Bill Text: NJ A1980 | 2014-2015 | Regular Session | Introduced
Bill Title: Establishes farmland preservation inheritance tax deduction program within Department of Agriculture.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2014-01-16 - Introduced, Referred to Assembly Agriculture and Natural Resources Committee [A1980 Detail]
Download: New_Jersey-2014-A1980-Introduced.html
STATE OF NEW JERSEY
216th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2014 SESSION
Sponsored by:
Assemblywoman CELESTE M. RILEY
District 3 (Cumberland, Gloucester and Salem)
Assemblyman BOB ANDRZEJCZAK
District 1 (Atlantic, Cape May and Cumberland)
SYNOPSIS
Establishes farmland preservation inheritance tax deduction program within Department of Agriculture.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel
An Act establishing a farmland preservation inheritance tax deduction program within the Department of Agriculture, supplementing Title 4 and Title 54 of the Revised Statutes and amending R.S.54:34-5, R.S.54:35-10, and R.S.54:38-1.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) There is established a farmland preservation inheritance tax deduction program within the Department of Agriculture, which shall be implemented and administered by the State Agriculture Development Committee.
The purpose of the program shall be to provide the committee with a means to preserve land suitable for agricultural production and the State's agricultural heritage for future generations of residents when land, or other assets that convey ownership interests in land, suitable for agricultural production is transferred by will or the intestate laws of this State or by deed, grant, bargain, sale, or gift made in contemplation of death.
To effectuate those purposes, the committee shall:
identify, evaluate, and certify transferees, distributees, and beneficiaries, and groups of transferees, distributees, and beneficiaries, that have received land, or other assets that convey ownership interests in land, suitable for agricultural production by will or the intestate laws of this State or by deed, grant, bargain, sale, or gift made in contemplation of death;
enter into agreements and award tax deductions to certified transferees, distributees, and beneficiaries, and certified groups of transferees, distributees, and beneficiaries, that may be used to reduce or eliminate the transfer inheritance tax and the New Jersey estate tax due and payable in connection with the transfer of the land, or other assets that convey ownership interests in the land, in exchange for enrolling the land suitable for agricultural production in a farmland preservation program and establishing a succession plan for the transfer of the ownership and managerial control of the land to the next succeeding generation;
conduct an annual review of agreements entered into with certified transferees, distributees, and beneficiaries and certified groups of transferees, distributees, and beneficiaries; and
make and publish an annual report regarding implementation and administration of the program.
2. (New section) The State Agriculture Development Committee shall establish an application process and prescribe the form and manner through which a transferee, distributee, or beneficiary, or a group of transferees, distributees, or beneficiaries, entitled to land, or other assets that convey ownership interests in land, suitable for agricultural production that was transferred by will or the intestate laws of this State or by deed, grant, bargain, sale, or gift made in contemplation of death may file an application for certification.
The application shall, at a minimum, require the transferee, distributee, or beneficiary, or the group of transferees, distributees, or beneficiaries, to:
provide the name and address of each transferee, distributee, or beneficiary who is entitled to the land, or entitled to other assets that convey ownership interests in the land, suitable for agricultural production;
identify each transferee's, distributee's, or beneficiary's share of the land suitable for agricultural production, or the nature and extent of each transferee's, distributee's, or beneficiary's interest in other assets that convey ownership interests in the land suitable for agricultural production;
identify the location of the land suitable for agricultural production, detailing any improvements and additions, including but not limited to any dwellings, barns, farm markets, or other structures or facilities used directly and primarily for agricultural purposes, located on or contiguous to the land suitable for agricultural production;
describe the purposes to which the land suitable for agricultural production, together with any improvements and additions, including but not limited to any dwellings, barns, farm markets, or other structures or facilities used directly and primarily for agricultural purposes, located on or contiguous to the land suitable for agricultural production, had been devoted prior to the transfer and will be devoted following the transfer;
indicate if the land suitable for agricultural production qualifies, or is eligible to qualify, for differential property tax assessment pursuant to the "Farmland Assessment Act of 1964," P.L.1964, c. 48 (C.54:4-23.1 et seq.);
indicate if the land suitable for agricultural production is, or has been, enrolled in a municipally approved program or other farmland preservation program established by sections 14 and 13 of P.L.1983, c.32 (C.4:1C-21 and 4:1C-20), respectively; and
estimate the fair market value of the land, or other assets that convey ownership interests in the land, suitable for agricultural production, together with any improvements and additions, including but not limited to any dwellings, barns, farm markets, or other structures or facilities used directly and primarily for agricultural purposes, located on or contiguous to the land suitable for agricultural production.
