A2549

ASSEMBLY, No. 2549

STATE OF NEW JERSEY

INTRODUCED DECEMBER 9, 1996

By Assemblymen KAVANAUGH and DiGAETANO

An Act authorizing the sale, assignment and transfer of State tax and motor vehicle surcharge indebtedness and lien, supplementing chapter 50 of Title 54 of the Revised Statutes and amending P.L.1983, c.65.

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

1. (New section) a. The State Treasurer shall have the authority to sell, transfer or assign all right, title and interest in any State tax indebtedness and lien represented by any certificate of debt including any statutory fee for the cost of collection imposed pursuant to section 8 of P.L.1987, c.76 (C.54:49-12.1), issued pursuant to R.S.54:49-12 to any person for a fair, adequate and reasonable consideration; provided however, that the underlying State tax indebtedness and lien represented by the certificate is fixed and constitutes a final determination of the Director of the Division of Taxation not subject to protest or appeal pursuant to the provisions of the State Tax Uniform Procedure Law, R.S.54:48-1 et seq.

b. After a sale pursuant to this section and for the purpose of the proper administration of this section and to prevent untimely protests or appeals of the underlying tax indebtedness, it shall be presumed that the tax indebtedness is fixed and constitutes a final determination of the director not subject to protest or appeal unless the taxpayer or the taxpayer's authorized representative can establish by clear and convincing evidence that the contrary is true. If the taxpayer contests the underlying tax indebtedness after the sale, transfer or assignment of the State tax indebtedness and lien represented by any certificate of debt, then the taxpayer shall first file a protest with the director pursuant to R.S.54:49-18 before bringing an appeal to the tax court pursuant to chapter 51A of Title 54 of the Revised Statutes; provided however, that the director shall be joined as the primary party in interest with the person to whom the State tax indebtedness and lien has been sold, transferred or assigned in any action or proceeding brought to challenge the underlying tax indebtedness. The director shall advise by written notice the clerk of the court which has entered the certificate on its record of docketed judgments that the sale, transfer or assignment has been made in the name and address of the purchaser. Thereupon, the clerk shall, without cost, enter a notation of the sale and the name and address of the purchaser in the record of docketed judgments. This written notice shall also be given by the director to the taxpayer in accordance with R.S.54:50-6.

2. (New section) All sales, transfers or assignments of indebtedness and lien represented by certificates of debt shall be on such terms and conditions as the State Treasurer may determine appropriate. In setting these terms, conditions and the fair, adequate and reasonable consideration, the State Treasurer shall consider what will be most advantageous to the State based upon a present value analysis taking into account the likelihood of the State collecting the indebtedness within a reasonable time and other factors as the State Treasurer may determine.

3. (New section) The purchaser, transferee or assignee of any State tax indebtedness and lien represented by a certificate of debt shall be entitled to exercise all the remedies and may take all of the proceedings for the collection of the indebtedness represented by the certificate that are available pursuant to the laws of this State to any judgment creditor, and shall be entitled to the same priority as the State may have respecting the certificate and underlying indebtedness and lien. Interest shall accrue at the rate provided by R.S.54:49-3.

4. (New section) Notwithstanding the provisions of subsection a. of R.S.54:50-8 to the contrary, the Director of the Division of Taxation may provide the purchaser, transferee or assignee of the indebtedness and lien represented by the certificate of debt such taxpayer information as is necessary for the purchaser to collect the indebtedness represented by the certificate, provided that such disclosure is not contrary to the provisions of subsection (a) of section 26 of the federal Internal Revenue Code of 1986, 26 U.S.C. §6103 or other State or federal law. Such purchaser, transferee or assignee and its employees shall be specifically subject to the confidentiality provisions of R.S.54:50-8; and the purchaser shall furnish the director with the affidavit of each of its principals and employees in which each such principal and employee shall acknowledge receipt of a copy of the confidentiality provisions of the State Tax Uniform Procedure Law, R.S.54:48-1 et seq., understanding of the obligation to maintain, and agreement to maintain, the confidentiality of taxpayer information, and awareness that violation of the confidentiality provisions is punishable by law.

