A2402

ASSEMBLY, No. 2402

STATE OF NEW JERSEY

INTRODUCED OCTOBER 7, 1996

By Assemblywoman MYERS, Assemblyman ARNONE, Assemblywoman Wright, Assemblyman Azzolina

and Assemblywoman Heck

An Act concerning the deferral of the payment of certain real property taxes by certain citizens and residents of the State, and amending and supplementing various sections of statutory law.

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

1. (New section) This act shall be known and may be cited as the “Senior and Disabled Citizens Property Tax Deferral Loan Act.”

2. (New section) The Legislature finds and declares that:

A significant portion of the State’s senior and disabled citizens have relatively low fixed incomes, property taxes impose a heavy burden on those citizens, and catastrophic medical costs for many of these low income citizens can be devastating;

The further financial burdens imposed upon low income senior and disabled citizens and their surviving spouses by increasing health care costs and other expenses, coupled with steady property tax increases, threatens home ownership among these citizens;

Many of these citizens who wish to remain in their homes have accrued significant equity in those homes, but their low incomes limit their ability to tap that equity;

There is a limited availability of private financial sector approaches which would permit senior and disabled citizens and their surviving spouses to use their primary asset, their home, to borrow funds for current needs;

The State has offered these homeowners certain property tax assistance through annual deductions and rebates, but these State aid programs often do not adequately address the hardship faced by low income senior and disabled citizens and their surviving spouses as they experience steady and inevitable property tax increases. These steady property tax increases fall particularly hard on low income homeowners who live in high income municipalities that because of the aggregate wealth in those municipalities generally receive relatively less State aid. Thus, these low income homeowners face a disproportionally high property tax burden among the low income homeowners in the State; and

It is preferable to provide low income senior and disabled citizens and their surviving spouses with a municipal loan assistance program under which they could borrow funds to pay their property tax obligation so they may remain in their own homes.

It is, therefore, a compelling public purpose in the best interests of the senior and disabled citizens and their surviving spouses of this State to establish a municipal program permitting a municipality, by annual resolution, to defer the collection of a percentage of the property taxes assessed on residences of senior and disabled residents with relatively low fixed incomes.

3. (New section) As used in this act:

“Income” means all income from whatever source derived, including, but not limited to, realized capital gains and, in their entirety, pension, annuity and retirement benefits, but exclusive of benefits derived under any one of the following:

(a.) The federal Social Security Act and all amendments and supplements thereto;

(b.) Any other program of the federal government or pursuant to any other federal law which provides benefits in whole or in part in lieu of benefits referred to in, or for persons excluded from coverage under, (1) hereof including but not limited to the federal Railroad Retirement Act and federal pension, disability and retirement programs; or

(c.) Pension, disability or retirement programs of any state or its political subdivisions, or agencies thereof, for persons not covered under (a.) hereof; provided, however, that the total amount of the benefits to be allowed exclusion by any owner under (b.) or (c.) hereof shall not be in excess of the maximum amount of benefits payable to, and allowable for exclusion by, an owner in similar circumstances under (d.) hereof.

“Permanently and totally disabled” means total and permanent inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment, including blindness. For purpose of this subsection, “blindness” means central visual acuity of 20/200 or less in the better eye with the use of a correcting lens. An eye which is accompanied by a limitation in the fields of vision such that the widest diameter of the visual field subtends an angle no greater than 20 degrees shall be considered as having a central vision acuity of 20/200 or less.

“Residence” means a legal domicile within the State of New Jersey for a period of at least one day immediately preceding November 1 of the calendar year immediately preceding the calendar year in which the general property tax is due and payable; however, a longer period of legal domicile within the municipality may be established annually by the municipal resolution procedure set forth in section 4 of this act. The burden of establishing legal domicile within the municipality shall be upon the taxpayer.

“Taxpayer” means an individual who has filed a claim for deferral of tax pursuant to this act.

“Tax-deferred property” means the land and residential improvements thereon upon which taxes are deferred.

“Taxpayer’s equity” means 80 % of the value of the residence as assessed by the municipal assessor for the year in which the taxpayer files his claim under section 4 of this act, which 80 % amount shall be reduced by the amount of any liens against the residence, including the liens for any taxes already deferred.

4. (New section) a. The governing body of a municipality, by annual resolution, adopted on or before September 1 of the year immediately prior to a year for which tax deferrals are to be allowed, may permit any person who is 65 years of age or older and any person who is less than 65 years of age who is permanently and totally disabled on November 1 of the year in which he files his claim under this section, and who has an income not in excess of $10,000 per year, to defer payment, subject to section 5 of this act, of a percentage of the taxes assessed and levied on his residence for that year as specified in the resolution but not to exceed 100% of the amount of that tax.