The application shall be filed by a transferee, distributee, or beneficiary, or by a group of transferees, distributees, or beneficiaries, on or after the date the transfer inheritance tax or the New Jersey estate tax is due and payable in connection with the transfer of the land, or the transfer of the other assets that convey ownership interests in the land, suitable for agricultural production, but before the first day of the thirteenth month beginning thereafter.
3. (New section) The State Agriculture Development Committee shall establish an evaluation process and prescribe the form and manner through which a review of each complete application for certification filed by a transferee, distributee, or beneficiary, or by a group of transferees, distributees, or beneficiaries, will be conducted.
The review shall, at a minimum, require the committee to determine:
the extent to which the committee's certification of a transferee, distributee, or beneficiary, or a group of transferees, distributees, or beneficiaries, will further the committee's efforts to preserve land suitable for agricultural production;
the extent to which the committee's certification of a transferee, distributee, or beneficiary, or a group of transferees, distributees, or beneficiaries, will further the committee's efforts to preserve the State's agricultural heritage for future generations of residents; and
the fair market value of the land, or other assets that convey ownership interests in the land, suitable for agricultural production, together with any improvements and additions, including but not limited to any dwellings, barns, farm markets, or other structures or facilities used directly and primarily for agricultural purposes, located on or contiguous to the land suitable for agricultural production that was transferred by will or the intestate laws of this State or by deed, grant, bargain, sale, or gift made in contemplation of death.
The review of each complete application shall be conducted by the committee on or after the date the application is filed, but before the first day of the fourth month beginning thereafter.
4. (New section) The State Agriculture Development Committee shall establish a certification process and prescribe the form and manner through which a determination as to the certification of each transferee, distributee, or beneficiary, or each group of transferees, distributees, or beneficiaries, that filed a complete application for certification will be made by the committee.
The determination as to the certification of each transferee, distributee, or beneficiary, or each group of transferees, distributees, or beneficiaries, shall, at a minimum, be based on the committee's finding that:
the certification of the transferee, distributee, or beneficiary, or the group of transferees, distributees, or beneficiaries, will result in the preservation of land suitable for agricultural production;
the certification of the transferee, distributee, or beneficiary, or the group of transferees, distributees, or beneficiaries, will result in the preservation of the State's agricultural heritage for future generations of residents; and
the certification of the transferee, distributee, or beneficiary, or the group of transferees, distributees, or beneficiaries, will not result in the awarding of a tax deduction that exceeds the $5,000,000 limit on the value of deductions awarded by the committee to any one certified transferee, distributee, or beneficiary, or to any one certified group of transferees, distributees, and beneficiaries, in accordance with section 7 of P.L. , c. (C. ) (pending before the Legislature as this bill), and will not result in the awarding of a tax deduction that exceeds the $10,000,000 limit on the aggregate value of all deductions awarded by the committee to all certified transferees, distributees, and beneficiaries, and to all certified groups of transferees, distributees, and beneficiaries, in a calendar year, in accordance with section 8 of P.L. , c. (C. ) (pending before the Legislature as this bill).
The determination as to the certification of each transferee, distributee, or beneficiary, or each group of transferees, distributees, or beneficiaries, shall be made by the committee on or after the date the review of each complete application is conducted, but before the first day of the fourth month beginning thereafter.
The committee shall provide written notification to each transferee, distributee, or beneficiary, or to each group of transferees, distributees, or beneficiaries, that filed a complete application stating the grounds for the committee's determination to certify, or to not certify, the transferee, distributee, or beneficiary, or the group of transferees, distributees, or beneficiaries, within five days after the date the determination is made.
5. (New section) The State Agriculture Development Committee shall enter into an agreement with each transferee, distributee, or beneficiary, and each group of transferees, distributees, or beneficiaries, that is certified by the committee.