5. (New section) The purchaser, transferee or assignee of the indebtedness and lien represented by the certificate of debt shall promptly file any warrant of satisfaction with the clerk, and such warrant of satisfaction shall be recorded in the office of any recording officer in which such certificate has been filed.

6. (New section) All proceeds received by the State Treasurer from the sale, transfer or assignment of State tax indebtedness and lien represented by certificates of debt pursuant to sections 1 through 5 of P.L. , c. (C. )(now pending before the Legislature as this bill) shall be deposited in the designated fund, if any, as may be provided by law for deposit of the proceeds collected pursuant to the

State tax under which the indebtedness arises, including but not limited to the indebtedness pursuant to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq., the proceeds of which sale, transfer or assignment of indebtedness and lien shall be deposited to the Property Tax Relief Fund established pursuant to N.J.S.54A:9-25.

7. (New section) The Director of the Division of Taxation is authorized to promulgate regulations and take other necessary or useful measures for the purpose of efficiently administering sections 1 through 6 of this act, securing the largest possible revenue for the State, ensuring the integrity of the collection program and assuring fairness to taxpayers.

8. (New Section) Under no circumstances shall any purchaser, transferee, or designee have any legal recourse against the State or its officers or employees for any damages of any sort whatsoever that might arise on account of or in connection with any sale, transfer or assignment made or proposed to be made pursuant to the provisions of sections 1 through 7 of P.L. , c. (C. )(now pending before the Legislature as this bill).

9. Section 6 of P.L.1983, c.65, (C.17:29A-35) is amended to read as follows:

6. a. A merit rating accident surcharge system for private passenger automobiles may be used in the voluntary market, by the New Jersey Automobile Full Insurance Underwriting Association created pursuant to section 16 of P.L.1983, c.65 (C. 17:30E-4), by the Market Transition Facility created pursuant to section 88 of P.L.1990, c.8 (C.17:33B-11), and by any insurance plan established to provide private passenger automobile insurance pursuant to section 1 of P.L.1970, c.215 (C.17:29D-1). No surcharges shall be imposed on or after the operative date of this act, unless there is an at-fault accident within a three-year period immediately preceding the effective date of coverage which results in payment by the insurer of at least a [$300.00] $300 claim. All moneys collected under this subsection shall be retained by the insurer assessing the surcharge. Accident surcharges shall be imposed for a three-year period and shall, for each filer, be uniform on a Statewide basis without regard to classification or territory.

b. There is created a New Jersey Merit Rating Plan which shall apply to all drivers and shall include, but not be limited to, the following provisions:

(1) (a) Plan surcharges shall be levied, beginning on or after January 1, 1984, by the Division of Motor Vehicles on any driver who has accumulated, with the immediately preceding three year period, beginning on or after February 10, 1983, six or more motor vehicle points, as provided in Title 39 of the Revised Statutes, exclusive of any points for convictions for which surcharges are levied under paragraph (2) of this subsection; except that the allowance for a reduction of points in Title 39 of the Revised Statutes shall not apply for the purpose of determining surcharges under this paragraph. Surcharges shall be levied for each year in which the driver possesses six or more points. Surcharges assessed pursuant to this paragraph shall be [$100.00] $100 for six points, and [$25.00] $25 for each additional point.

(b) (Deleted by amendment, P.L.1984, c.1.)

(2) Plan surcharges shall be levied for convictions (a) under R.S.39:4-50 for violations occurring on or after February 10, 1983, and (b) under section 2 of P.L.1981, c.512 (C.39:4-50.4a), or for offenses committed in other jurisdictions of a substantially similar nature to those under R.S.39:4-50 or section 2 of P.L.1981, c.512 (C.39:4-50.4a), for violations occurring on or after January 26, 1984. Except as hereinafter provided, surcharges under this paragraph shall be levied annually for a three year period, and shall be [$1,000.00] $1,000 per year for each of the first two convictions, for a total surcharge of $3,000 for each conviction, and [$1,500.00] $1,500 per year for the third conviction occurring within a three year period, for a total surcharge of $4,500 for the third conviction. If a driver is convicted under both R.S.39:4-50 and section 2 of P.L.1981, c.512 (C.39:4-50.4a) for offenses arising out of the same incident, the driver shall be assessed only one surcharge for the two offenses.