The income of a married person shall be deemed to include an amount equal to the income of the spouse during the applicable income year, except for that portion of that year as the two were living apart in a state of separation, whether under judicial decree or otherwise.

b. No tax deferrals shall be permitted for any year in which a municipality which has previously adopted the provisions of this act, does not adopt on or before September 1 of the year prior to the subsequent tax year, a resolution as provided in subsection a. of this section. The deferral of the payment of any taxes permitted to the taxpayer for previous tax years, and of any accruing interest owing thereon, shall be continued until such times as any of the circumstances listed in section 12 of P.L. , c. (C. ) (now pending before the Legislature as this bill) occurs. On or before October 1 of the first year in which such a municipality does not adopt a resolution as provided in subsection a. of this section, the municipal assessor shall send a notice by mail to each taxpayer who, pursuant to this act, was permitted a tax deferral for the prior tax year. The notice shall be substantially in the following form:

To: (name of taxpayer)

The governing body of (name of municipality) has determined not to permit, for the tax year beginning on January 1, ...., the deferral of the collection of ....% of the property taxes on your residence that you were permitted for the last tax year. The status of any taxes for which you were permitted a deferral in this or previous tax years will not be affected by this determination, but you will not be permitted, and you should not file a claim for, a tax deferral for the coming tax year. Interest shall continue to accrue on your previously deferred taxes at the rate established for delinquent taxes pursuant to R.S.54:4-67.

The municipal assessor shall also, on the same date as the notice is sent, notify the State Treasurer, the county treasurer and the county board of taxation that the governing body of the municipality has determined not to adopt the provisions of this act for the coming tax year.

c. A person who resides within a municipality which has adopted the provisions of this act, and who claims a deferral, shall file a claim with the municipal assessor before November 1 of the year prior to the tax year in which he claims the deferral.

d. When a taxpayer files a claim in any year for deferral under subsection c. of this section, it shall have the effect of:

(1) Deferring the payment of the property taxes levied on his residence for the fiscal year beginning on January 1 of the succeeding tax year in that amount fixed by the governing body of the municipality.

(2) Continuing the deferral of the payment by the taxpayer of any taxes deferred under this act for previous years which have not become delinquent under section 13 of this act.

e. If a guardian has been appointed for an individual otherwise qualified to obtain deferral of taxes under this act, the guardian may act for that individual in complying with the provisions of this act.

5. (New section) In order to qualify for tax deferral under this act, the property shall, in addition to the requirements set forth in section 4 of this act, meet all of the following requirements when the claim is filed and thereafter so long as the payment of taxes by the taxpayer is deferred:

a. The property shall be the residence of the person who files the claim for deferral.

b. The person claiming the deferral shall, by himself or together with his spouse as joint tenants, own the property for at least one day prior to November 1, in the year in which the claim is filed; however, a longer period of ownership may be established annually by the municipal resolution procedure set forth in section 4 of this act.

c. There shall not be any unpaid, nondeferred property taxes or assessments on the property; except that the municipality may, upon the application of the taxpayer and subject to the limitations and provisions of this act, waive this requirement for any unpaid property taxes or assessments on the property as may exist at the time the taxpayer first files a claim for deferral, and may treat these unpaid taxes as previously deferred taxes.

d. The taxpayer’s equity shall exceed the amount of the taxes assessed against the property in the year in which the taxpayer files his claim.

6. (New section) a. A taxpayer’s claim for deferral under section 4 of P.L. , c. , (C. ) (now pending before the Legislature as this bill) shall be in writing on the claim for deduction form currently used for senior citizen and disabled property tax deductions pursuant to section 3 of P.L.1963, c. 172 (C.54:4-8.42) or on an addendum to that form with appropriate modifications for the deferral claimant as specified in the municipal resolution and shall:

(1) Describe the residence.

(2) Recite facts establishing the eligibility for the deferral under the provisions of this act.

b. There shall be annexed to the application form a statement verified by a written declaration of the applicant that the statements contained therein are true.