The agreement shall, at a minimum, require the certified transferee, distributee, or beneficiary, or the certified group of transferees, distributees, or beneficiaries, to:
enroll the land suitable for agricultural production in a municipally approved program or other farmland preservation program established by sections 14 and 13 of P.L.1983, c.32 (C.4:1C-21 and 4:1C-20), respectively, that requires the certified transferee, distributee, or beneficiary, or the certified group of transferees, distributees, or beneficiaries, to retain the land in agricultural production for a minimum period of eight years commencing on or after the first day of the first month beginning after the date the agreement is entered into;
establish by will or by contract or agreement a succession plan that provides for the transfer of the ownership and managerial control of the land suitable for agricultural production to the next succeeding generation on or before the first day of the thirteenth month beginning after the date the agreement is entered into; and
pay any penalty required to be paid to the Director of the Division of Taxation in the Department of the Treasury in accordance with section 15 or 17 of P.L. , c. (C. ) (pending before the Legislature as this bill).
The committee shall enter into an agreement with each certified transferee, distributee, and beneficiary, and each certified group of transferees, distributees, and beneficiaries, on or after the date each transferee, distributee, or beneficiary, or each group of transferees, distributees, or beneficiaries, is certified, but before the first day of the fourth month beginning thereafter.
6. (New section) The State Agriculture Development Committee shall award a tax deduction to each certified transferee, distributee, and beneficiary, and each certified group of transferees, distributees, and beneficiaries, that has entered into an agreement with the committee.
The amount of the tax deduction shall be equal to the fair market value of the land, or other assets that convey ownership interests in the land, suitable for agricultural production, together with any improvements and additions, including but not limited to any dwellings, barns, farm markets, or other structures or facilities used directly and primarily for agricultural purposes, that are located on or contiguous to the land suitable for agricultural production that was transferred by will or the intestate laws of this State or by deed, grant, bargain, sale, or gift made in contemplation of death.
The tax deduction may be used by an executor, administrator, trustee, grantee, donee, or vendee personally liable for the payment of the transfer inheritance tax or the payment of the New Jersey estate tax on behalf of the certified transferee, distributee, or beneficiary, or the certified group of transferees, distributees, or beneficiaries, to determine, pursuant to R.S.54:33-1 et seq. and R.S.54:38-1 et seq., the tax due and payable in connection with the transfer of the land, or the transfer of the other assets the convey ownership interest in the land, suitable for agricultural production, together with any improvements and additions, including but not limited to any dwellings, barns, farm markets, or other structures or facilities used directly and primarily for agricultural purposes, located on or contiguous to the land suitable for agricultural production by will or the intestate laws of this State or by deed, grant, bargain, sale, or gift made in contemplation of death.
If the transfer inheritance tax or the New Jersey estate tax is paid prior to the date the tax deduction is awarded, the deduction may be used by an executor, administrator, trustee, grantee, donee, or vendee personally liable for the payment of the transfer inheritance tax or the New Jersey estate tax on behalf of the certified transferee, distributee, or beneficiary, or the certified group of transferees, distributees, or beneficiaries, to redetermine, pursuant to R.S.54:33-1 et seq. and R.S.54:38-1 et seq., the tax due and payable in connection with the transfer of the land, or the transfer of the other assets the convey ownership interest in the land, suitable for agricultural production, together with any improvements and additions, including but not limited to any dwellings, barns, farm markets, or other structures or facilities used directly and primarily for agricultural purposes, located on or contiguous to the land suitable for agricultural production by will or the intestate laws of this State or by deed, grant, bargain, sale, or gift made in contemplation of death.
The committee shall award a tax deduction to each certified transferee, distributee, and beneficiary, and each certified group of transferees, distributees, and beneficiaries, that has entered into an agreement with the committee on or after the date the agreement is entered into, but before the first day of the second month beginning thereafter.
The committee shall provide written notification to the Director of the Division of Taxation in the Department of the Treasury informing the director of the date, and the amount, of each tax deduction awarded, and the name and address of each certified transferee, distributee, and beneficiary, and each transferee, distributee, and beneficiary who is part of a certified group of transferees, distributes, and beneficiaries, within five days after the date the deduction is awarded.
7. (New section) Notwithstanding the provisions of section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill) to the contrary, the amount of any tax deduction awarded by the State Agricultural Development Committee to a certified transferee, distributee, or beneficiary, or to a certified group of transferees, distributees, or beneficiaries, shall not exceed $5,000,000.
8. (New section) Notwithstanding the provisions of section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill) to the contrary, the aggregate amount of tax deductions awarded by the State Agriculture Development Committee to all certified transferees, distributees, and beneficiaries, and to all certified groups of transferees, distributees, and beneficiaries, in a calendar year shall not exceed $10,000,000.
