Bill Text: NJ S1900 | 2014-2015 | Regular Session | Introduced
Bill Title: Requires notice and payment of amounts that may be due for New Jersey transfer inheritance and estate taxes from funds held in escrow arising from real estate transactions.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2014-03-27 - Introduced in the Senate, Referred to Senate Commerce Committee [S1900 Detail]
Download: New_Jersey-2014-S1900-Introduced.html
Sponsored by:
Senator GERALD CARDINALE
District 39 (Bergen and Passaic)
SYNOPSIS
Requires notice and payment of amounts that may be due for New Jersey transfer inheritance and estate taxes from funds held in escrow arising from real estate transactions.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning State transfer inheritance and estate tax due from escrow funds held in certain real estate transfers, supplementing chapters 33 and 38 of Title 54 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. A real estate settlement agent, including but not limited to an attorney, title insurance company, title insurance agent, another person in the business of title insurance, and any other party holding escrow funds at the closing of a real estate transaction, shall notify the Director of the Division of Taxation in the Department of the Treasury, in such written form as the director shall prescribe, within 10 days of receiving funds to be held in escrow arising out of a real estate transaction for the payment of transfer inheritance taxes owed pursuant to chapters 33 to 36 of Title 54 of the Revised Statutes (C.54:33-1 et seq.) that may be owed to the State of New Jersey, that the settlement agent has received those funds, the amount of the funds being held in escrow, and confirmation that the grantor has been provided with notice that the settlement agent is holding the funds for payment of transfer inheritance tax that may be due and owing to the State of New Jersey.
b. On or before the first day of the seventh month after the director has received notice from a settlement agent pursuant to subsection a. of this section, but after the director has made demand upon the executor or administrator of the decedent's estate for payment of the outstanding inheritance transfer tax that is due and owing to the State pursuant to provisions of R.S.54:35-1 et seq., the director shall provide written notice to the settlement agent of the amount of the escrow funds that shall be remitted to the director by the settlement agent to be applied against any outstanding inheritance transfer tax that is due and owing to the State, or, shall inform the settlement agent of any additional information required for the director to make a determination of any outstanding inheritance transfer tax that is due and owing to the State. If after receiving a notice pursuant to subsection a. of this section the director receives full payment from the executor or administrator of the decedent's estate of the transfer inheritance taxes due and owing, the director shall issue a waiver to the settlement agent after receipt of the full payment pursuant to R.S.54:35-9. The settlement agent shall not release any escrow amount to the grantor until the waiver is received by the settlement agent from the director.
c. A settlement agent shall pay to the director from the escrow funds the amount required to be remitted pursuant to the notice provided pursuant to subsection b. of this section, on or before the 7th day after receipt of the notice.
d. If the settlement agent shall fail to pay the escrow funds that are held for the payment of transfer inheritance taxes to the director, the settlement agent shall be liable to pay up to the amount of the escrowed funds, the tax and statutory interest due or to become due on the escrowed funds, in addition to being liable for a penalty of $1,000.
2. a. A real estate settlement agent, including but not limited to an attorney, title insurance company, title insurance agent, another person in the business of title insurance, and any other party holding escrow funds at the closing of a real estate transaction, shall notify the Director of the Division of Taxation in the Department of the Treasury, in such written form as the director shall prescribe, within 10 days of receiving funds to be held in escrow arising out of a real estate transaction for the payment of estate taxes owed pursuant to chapter 38 of Title 54 of the Revised Statutes (C.54:38-1 et seq.) that may be owed to the State of New Jersey, that the settlement agent has received those funds, the amount of the funds being held in escrow, and confirmation that the grantor has been provided with notice that the settlement agent is holding the funds for payment of estate taxes that may be due and owing to the State of New Jersey.
b. On or before the first day of the seventh month after the director has received notice from a settlement agent pursuant to subsection a. of this section, but after the director has made demand upon the executor or administrator of the decedent's estate for payment of the outstanding estate tax that is due and owing to the State pursuant to provisions of R.S.54:38-6 et seq., the director shall provide written notice to the settlement agent of the amount of the escrow funds that shall be remitted to the director by the settlement agent to be applied against any outstanding estate tax that is due and owing to the State, or, shall inform the settlement agent of any additional information required for the director to make a determination of any outstanding estate tax that is due and owing to the State. If after receiving a notice pursuant to subsection a. of this section the director receives full payment from the executor or administrator of the decedent's estate of the estate taxes due and owing, the director shall issue a waiver to the settlement agent after receipt of the full payment pursuant to R.S.54:38-12. The settlement agent shall not release any escrow amount to the grantor until the waiver is received by the settlement agent from the director.
c. A settlement agent shall pay to the director from the escrow funds the amount required to be remitted pursuant to the notice provided pursuant to subsection b. of this section, on or before the 7th day after receipt of the notice.
d. If the settlement agent shall fail to pay the escrow funds that are held for the payment of estate taxes to the director, the settlement agent shall be liable to pay up to the amount of the escrowed funds, the tax and statutory interest due or to become due on the escrowed funds, in addition to being liable for a penalty of $1,000.
3. This act shall take effect immediately.
STATEMENT
This bill requires notice and payment of amounts that are held in escrow by real estate settlement agents arising from real estate transactions that may be due for New Jersey transfer inheritance and estate taxes. At real estate closings some settlement agents hold a portion of funds due the seller in escrow ostensibly to ensure payment of the New Jersey inheritance and/or estate tax and receipt of an inheritance/estate tax waiver releasing the State's statutory lien on the real estate.
This bill is necessary to compel the settlement agents to notify the New Jersey Division of Taxation that funds are being held in escrow and to release the funds escrowed in these transactions. The Division of Taxation is not normally made aware of such escrow holdings and the division does not have authority to regulate these transactions under current statutes. This bill will help identify taxable estates for which a tax return has not been filed or real property has not been reported. It will enable the State to identify parties that are holding funds that are owed to the State.
Under this bill a real estate settlement agent or any other party holding escrow funds at closing of a real estate transaction must notify the Division of Taxation in writing within 10 days of receipt of monies to be held in escrow arising out of a real estate transaction for the payment of transfer inheritance taxes owed. The division has six months to respond to the settlement agent in writing, advising the settlement agent of the amount of the escrow that needs to be remitted. The settlement agent has seven days from the time the agent receives the division's notice to forward to the State the escrow amount being held.