7. (New section) a. If eligibility for deferral is established as provided in P.L. , c. , (C. ) (now pending before the Legislature as this bill), the municipal assessor shall show on the current assessment and tax roll that the property is tax-deferred property by an entry clearly designating that property as tax-deferred property.

b. Unless otherwise required by P.L. , c. , (C. ) (now pending before the Legislature as this bill), the assessor shall in subsequent years continue to list the property as tax-deferred property in the manner provided in subsection a. of this section.

c. The tax collector shall, for convenience, transfer the deferred property taxes into a separate tax-deferred roll which shall be continuing from year to year and shall show the taxes deferred for each year, the total of taxes deferred, and the accrued interest added each year on the balance and the total accrued interest.

d. The deferred taxes shall continue to be a lien against the property in the same manner as any other unpaid taxes or assessments, but shall not be subject to foreclosure except as provided in accordance with sections 12 through 14 of P.L. , c. , (C. ) (now pending before the Legislature as this bill).

e. Interest shall accrue on the deferred taxes at the rate established for delinquent taxes pursuant to R.S.54:4-67.

8. (New section) a. The municipal assessor in conjunction with the municipal collector shall annually submit to the county board of taxation a list which shall include: the properties for which the collection of taxes has been deferred for that year; the total amount of taxes deferred for each property, and the total accrued interest on that amount, which have accumulated since the owner first filed a claim pursuant to section 4 of P.L. , c. , (C. ) (now pending before the Legislature as this bill); the total amount of taxes deferred in that municipality for that year; and the total amount of taxes which have been deferred, and which have not become payable under section 13 of this act, in the years since the municipality first adopted the provisions of this act, and the accrued interest upon that amount.

b. The county board of taxation of each county shall forward to the State Treasurer a County Deferral Abstract which summarizes the data in those municipal lists for its county. The State Treasurer shall annually compile the data in those County Deferral Abstracts into a State Deferral Abstract and send a copy of it to the Governor and the Legislature.

9. (New section) On or before September 1 of each year, the municipal assessor in conjunction with the municipal collector shall send a notice to each taxpayer who has claimed deferral of taxes for the current year. The municipal assessor in conjunction with the municipal collector shall give the notice by an unsealed post card or other form of mail sent to the residence address of the taxpayer as shown in the claim for deferral filed for the current year. The notice shall be substantially in the following form:

To: (name of taxpayer)

If you wish to defer the collection of ...% of the property taxes on your residence for the tax year beginning on January 1, ...., you must file a claim for deferral not later than November 1, ...., with the municipal assessor.

If you fail to file your claim for deferral on or before November 1, ...., you will have to pay all property taxes on your residence for the coming assessment year, and all deferred property taxes (including any interest owing) on your residence for the current and past years will become payable after the title to your residence is conveyed to another owner, unless that title passes to another taxpayer who is qualified for a deferral on your residence.

10. (New section) a. If a taxpayer who has claimed deferral of property taxes for the current year does not file a claim for deferral on or before November 1 for the coming year, the municipal assessor in conjunction with the municipal collector, not later than November 15, shall send a notice to the taxpayer by registered mail to the residence address of the taxpayer as shown on the claim for deferral filed for the current year.

b. The notice required by subsection a. of this section shall be in substantially the following form:

To: (name of taxpayer)

You did not file a claim for deferral of ....% of the taxes for your residence this coming year. Consequently you will have to pay all real property taxes on your residence for this coming year. In addition, the deferred property taxes, including interest owed, for the current year and for prior years on your residence will become payable after the title to your residence is conveyed to a another owner, unless that title is conveyed to another taxpayer who is qualified for a deferral on your residence.

11. (New section) Failure to receive the notices provided for in sections 9 and 10 of P.L. , c. , (C. ) (now pending before the Legislature as this bill) is not a defense in any proceeding for the collection of taxes. Neither the municipal assessor nor the municipal collector is personally liable for failure to give these notices.

12. (New section) Subject to section 14 of P.L. , c. , (C. ) (now pending before the Legislature as this bill) all deferred property taxes, including accrued interest, shall become payable when:

a. The taxpayer who claimed deferment of collection of property taxes on his residence dies.

b. The property with respect to which deferment of collection of taxes has been allowed is conveyed, or some person other than the taxpayer who claimed the deferment becomes the owner of the property.

c. The tax-deferred property is no longer the residence of the taxpayer who claimed the deferral, except in the case of a taxpayer required to be absent from that tax-deferred property by reason of health.

d. The tax-deferred property no longer meets the requirements of subsection c. of section 5 of P.L. , c. , (C. ) (now pending before the Legislature as this bill).

e. The taxpayer fails to file a claim for deferral of payment of property taxes on that property on or before November 1.