9. (New section) The State Agriculture Development Committee shall conduct an annual review of agreements entered into with certified transferees, distributees, and beneficiaries, and certified groups of transferees, distributes, or beneficiaries, on or before April 1 of each year immediately following a year in which an agreement entered into by the committee is effective.
The review shall, at a minimum, require the committee to determine:
if, during the preceding calendar year, a certified transferee, distributee, or beneficiary, or a certified group of transferees, distributees, or beneficiaries, that has entered into an agreement with the committee withdrew the land suitable for agricultural production from the municipally approved program or other farmland preservation program established by sections 14 and 13 of P.L.1983, c.32 (C.4:1C-21 and 4:1C-20), respectively, prior to completion of the minimum eight-year period established by the agreement; and
if, during the preceding calendar year, a certified transferee, distributee, or beneficiary, or a certified group of transferees, distributees, or beneficiaries, that has entered into an agreement with the committee failed to establish a succession plan providing for the transfer of the ownership and managerial control of the land suitable for agricultural production to the next succeeding generation on or before the first day of the thirteenth month beginning after the date the agreement is entered into.
The committee shall provide written notification to the Director of the Division of Taxation in the Department of the Treasury informing the director of any certified transferee, distributee, or beneficiary, or any certified group of transferees, distributees, or beneficiaries, that has withdrawn land suitable for agricultural production prior to completion of the minimum eight-year period established by the agreement or has failed to establish a succession plan on or before the first day of the thirteenth month beginning after the date the agreement is entered into, within five days after the date the review is conducted.
10. (New section) The State Agriculture Development Committee shall make an annual report regarding the implementation and administration of the program on or before July 1 of each year immediately following a year in which an agreement entered into by the committee is effective.
The report shall include a statement from the committee detailing:
the name and address of each certified transferee, distributee, and beneficiary, and each transferee, distributee, and beneficiary who is part of a certified group of transferees, distributes, or beneficiaries, that has entered into an agreement with the committee during the preceding calendar year;
the date, and the amount, of each tax deduction awarded to a certified transferee, distributee, and beneficiary, or to a certified group of transferees, distributees, or beneficiaries, during the preceding calendar year;
the aggregate amount of all tax deductions awarded to all certified transferees, distributees, and beneficiaries, and all certified groups of transferees, distributees, and beneficiaries, under the program;
the cost incurred by the committee to implement and administer the program during the preceding calendar year; and
the legislative proposals, if any, made by the committee to improve the implementation and administration of the program during the preceding calendar year.
The committee shall publish the annual report online through a link prominently displayed on the homepage of the Department of Agriculture's Internet website, and transmit a copy of the report to the Legislature, in accordance with section 2 of P.L.1991, c.164 (C.52:14-19.1), within five days after the date the report is made.
11. R.S.54:34-5 is amended to read as follows:
R.S.54:34-5. Taxes imposed by chapters 33 to 36 of this title (s. 54:33-1 et seq.) shall be computed upon the clear market value of the property transferred.
In determining the clear market value of the property the following deductions and no others shall be allowed:
Debts of decedent; exception. a. Debts of the decedent owing at the date of death, except that debts of a resident decedent owing for or secured by property outside this state shall not be allowed unless:
(1) The property for which the debt is owing or for which it is secured is subject to the tax imposed by said chapters 33 to 36; or,
(2) The foreign debt exceeds the value of the property securing it or for which it was contracted, when the excess may be deducted;
Funeral and last illness expenses. b. A reasonable sum for funeral expenses and last illness.
Administration expenses; fees of executors and attorneys. c. The ordinary expenses of administration, including the ordinary fees allowed executors and administrators and the ordinary fees of their attorneys.
Proportion of state, county and local taxes. d. Such proportion of the state, county and municipal taxes upon the property for the current fiscal year as the elapsed portion of the said year bears to the full calendar year.
Transfer taxes of other states or United States. e. Transfer taxes paid or payable to other states or territories or the District of Columbia or foreign countries on any property the transfer of which is taxable hereunder, but the amount due or paid the government of the United States as a federal estate tax shall not be considered as an expense of administration and shall not be allowed as a deduction.
Tax deduction for farmland preservation. f. The amount of any tax deduction awarded by the State Agriculture Development Committee under the farmland preservation inheritance tax deduction program established by P.L. , c. (C. ) (pending before the Legislature as this bill).
