ASSEMBLY, No. 2782

 

STATE OF NEW JERSEY

 

INTRODUCED MARCH 3, 1997

 

 

By Assemblymen DALTON, ASSELTA, Greenwald, Moran,

R. Smith, Assemblywoman Quigley and

Assemblyman Impreveduto

 

 

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 Citizens Property Tax Foreclosure Moratorium Act.”

 

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

    Many of the State’s senior and disabled citizens have relatively low fixed incomes and property taxes impose a heavy burden on those citizens, and the inability of these low income citizens to pay the ever increasing property tax burden threatens their home ownership;

    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;

    It is preferable to provide low income senior and disabled citizens and their surviving spouses, who for more than two years have owned and occupied the same residence, with a municipal Property Tax Foreclosure Moratorium program under which they can remain in their own home, rather than risk having their shelter possibly paid for by taxpayer dollars after foreclosure; and

    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 100 % of the property taxes payable by these residents with relatively low fixed incomes who have owned and occupied the same residence for two consecutive years or more.


    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:

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

    (2) 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

    (3) Pension, disability or retirement programs of any state or its political subdivisions, or agencies thereof, for persons not covered under (1) hereof; provided, however, that the total amount of the benefits to be allowed exclusion by any owner under (2) or (3) 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 (1) 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 municipality for a period of two years immediately preceding November 1 of the calendar year in which the general property tax is due and payable. Mere seasonal or temporary residence within the State, of whatever duration, shall not constitute domicile within the State for the purpose of this act. Absence from this State for a period of 12 months shall be prima facie evidence of abandonment of domicile in this State. The burden of establishing legal domicile within the State 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 75 % 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 75 % 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 each 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 the person files a claim under this section, and who has an income not in excess of $20,000 per year, to defer payment, subject to section 5 of this act, of the taxes assessed and levied on his residence for that year in an amount 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 the accruing interest thereon, 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. 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 in conjunction with the municipal collector shall send a notice by mail to each taxpayer who, pursuant to P.L. , c. (C. ) (now pending before the Legislature as this bill) , 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 100 % 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 and the county board of taxation that the governing body of the municipality has determined not to adopt the provisions of P.L. , c. (C. ) (now pending before the Legislature as this bill) for the coming tax year.

    c. A person who resides within a municipality which has adopted the provisions of P.L. , c. (C. ) (now pending before the Legislature as this bill), 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 P.L. , c. (C. ) (now pending before the Legislature as this bill) for previous years which have not become delinquent under section 13 of P.L. , c. (C. ) (now pending before the Legislature as this bill).

    e. If a guardian has been appointed for an individual otherwise qualified to obtain deferral of taxes under P.L. , c. (C. ) (now pending before the Legislature as this bill), the guardian may act for that individual in complying with the provisions of P.L. , c. (C. ) (now pending before the Legislature as this bill).

 

    5. (New section) In order to qualify for tax deferral under P.L.   , c. (C. ) (now pending before the Legislature as this bill), the property shall, in addition to the requirements set forth in section 4 of P.L. , c. (C. ) (now pending before the Legislature as this bill) , 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 two years prior to November 1, in the year in which the claim is filed.

    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 P.L. , c. (C. ) (now pending before the Legislature as this bill) , 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 a form prescribed by the Director of the Division of Taxation and supplied by the municipal assessor and shall:

    (1) Describe the residence.

    (2) Recite facts establishing the eligibility for the deferral under the provisions of P.L. , c. (C. ) (now pending before the Legislature as this bill) .

    b. There shall be annexed to the claim 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 one-half 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 P.L. , c. (C. ) (now pending before the Legislature as this bill) , in the years since the municipality first adopted the provisions of P.L. , c. (C. ) (now pending before the Legislature as this bill), and the accrued interest upon that amount.

    b. The county board of taxation of each county shall forward to the State Treasurer a County Moratorium Abstract which summarizes the data in those municipal lists for its county. The State Treasurer shall annually compile the data in those County Moratorium Abstracts into a State Moratorium 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 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 100 % 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 interest) on your residence for the current and past years will become payable on January 1, ....

 

    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 100 % 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, you must pay, not later than January 1, ...., the deferred property taxes, including interest, for the current year and for prior years on your residence, amounting to approximately $....

    If you wish to continue to defer collection of the taxes for this coming year on your residence and to defer payment of taxes and interest for the current year and for prior years, you must file a claim for deferral with the municipal assessor not later than December 15, and pay the penalty of $25.

    c. If the taxpayer files a claim for deferral after November 1 and on or before December 15 and pays a penalty of $25, 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). The $25 penalty will be receipted and accounted for in the records of the municipal assessor’s office and shall be paid into the general fund of the municipality not later than December 20.

 

    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 the late filing date of December 15.

 

    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 accrued interest, 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 another owner, unless title is conveyed to another taxpayer who is qualified for a deferral on that property under P.L. , c. (C. ) (now pending before the Legislature as this bill).

    c. Taxes becoming due under subsection e. of section 12 shall be payable on January 1, immediately subsequent to the year in which the taxpayer fails to file a claim for deferral.

 

    14. (New section) a. Notwithstanding the provisions of section 12, when one of the circumstances listed in subsections a. through c. of section 12 occurs, the spouse of the taxpayer may elect to continue the property in its deferred 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 circumstance listed in subsections a. through c. of section 12 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); except that in this case the two years' ownership requirement of subsection b. of section 5 shall not apply.

    b. The election under subsection a. of this section to continue the property in its deferred 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 P.L. , c. (C. ) (now pending before the Legislature as this bill), 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 P.L. , c. (C. ) (now pending before the Legislature as this bill) 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 of P.L. , c. (C. ) (now pending before the Legislature as this bill). During the period in which the property disqualified pursuant to the provisions of subsection d. of section 5 of P.L. , c. (C. ) (now pending before the Legislature as this bill) fails to meet those 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 P.L. , c. (C. ) (now pending before the Legislature as this bill) has an income in excess of $20,000, 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 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. 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 the deferred taxes and accrued interest 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 accrued interest and any remainder 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 P.L. , c. (C. ) (now pending before the Legislature as this bill) 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:

    40A:4-23. 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: N.J.S.40A:4-23)

 

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

    40A:4-25. "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: N.J.S.40A:4-25)

 

    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 interest 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 have 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, by annual resolution, to defer the collection of 100% of the property taxes assessed on residences of senior and disabled citizens and their surviving spouses with annual incomes of less than $20,000 who have owned and occupied the same residence for two consecutive years or more.

    Specifically, this bill establishes standards, qualifications and procedures for granting of those tax deferrals. The bill provides that the deferred taxes shall become payable 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 shall accrue on the amount of deferred taxes at a rate of one-half of the rate established for delinquent taxes pursuant to R.S.54:4-67.

    Further, 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 $20,000 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.

    Also, the bill 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 100 % of payment of property taxes owed by certain citizens and residents.