If, upon written notification from the Division of Motor Vehicles, mailed to the last address of record with the division, a driver fails to pay a surcharge levied under this subsection, the license of the driver shall be suspended forthwith until the surcharge is paid to the Division of Motor Vehicles; except that the Division of Motor Vehicles may authorize payment of the surcharge on an installment basis over a period not to exceed 12 months. If a driver fails to pay the surcharge or any installments on the surcharge, the total surcharge shall become due immediately.

The director may authorize any person to pay the surcharge levied under this section by use of a credit card, and the director is authorized to require the person to pay all costs incurred by the division in connection with the acceptance of the credit card.

In addition to any other remedy provided by law, the director is authorized to utilize the provisions of the SOIL (Setoff of Individual Liability) program established pursuant to P.L.1981, c.239 (C.54A:9-8.1 et seq.) to collect any surcharge levied under this section that is unpaid on or after the effective date of this act. As an additional remedy, the director may issue a certificate to the Clerk of the Superior Court stating that the person identified in the certificate is indebted under this surcharge law in such amount as shall be stated in the certificate. The certificate shall reference the statute under which the indebtedness arises. Thereupon the clerk to whom such certificate shall have been issued shall immediately enter upon the record of docketed judgments the name of such person as debtor; the State as creditor; the address of such person, if shown in the certificate; the amount of the debt so certified; a reference to the statute under which the surcharge is assessed; and the date of making such entries. The docketing of the entries shall have the same force and effect as a civil judgment docketed in the Superior Court, and the director shall have all the remedies and may take all of the proceedings for the collection thereof which may be had or taken upon the recovery of a judgment in an action, but without prejudice to any right of appeal. Upon entry by the clerk of the certificate in the record of docketed judgments in accordance with this provision, interest in the amount specified by the court rules for post-judgment interest shall accrue from the date of the docketing of the certificate, however payment of the interest may be waived by the director. In the event that the surcharge remains unpaid following the issuance of the certificate of debt and the director takes any further collection action including referral of the matter to the Attorney General or his designee, the fee imposed, in lieu of the actual cost of collection, may be 20 percent of the surcharge or $200, whichever is greater. The director shall provide written notification to a driver of the proposed filing of the certificate of debt 10 days prior to the proposed filing; such notice shall be mailed to the driver's last address of record with the division.

All moneys collectible under this subsection b. shall be billed and collected by the Division of Motor Vehicles. Of the moneys collected: 10% or the actual cost of administering the collection of the surcharge, whichever is less, shall be retained by the Division of Motor Vehicles until August 31, 1996; five percent, or the actual cost of administering the cancellation notification system established pursuant to section 50 of P.L.1990, c.8 (C.17:33B-41), whichever is less, shall be retained by the Division of Motor Vehicles until August 31, 1996; and prior to October 1, 1991, the remainder shall be remitted to the New Jersey Automobile Full Insurance Underwriting Association and on or after October 1, 1991 until August 31, 1996, the remainder shall be remitted to the New Jersey Automobile Insurance Guaranty Fund created pursuant to section 23 of P.L.1990, c.8 (C.17:33B-5). Commencing on September 1, 1996, or such earlier time as the Commissioner of Banking and Insurance shall certify to the State Treasurer that amounts on deposit in the New Jersey Automobile Insurance Guaranty Fund are sufficient to satisfy the current and anticipated financial obligations of the New Jersey Automobile Full Insurance Underwriting Association, all plan surcharges collected by the Division of Motor Vehicles under this subsection b. shall be remitted to the Division of Motor Vehicles Surcharge Fund for transfer to the Market Transition Facility Revenue Fund, as provided in section 12 of P.L.1994, c.57 (C.34:1B-21.12), for the purposes of section 4 of P.L.1994, c.57 (C.34:1B-21.4) until such a time as all the Market Transition Facility bonds, notes and obligations issued pursuant to that section 4 of that act and the costs thereof are discharged and no longer outstanding. From the date of certification by the Commissioner of Banking and Insurance that the moneys collectible under this subsection are no longer needed to fund the association or at such a time as all Market Transition Facility bonds, notes and obligations issued pursuant to section 4 of P.L.1994, c.57 (C.34:1B-21.4) and the costs thereof are discharged and no longer outstanding moneys collectible under this subsection shall, subject to appropriation, be remitted to the New Jersey Property-Liability Insurance Guaranty Association created pursuant to section 6 of P.L.1974, c.17 (C.17:30A-6) to be used for payment of any loans made by that association to the New Jersey Automobile Insurance Guaranty Fund pursuant to paragraph (10) of subsection a. of section 8 of P.L.1974, c.17 (C.17:30A-8); provided that all such payments shall be subject to and dependent upon appropriation by the State Legislature.