(cf: R.S.54:34-5)
12. R.S.54:35-10 is amended to read as follows:
R.S.54:35-10. When any amount of a tax assessed pursuant to chapters 33 to 36 of this Title (section 54:33-1 et seq.) shall have been paid erroneously to the Director of the Division of Taxation or paid to the Director of the Division of Taxation prior to the awarding of a tax deduction by the State Agriculture Development Committee under the farmland preservation inheritance tax deduction program established by P.L. , c. (C. ) (pending before the Legislature as this bill) that is used to redetermine a tax liability, the Director of the Division of Budget and Accounting may, on satisfactory proof of such erroneous payment to the Director of the Division of Taxation and duly certified by him to the Director of the Division of Budget and Accounting, draw his warrant on the State Treasurer, in favor of the executor, administrator, person or persons who have paid the tax in error, or who may be lawfully entitled to receive the same, for the amount of the tax so paid in error, but all applications for repayment of such tax shall be made within 3 years from the date of such payment, from the date the tax deduction is awarded, or from the date of the final determination of a court of competent jurisdiction which establishes the fact that the decedent had no legal or equitable interest in the property on which the tax was assessed and erroneously paid, whichever is later; provided, however, no refund shall be made where such final determination occurs more than 20 years after the date of death of the decedent.
(cf: P.L.1956, c.54, s.1)
13. R.S.54:38-1 is amended to read as follows:
54:38-1. a. In addition to the inheritance, succession or legacy taxes imposed by this State under authority of chapters 33 to 36 of this title (R.S.54:33-1 et seq.), or hereafter imposed under authority of any subsequent enactment, there is hereby imposed an estate or transfer tax:
(1) Upon the transfer of the estate of every resident decedent dying before January 1, 2002 which is subject to an estate tax payable to the United States under the provisions of the federal revenue act of one thousand nine hundred and twenty-six and the amendments thereof and supplements thereto or any other federal revenue act in effect as of the date of death of the decedent, the amount of which tax shall be the sum by which the maximum credit allowable against any federal estate tax payable to the United States under any federal revenue act on account of taxes paid to any state or territory of the United States or the District of Columbia, shall exceed the aggregate amount of all estate, inheritance, succession or legacy taxes actually paid to any state or territory of the United States or the District of Columbia, including inheritance, succession or legacy taxes actually paid this State, in respect to any property owned by such decedent or subject to such taxes as a part of or in connection with the estate; and
(2) (a) Upon the transfer of the estate of every resident decedent dying after December 31, 2001 which would have been subject to an estate tax payable to the United States under the provisions of the federal Internal Revenue Code of 1986 (26 U.S.C. s.1 et seq.) in effect on December 31, 2001, the amount of which tax shall be, at the election of the person or corporation liable for the payment of the tax under this chapter, either
(i) the maximum credit that would have been allowable under the provisions of that federal Internal Revenue Code in effect on that date against the federal estate tax that would have been payable under the provisions of that federal Internal Revenue Code in effect on that date on account of taxes paid to any state or territory of the United States or the District of Columbia, or
(ii) determined pursuant to the simplified tax system as may be prescribed by the Director of the Division of Taxation in the Department of the Treasury to produce a liability similar to the liability determined pursuant to clause (i) of this paragraph reduced pursuant to paragraph (b) of this subsection.
Provided, however, that the tax imposed upon the transfer of the estate of every resident decedent that includes, as part of the estate transferred, land, or other assets that convey ownership in land, suitable for agricultural production, shall be determined after the amount of any tax deduction awarded by the State Agriculture Development Committee under the farmland preservation inheritance tax deduction program established by P.L. , c. (C. ) (pending before the Legislature as this bill) is used to determine the tax due and payable in connection with the transfer of the land, or the transfer of the other assets the convey ownership interest in the land, suitable for agricultural production.
(b) The amount of tax liability determined pursuant to subparagraph (a) of this paragraph shall be reduced by the aggregate amount of all estate, inheritance, succession or legacy taxes actually paid to any state or territory of the United States or the District of Columbia, including inheritance, succession or legacy taxes actually paid this State, in respect to any property owned by such decedent or subject to such taxes as a part of or in connection with the estate; provided however, that the amount of the reduction shall not exceed the proportion of the tax otherwise due under this subsection that the amount of the estates's property subject to tax by other jurisdictions bears to the entire estate taxable under this chapter.
b. (1) In the case of the estate of a decedent dying before January 1, 2002 where no inheritance, succession or legacy tax is due this State under the provisions of chapters 33 to 36 of this title or under authority of any subsequent enactment imposing taxes of a similar nature, but an estate tax is due the United States under the provisions of any federal revenue act in effect as of the date of death, wherein provision is made for a credit on account of taxes paid the several states or territories of the United States, or the District of Columbia, the tax imposed by this chapter shall be the maximum amount of such credit less the aggregate amount of such estate, inheritance, succession or legacy taxes actually paid to any state or territory of the United States or the District of Columbia.
