritance tax.