(3) In addition to any other authority provided in P.L.1983, c.65 (C.17:29A-33 et al.), the commissioner, after consultation with the Director of the Division of Motor Vehicles, is specifically authorized (a) (Deleted by amendment, P.L.1994, c.64), (b) to impose, in accordance with paragraph (1)(a) of this subsection, surcharges for motor vehicle violations or convictions for which motor vehicle points are not assessed under Title 39 of the Revised Statutes, or (c) to reduce the number of points for which surcharges may be assessed below the level provided in paragraph (1) (a) of this subsection, except that the dollar amount of all surcharges levied under the New Jersey Merit Rating Plan shall be uniform on a Statewide basis for each filer, without regard to classification or territory. Surcharges adopted by the commissioner on or after January 1, 1984 for motor vehicle violations or convictions for which motor vehicle points are not assessable under Title 39 of the Revised Statutes shall not be retroactively applied but shall take effect on the date of the New Jersey Register in which notice of an adoption appears or the effective date set forth in that notice, whichever is later.

c. No motor vehicle violation surcharges shall be levied on an automobile insurance policy issued or renewed on or after January 1, 1984, except in accordance with the New Jersey Merit Rating Plan, and all surcharges levied thereunder shall be assessed, collected and distributed in accordance with subsection b. of this section.

d. (Deleted by amendment, P.L.1990, c.8).

e. The Commissioner of Banking and Insurance and the Director of the Division of Motor Vehicles as may be appropriate, shall adopt any rules and regulations necessary or appropriate to effectuate the purposes of subsections a. through e. of this section.

f. The State Treasurer shall have the authority to sell, transfer or assign all rights, title and interest in any State indebtedness and lien represented by any certificate of debt issued pursuant to subsection b. of this section, including any statutory fee for the cost of collection imposed pursuant to subsection b. of this section, to any person for a fair, adequate and reasonable consideration; provided however, that the underlying indebtedness represented by the certificate is fixed and constitutes a final determination of the director not subject to protest or appeal pursuant to the provisions of this section. After a sale as provided in this section and for the purpose of the proper administration of this section and to prevent untimely protests or appeals of the underlying indebtedness, it shall be presumed that the indebtedness is fixed and constitutes a final determination of the director not subject to protest or appeal unless the driver can establish by clear and convincing evidence that the contrary is true. If the driver contests the underlying indebtedness after the sale, transfer or assignment of the State indebtedness and lien represented by any certificate of debt, then the driver shall first file a protest with the director; provided however, that the director shall be joined as the primary party in interest with the person to whom the indebtedness and lien has been sold, transferred or assigned, in any action or proceeding brought to challenge the underlying indebtedness. The director shall advise by written notice the clerk of the court which has entered the certificate on its record of docketed judgements, that the sale, transfer or assignment has been made and the name and address of the purchaser. Thereupon, the clerk shall, without cost, enter a notation of such sale and the name and address of the purchaser in the record of docketed judgments. This written notice shall also be sent by the director by regular mail to the driver to the last address of the driver on file with the director.

g. All sales, transfers or assignments of the indebtedness and lien represented by certificates of debt shall be on such terms and conditions as the State Treasurer may determine appropriate. In setting these terms, conditions and the fair, adequate and reasonable consideration, the State Treasurer shall consider what will be most advantageous to the State based upon a present value analysis taking into account the likelihood of the State collecting the indebtedness within a reasonable time and other factors as the State Treasurer may determine.