(2) In the case of the estate of a decedent dying after December 31, 2001 where no inheritance, succession or legacy tax is due this State under the provisions of chapters 33 to 36 of this title or under authority of any subsequent enactment imposing taxes of a similar nature, the tax imposed by this chapter shall be determined pursuant to paragraph (2) of subsection a. of this section.
c. For the purposes of this section, a "simplified tax system" to produce a liability similar to the liability determined pursuant to clause (i) of subparagraph (a) of paragraph (2) of subsection a. of this section is a tax system that is based upon the $675,000 unified estate and gift tax applicable exclusion amount in effect under the provisions of the federal Internal Revenue Code of 1986 (26 U.S.C. s.1 et seq.) in effect on December 31, 2001, and results in general in the determination of a similar amount of tax but which will enable the person or corporation liable for the payment of the tax to calculate an amount of tax notwithstanding the lack or paucity of information for compliance due to such factors as the absence of an estate valuation made for federal estate tax purposes, the absence of a measure of the impact of gifts made during the lifetime of the decedent in the absence of federal gift tax information, and any other information compliance problems as the director determines are the result of the phased repeal of the federal estate tax.
(cf: P.L.2002, c.31, s.1)
14. (New section) If subsequent to the determination of the tax due under this chapter, a tax deduction is awarded by the State Agriculture Development Committee under the farmland preservation inheritance tax deduction program established by P.L. , c. (C. ) (pending before the Legislature as this bill) and is used to redetermine the tax imposed on the estate of a resident decedent, the tax due hereunder shall be reduced accordingly upon satisfactory proof submitted to the Director of the Division of Taxation in the Department of the Treasury, and, if the tax due hereunder shall have theretofore been paid into the State treasury, the Director of the Division of Budget and Accounting in the Department of the Treasury, on satisfactory proof of such fact submitted to the Director of the Division of Taxation, and duly certified by the Director of the Division of Taxation to the Director of the Division of Budget and Accounting, shall draw the Director of the Division of Budget and Accounting's warrant on the State Treasurer in favor of the executor, administrator, trustee, person, or corporation that has paid said tax, or that may be lawfully entailed to receive the same, for the amount of the tax excessively paid and said warrant shall be paid by the State Treasurer out of any appropriation for the refund of transfer inheritance taxes the same as warrants for the refund of such taxes under the transfer inheritance tax statutes of this State are paid. The foregoing provisions respecting refund shall apply with the same force and effect to any other payments determined by the Director of the Division of Taxation to have been excessively made under this chapter.
All applications for the refund of taxes claimed to have been excessively or erroneously paid hereunder must be filed with the Director of the Division of Taxation within three years after the date the deduction is awarded.
15. (New section) A certified transferee, distributee, or beneficiary, or a certified group of transferees, distributees, or beneficiaries, that is awarded a tax deduction by the State Agriculture Development Committee, but withdraws the land suitable for agricultural production from the municipally approved program or other farmland preservation program established by sections 14 and 13 of P.L.1983, c.32 (C.4:1C-21 and 4:1C-20), respectively, prior to completion of the minimum eight-year period established by the agreement shall be required to pay to the Director of the Division of Taxation in the Department of the Treasury a penalty in an amount equal to the difference between the sum of the transfer inheritance tax and the New Jersey estate tax that would have been due and payable without the benefit of the deduction and the sum of the transfer inheritance tax and the New Jersey estate tax paid with the benefit of the deduction.
The director shall assess the amount of any penalty required to be paid, give notice of the assessment to the certified transferee, distributee, or beneficiary, or the certified group of transferees, distributees, or beneficiaries, and make demand upon the certified transferee, distributee, or beneficiary, or the certified group of transferees, distributees, or beneficiaries, for payment of the assessment to be made in full within 30 days of the date notice and demand is given by the director.
If payment of an assessment is not made in full within 30 days of the date notice and demand is given by the director, interest shall accrue and be due to the director on the unpaid amount at the rate of three percentage points above the prime rate assessed for each month or fraction thereof, compounded annually at the end of each year, from the date notice and demand was given until the date the assessment, and any interest that has accrued on the assessment, is fully paid.