13. (New section) Whenever any of the circumstances listed in section 12 of P.L. , c. , (C. ) (now pending before the Legislature as this bill) occurs:

a. The deferral of taxes for the tax year subsequent to the year in which the circumstance occurs shall be lost and property taxes for that year shall be due and payable in full just as if that property were on the tax roll for that year and that property shall be added to the tax roll for that year; and

b. The amounts of deferred property taxes, including any accrued interest owing, for all years prior to the year in which the circumstance occurs shall be due and payable after the date on which title to that property with deferred property taxes is conveyed to a another owner, unless that title is conveyed to another taxpayer who is qualified for a deferral on that property under this act.

c. If the amounts falling due as provided in this section are not paid on the indicated due date, those amounts shall be deemed delinquent as of that date.

14. (New section) a. Notwithstanding the provisions of section 12 P.L. , c. , (C. ) (now pending before the Legislature as this bill), when one of the circumstances listed in subsections a. through c. of section that occurs, the spouse of the taxpayer may elect to continue the property tax status if:

(1) The spouse of the taxpayer is or will be 55 years of age or older not later than six months from the day the listed circumstance occurs; and

(2) The property is the residence of the spouse of the taxpayer and meets the requirements of subsection b. of section 5 of P.L. , c. , (C. ) (now pending before the Legislature as this bill).

b. The election under subsection a. of this section to continue the deferred property tax status by the spouse of the taxpayer shall be filed in the same manner as a claim for deferral is filed under section 4 of this act, not later than 90 days from the date the circumstance listed in subsections a. through c. of section 12 occurs. Thereupon, the property with respect to which the deferral is claimed shall continue to be treated as tax-deferred property in the manner provided in section 7 of P.L. , c. , (C. ) (now pending before the Legislature as this bill) and the municipal assessor and tax collector shall cancel all actions taken under section 13 of P.L. , c. , (C. ) (now pending before the Legislature as this bill) and shall make any necessary correcting entries on the tax rolls and in their records. When the property has been continued in its deferred tax status by the filing of the spouse of the taxpayer of an election under this section, the spouse of the taxpayer may continue the property in its deferred tax status in subsequent years by filing a claim under section 6 of this act so long as the spouse meets the qualifications set out in this section.

15. (New section) a. If in any tax year the property of a taxpayer who previously was permitted a tax deferral pursuant to P.L. , c. , (C. ) (now pending before the Legislature as this bill), is disqualified for a tax deferral pursuant to the provisions of subsection d. of section 5 of P.L. , c. , (C. ) (now pending before the Legislature as this bill), no claim for deferral of the collection of taxes on the taxpayer’s property shall be allowed in that year, nor shall any claim be allowed until the year in which the property once again meets all of the requirements for qualification listed in section 5. During the period in which the disqualified property fails to meet the requirements for qualification, the deferral of the payment of any taxes permitted to the taxpayer for previous tax years, and of the accruing interest, shall be continued until such time as any of the circumstances listed in section 12 of P.L. , c. , (C. ) (now pending before the Legislature as this bill) occurs.

b. If in any year a taxpayer who previously was permitted a tax deferral pursuant to this act has an income in excess of $10,000, no claim for the deferral of the collection of taxes on the taxpayer’s property shall be allowed for that tax year. The deferral of the payment of any taxes permitted to the taxpayer for previous tax years, and of any accruing interest owed, shall be continued until such time as any of the circumstances listed in section 12 of P.L. , c. , (C. ) (now pending before the Legislature as this bill) occurs. Nothing in this subsection shall prevent a taxpayer from filing a claim for deferral in any subsequent tax year.

16. (New section) a. Subject to subsection b. of this section, all or part of any deferred taxes and accrued interest thereon may at any time be paid to the tax collector by:

(1) The taxpayer or the spouse or child of the taxpayer.

(2) A person having or claiming a legal or equitable interest in the property.

b. A person listed in paragraph (2) of subsection a. of this section may make payments only if no objection is made by the taxpayer within 10 days after the tax collector deposits in the mail notice to the taxpayer of the fact that payment has been tendered.

c. Any payment made under this section shall be applied first against any accrued interest owed and then any remainder shall be applied against the deferred taxes. Payment shall not affect the deferred tax status of the property. Unless otherwise provided by law, payment shall not give the person paying the taxes any interest in the property or any claim against the estate of the taxpayer, in the absence of a valid agreement to the contrary.

17. (New section) Nothing in this act is intended to or shall be construed to:

a. Defer payment of special assessments to benefited property.

b. Affect any provision of any mortgage or other instrument relating to land requiring a person to pay property taxes.

18. N.J.S.40A:4-23 is amended to read as follows:

The anticipated revenues shall be classified as "surplus anticipated", "miscellaneous revenues", "receipts from delinquent taxes", “receipts from deferred taxes,” and "amount to be raised by taxes to support municipal budget appropriations".