h. The purchaser, transferee or assignee of any indebtedness and lien represented by a certificate of debt shall be entitled to exercise all the remedies and may take all of the proceedings for the collection of the indebtedness represented by the certificate that are available pursuant to the laws of this State to any judgment creditor, and shall be entitled to the same priority as the State may have respecting the certificate and underlying indebtedness. Interest shall accrue at the rate provided by the Rules Governing the Courts of the State of New Jersey.

i. The director may provide the purchaser, transferee or assignee of the indebtedness and lien represented by the certificate of debt such driver information as is necessary for the purchaser to collect the indebtedness represented by the certificate, provided that such disclosure is not contrary to the provisions of other State or federal law.

j. The purchaser, transferee or assignee of the indebtedness and lien shall promptly file any warrant of satisfaction with the clerk, and such warrant of satisfaction shall be recorded in the office of any recording officer in which such certificate has been filed.

k. All proceeds received by the State Treasurer from the sale, transfer or assignment of State indebtedness and lien represented by certificates of debt pursuant to this section shall be deposited in such fund as may be provided by law, including P.L.1994, c.57 (C.34:1B-21.1 et al.), for deposit of such proceeds; provided however, that those proceeds shall be used only to provide for the redemption or retirement of any existing Market Transition Facility bonds, notes and obligations issued pursuant to section 4 of P.L.1994, c.57 (C.34:1B-21.4), in accordance with, and to the extent permitted by, the terms and conditions of those Market Transition Facility bonds, notes and obligations and thereafter, subject to appropriation, as provided pursuant to subsection b. of this section.

l. The Commissioner of Banking and Insurance or the State Treasurer, as appropriate, shall adopt regulations and take other necessary or useful measures for the purpose of efficiently administering subsections f. through m. of this section, securing the largest possible revenue for the State, ensuring the integrity of the collection program and assuring fairness to drivers.

m. Under no circumstances shall any purchaser, transferee, or designee have any legal recourse against the State or its officers or employees for any damages of any sort whatsoever that might arise on account of or in connection with any sale, transfer or assignment made or proposed to be made pursuant to the provisions of subsections f. through l. of this section.

(cf: P.L.1994, c.64, s.1)

10. This act shall take effect immediately.

STATEMENT

This bill authorizes the State Treasurer to sell State tax indebtedness and merit rating surcharge indebtedness.

The bill authorizes the State Treasurer to sell debt that has been reduced to a lien under a certificate of debt filed with the clerk of the Superior Court, a filing that has the same legal effect as the entry of a court judgement of indebtedness. Taxpayers and those assessed surcharges may still appeal the underlying indebtedness, but must establish their lack of liability by presentation of clear and convincing evidence.

The bill allows the Treasurer to determine the appropriate terms and conditions for all sales of debt, based on what will be most advantageous to the State, a present value analysis of the probability and time lapse involved in collecting the debt, and other relevant factors. The Director of the Division of Taxation, in the case of tax indebtedness, and the Director of the Division of Motor Vehicles, in the case of surcharge indebtedness, must notify the court and the debtor of the purchaser of debt when debt is sold. The purchaser of debt is entitled to all of the remedies, and may take all of the proceedings for collecting the indebtedness, that are available under State law to a judgement creditor. The "indebtedness" includes interest at statutory rates and the provision for certain collection costs.

To protect debtors, purchasers of debt must file promptly any warrant of satisfaction of the debt. Purchasers of tax indebtedness and their employees are subject to the confidentiality provisions of the State Tax Uniform Procedure Law, and are subject to criminal penalties and fine if purchasers or their employees use tax information for purposes other than the collection of the debt. Purchasers of merit rating surcharge indebtedness will be provided with information necessary to collect the debt if disclosure of the information does not violate State or federal law.

The bill requires that, if the underlying tax or surcharge must be deposited to a dedicated fund then the proceeds of the sale of the indebtedness relating to the tax or surcharge must be deposited to the same dedicated fund.

Authorizes State Treasurer to sell State tax indebtedness and merit rating surcharge indebtedness.