The assessment, and any interest on the assessment, that is due to the director shall be a deficiency with respect to the payment of a State tax: the director shall have all rights, powers, and duties authorized by the State Uniform Tax Procedure Law, R.S.54:48-1 et seq., to ensure payment, collection, or recovery of a deficiency and the certified transferee, distributee, or beneficiary, or the certified group of transferees, distributees, or beneficiaries, required to pay the deficiency shall be afforded all protections, rights, and remedies allowed by R.S.54:48-1 et seq., to challenge, protest, or appeal the deficiency or any determination or decision made in connection with the deficiency.
16. (New section) Notwithstanding the provisions of section 15 of P.L. , c. (C. ) (pending before the Legislature as this bill) to the contrary, the Director of the Division of Taxation in the Department of the Treasury may waive the requirement to pay the amount of any penalty required to be paid to the director, if the director determines that the withdrawal of the land from a municipally approved program or other farmland preservation program established by sections 14 and 13 of P.L.1983, c.32 (C.4:1C-21 and 4:1C-20), respectively, prior to completion of the minimum eight-year period established by the agreement was due to the death or incapacitating illness of, or other serious hardship or bankruptcy involving, the certified transferee, distributee, or beneficiary, or a transferee, distributee, or beneficiary who is part of a certified group of transferees, distributees, or beneficiaries.
17. (New section) A certified transferee, distributee, or beneficiary, or a certified group of transferees, distributees, or beneficiaries, that is awarded a tax deduction by the State Agriculture Development Committee, but fails to establish a succession plan providing for the successful transfer of the ownership and managerial control of the land suitable for agricultural production to the next succeeding generation on or before the first day of the thirteenth month beginning after the date the agreement is entered into shall be required to pay to the Director of the Division of Taxation in the Department of the Treasury a penalty in an amount equal to the difference between the sum of the transfer inheritance tax and the New Jersey estate tax that would have been due and payable without the benefit of the deduction and the sum of the transfer inheritance tax and the New Jersey estate tax paid with the benefit of the deduction.
The director shall assess the amount of any penalty required to be paid, give notice of the assessment to the certified transferee, distributee, or beneficiary, or the certified group of transferees, distributees, or beneficiaries, and make demand upon the certified transferee, distributee, or beneficiary, or the certified group of transferees, distributees, or beneficiaries, for payment of the assessment to be made in full within 30 days of the date notice and demand is given by the director.
If payment of an assessment is not made in full within 30 days of the date notice and demand is given by the director, interest shall accrue and be due to the director on the unpaid amount at the rate of three percentage points above the prime rate assessed for each month or fraction thereof, compounded annually at the end of each year, from the date notice and demand was given until the date the assessment, and any interest that has accrued on the assessment, is fully paid.
The assessment, and any interest on the assessment, that is due to the director shall be a deficiency with respect to the payment of a State tax: the director shall have all rights, powers, and duties authorized by the State Uniform Tax Procedure Law, R.S.54:48-1 et seq., to ensure payment, collection, or recovery of a deficiency and the certified transferee, distributee, or beneficiary, or the certified group of transferees, distributees, or beneficiaries, required to pay the deficiency shall be afforded all protections, rights, and remedies allowed by R.S.54:48-1 et seq., to challenge, protest, or appeal the deficiency or any determination or decision made in connection with the deficiency.
18. (New section) Notwithstanding the provisions of section 17 of P.L. , c. (C. ) (pending before the Legislature as this bill) to the contrary, the Director of the Division of Taxation in the Department of the Treasury may waive the requirement to pay any penalty required to be paid to the director, if the director determines that the failure to establish a succession plan providing for the transfer of the ownership and managerial control of the land suitable for agricultural production to the next succeeding generation on or before the first day of the thirteenth month beginning after the date the agreement is entered into was due to the death or incapacitating illness of, or other serious hardship or bankruptcy involving, the certified transferee, distributee, or beneficiary, or a transferee, distributee, or beneficiary who is part of a certified group of transferees, distributees, or beneficiaries.
19. (New section) Notwithstanding the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the State Agriculture Development Committee, in consultation with the Director of the Division of Taxation in the Department of the Treasury, may adopt immediately upon filing with the Office of Administrative Law such rules and regulations as the committee and the director determine to be necessary to effectuate the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill), which rules and regulations shall be effective for a period not to exceed 360 days following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) and may thereafter be amended, adopted, or readopted by the committee and the director in accordance with P.L.1968, c.410.