In parallel columns to the right of the several items of anticipated revenues, the following shall be stated:

a. The amounts estimated to be realized from the several items of revenue in the current fiscal year.

b. The amounts anticipated from the same source in the preceding year.

c. The amounts actually received in cash or realized in accordance with regulations of the local government board during such preceding year.

(cf: P.L.1960, c.169, s.1)

19. N.J.S.40A:4-25 is amended to read as follows:

"Miscellaneous revenues" shall include such amounts as may reasonably be expected to be realized in cash during the fiscal year from known and regular sources, or from sources reasonably capable of anticipation, and lawfully applicable to the appropriations made in the budget, other than dedicated revenues, revenues from taxes to be levied to support the budget, receipts from delinquent taxes, receipts from deferred taxes, and surplus. Miscellaneous revenues stated in the budget shall be classified according to their respective sources.

(cf: P.L.1960, c.169, s.1)

20. N.J.S.40A:4-41 is amended to read as follows:

40A:4-41. For the purpose of determining the amount of the appropriation for "reserve for uncollected taxes" required to be included in each annual budget where less than 100% of current tax collections may be and are anticipated, anticipated cash receipts shall be as set forth in the budget of the current year, and in accordance with the limitations of statute for anticipated revenue from, surplus appropriated, miscellaneous revenues, receipts from deferred taxes and receipts from delinquent taxes.

Receipts from the collection of taxes levied or to be levied in the municipality, or in the case of a county for general county purposes and payable in the fiscal year shall be anticipated in an amount which is not in excess of the percentage of taxes levied and payable during the next preceding fiscal year which was received in cash by the last day of the preceding fiscal year.

(cf: P.L.1991, c 75, s.19)

21. (New section) Deferred taxes in any fiscal year shall consist of taxes, and any interest owed thereon, on the residences of persons 65 years of age or older and on the residences of persons less than 65 years of age who are permanently and totally disabled or their surviving spouse, the collection of which has been deferred pursuant to municipal resolution in prior fiscal years and which have not previously been collected or become delinquent.

The maximum amount which may be anticipated as “receipts from deferred taxes” shall be that amount actually realized in cash from the same source during the next preceding fiscal year, unless the director shall determine upon application by the governing body that the facts clearly warrant the expectation that some different amount will actually be realized in cash during the fiscal year and shall certify the determination, in writing, to the local unit; provided, however, that for the first fiscal year in which the local unit anticipates such receipts from deferred taxes, the maximum amount shall be 3% of the amount of the outstanding deferred taxes which have not previously been collected or become delinquent.

Any deferred taxes, which have become due and payable, and which have not been collected within the time period prescribed by law, shall after the time period become delinquent taxes, and shall be anticipated as “receipts from delinquent taxes,” pursuant to N.J.S.40A:4-29 and not as “receipts from deferred taxes” pursuant to this section.

22. This act shall take effect immediately, and the tax year for which the first deferral may be claimed shall begin on or after the first day of January next following enactment.

STATEMENT

This bill allows a municipality to defer the collection of a percentage of the taxes on the residences of senior and disabled taxpayers with annual incomes of less than $10,000, in an amount not to exceed 100% of the amount of tax due as specified in the municipal resolution. The bill also establishes standards, qualifications and procedures for the granting of those tax deferrals.

The bill provides that the deferral of taxes will cease when the senior or disabled citizen or his or her spouse dies, sells the property, no longer resides on the property, or fails to file a claim for the deferral. It also provides that the deferred taxes shall constitute a lien on the property, and that interest will accrue on the amount of deferred taxes at the rate established for delinquent taxes pursuant to R.S.54:4-67. Further, the amounts of deferred property taxes, including any accrued interest owing, for all years in which a deferral was granted will become payable after the date on which the title to that residence with deferred property taxes is conveyed to another owner, unless that title is conveyed to another taxpayer who is qualified for a deferral on that property.

Also, this bill modifies the “Local Budget Law” to accommodate the deferral of the payment of taxes assessed against certain senior and disabled residents of this State having an income not in excess of $10,000 per year. Specifically, it places those taxes deferred in a fiscal year by a municipality adopting the provisions of this bill within the budget category of total general municipal budget appropriations, and therefore adds the amount of such deferred taxes in such fiscal year to the amount required to be levied by taxation for the support of the municipal budget for that fiscal year. The bill, however, allows the municipality to anticipate in the budget “receipts from deferred taxes” as a revenue not required to be raised through taxation. Over a period of years as deferred taxes become due and payable the two budget categories would balance out.

Permits municipalities to defer percentage of payment of property taxes owed by certain citizens and residents.