Bill Text: NJ A4045 | 2010-2011 | Regular Session | Introduced
Bill Title: Repeals State inheritance taxes.
Sponsorship: Partisan Bill (Republican 3)
Status: (Introduced - Dead) 2011-05-19 - Introduced, Referred to Assembly Budget Committee [A4045 Detail]
Download: New_Jersey-2010-A4045-Introduced.html
Sponsored by:
Assemblyman MICHAEL PATRICK CARROLL
District 25 (Morris)
Assemblywoman NANCY F. MUNOZ
District 21 (Essex, Morris, Somerset and Union)
Co-Sponsored by:
Assemblywoman McHose
SYNOPSIS
Repeals State inheritance taxes.
CURRENT VERSION OF TEXT
As introduced.
An Act eliminating State inheritance taxes and repealing parts of the statutory law.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. The following are repealed:
R.S.54:33-1 through R.S.54:36-7;
Section 1 of P.L.1940, c.220 (C.54:33-9.1);
Section 2 of P.L.1985, c.57 (C.54:33-14);
Section 1 of P.L.1955, c.135 (C.54:34-1.1);
Section 4 of P.L.1978, c.172 (C.54:35-4.1);
Sections 1 and 2 of P.L.1947, c.369 (C.54:35-5.1 and 54:35
5.2)
Section 2 of P.L.1956, c.54 (C.54:35-10.1);
Section 1 of P.L.1939, c.122 (C.54:35-23);
R.S.54:38-1 through R.S.54:38-7;
R.S.54:38-10 through R.S.54:38-16.;
Sections 1 and 2 of P.L.1944, c.220 (C.54:38A-1 and
54:38A-2) and;
Sections 1 through 4 of P.L.1945, c.127 (C.54:38A-1
through 54:38A-6);
provided, however, that this repeal shall not affect any obligation, lien or duty to pay taxes, interest or penalties which have accrued or may accrue by virtue of any taxes imposed pursuant to the provisions of the laws repealed by this act, or which may be imposed with respect to any redetermination, correction, recomputation or deficiency assessment; and provided that all taxes and returns which would have been due and payable under the provisions of the laws repealed shall be due and payable as if the laws were in effect; and provided that this repeal shall not affect the legal authority of the State to audit records and assess and collect taxes due or which may be due, together with such interest and penalties as have accrued or would have accrued thereon under the provisions of the laws repealed; and provided that this repeal shall not affect any determination of, or affect any proceeding for, the enforcement thereof.
2. This act shall take effect immediately, and shall apply to transfers of property and the estates of resident decedents dying on or after January 1, 2011.
STATEMENT
This bill provides for the repeal of the State's inheritance taxes, including the transfer inheritance tax and the New Jersey estate tax and would apply to the estate of any resident decedent dying on or after January 1, 2011.
Currently, New Jersey imposes a transfer inheritance tax on beneficiaries for the receipt of assets from a New Jersey resident decedent and certain New Jersey assets of nonresident decedents, as determined by the value of the assets transferred and the beneficiary's relationship to the decedent.
The transfer inheritance tax is one of the State's oldest taxes, originating in 1892. The tax is imposed on the transfer of all personal and real property in the estates of New Jersey resident decedents and of all tangible and real property located in New Jersey in the estates of nonresident decedents. The tax was extensively revised in 1985 to exempt from taxation transfers to spouses, ancestors and descendants of the decedent, but "lateral" transfers, bequests to brothers and sisters of the decedent or their children, and to nonrelatives are taxed at rates of up to 16%.
In addition, an estate tax is imposed on the estate of a resident decedent equal to the amount of the credit allowed under federal estate tax law for state inheritances taxes paid, based on the terms of the federal estate tax in effect on December 31, 2001, or at the election of the estate, pursuant to a simplified system developed by the Director of the Division of Taxation. However, under federal tax code changes enacted in 2001, the federal credit by which New Jersey's estate tax is calculated was phased-out over a four year period, with a full repeal of the federal credit taking effect in 2005. Thus, but for the enactment of P.L.2002, c.31 (C.54:38-1et seq.), which "decoupled" the New Jersey estate tax from the 2001 federal tax law changes, New Jersey's estate tax would have been completely eliminated in 2005. Under current law, a New Jersey estate tax return must be filed if the decedent's gross estate plus adjusted taxable gifts determined in accordance with the provisions of the Internal Revenue Code in effect on December 31, 2001 exceeds $675,000.
At present, New Jersey is one of only 17 states that imposes some form of an estate tax, and one of only eight states imposing an inheritance tax. Only two states, New Jersey and Maryland, impose both forms of taxation on inheritance.