20. This act shall take effect immediately and apply to transfers from the estates of persons dying on or after January 1 next following the date of enactment.
STATEMENT
This bill establishes a farmland preservation inheritance tax deduction program within the Department of Agriculture, and provides for the program to be implemented and administered by the State Agriculture Development Committee.
The bill provides that the purpose of the program is to provide the committee with a means to preserve land suitable for agricultural production and the State's agricultural heritage for future generations of residents when land, or other assets that convey ownership interests in land, suitable for agricultural production is transferred by will or the intestate laws of this State or by deed, grant, bargain, sale, or gift made in contemplation of death.
To effectuate those purposes, the bill authorizes the committee to:
identify, evaluate, and certify transferees, distributees, and beneficiaries, and groups of transferees, distributees, and beneficiaries, that have received land, or other assets that convey ownership interests in land, suitable for agricultural production by will or the intestate laws of this State or by deed, grant, bargain, sale, or gift made in contemplation of death;
enter into agreements and award tax deductions to certified transferees, distributees, and beneficiaries, and certified groups of transferees, distributees, and beneficiaries, that may be used to reduce or eliminate the transfer inheritance tax and the New Jersey estate tax due and payable in connection with the transfer of the land, or other assets that convey ownership interests in the land, in exchange for enrolling the land suitable for agricultural production in a farmland preservation program and establishing a succession plan for the transfer of the ownership and managerial control of the land to the next succeeding generation;
conduct an annual review of agreements entered into with certified transferees, distributees, and beneficiaries and certified groups of transferees, distributees, and beneficiaries; and
make and publish an annual report regarding implementation and administration of the program.
The bill provides that the amount of the tax deduction awarded to each certified transferee, distributee, and beneficiary, and each certified group of transferees, distributees, and beneficiaries, is equal to the fair market value of the land, or other assets that convey ownership interests to the land, suitable for agricultural production, together with any improvements and additions, including but not limited to any dwellings, barns, farm markets, or other structures or facilities used directly and primarily for agricultural purposes, that are located on or contiguous to the land suitable for agricultural production that was transferred by will or the intestate laws of this State or by deed, grant, bargain, sale, or gift made in contemplation of death. The bill specifies that the deduction may be used to determine or redetermine the transfer inheritance and New Jersey estate tax due and payable in connection with the transfer of the land, or the transfer of the other assets the convey ownership interest in the land, suitable for agricultural production.
The bill imposes certain caps on the value of tax deductions that may be awarded. Under the bill, the amount of any tax deduction awarded by the committee to a certified transferee, distributee, and beneficiary, or to a certified group of transferees, distributees, and beneficiaries, cannot exceed $5 million, and the aggregate amount of deductions awarded by the committee to all certified transferees, distributees, and beneficiaries, and to all certified groups of transferees, distributees, and beneficiaries, in a calendar year cannot exceed $10 million.
The bill imposes certain penalties on certified transferees, distributees, and beneficiaries, and certified groups of transferees, distributees, and beneficiaries, that withdraw land suitable for agricultural production from the farmland preservation program prior to completion of the minimum eight-year period or that fail to establish a succession plan within the time permitted under the agreement. The bill provides that the amount of the penalty is equal to the difference between the sum of the transfer inheritance tax and the New Jersey estate tax that would have been due and payable without the benefit of the tax deduction awarded by the committee and the sum of the transfer inheritance tax and the New Jersey estate tax paid with the benefit of the deduction, and authorizes the director to assess and collect any penalties imposed.
The bill permits the director to waive penalties under certain circumstances. Under the bill, the director may waive a penalty required to be paid to the director, if the withdrawal of the land from the farmland preservation program or failure to establish a succession plan is due to the death or incapacitating illness of, or other serious hardship or bankruptcy involving, the certified transferee, distributee, or beneficiary, or a transferee, distributee, or beneficiary who is part of a certified group of transferees, distributees, or beneficiaries.
The bill authorizes the committee, in consultation with the director, to adopt rules and regulations necessary to effectuate the purposes of the bill, and allows for the immediate filing of those rules and regulations with the Office of Administrative Law, effective for a period not to exceed 360 days following the bill's effective date.
The bill takes effect immediately upon enactment and applies to transfers from the estates of persons dying on or after January 1 next following the date of enactment.
