Bill Text: NJ A611 | 2016-2017 | Regular Session | Introduced
Bill Title: Eliminates transfer inheritance tax on Class C beneficiaries and increases filing threshold and applicable exclusion amount for New Jersey estate tax to $1,500,000.
Spectrum: Moderate Partisan Bill (Democrat 9-1)
Status: (Introduced - Dead) 2016-01-27 - Introduced, Referred to Assembly Budget Committee [A611 Detail]
Download: New_Jersey-2016-A611-Introduced.html
STATE OF NEW JERSEY
217th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2016 SESSION
Sponsored by:
Assemblyman JOSEPH A. LAGANA
District 38 (Bergen and Passaic)
Assemblyman VINCENT MAZZEO
District 2 (Atlantic)
Assemblyman DANIEL R. BENSON
District 14 (Mercer and Middlesex)
Assemblywoman VALERIE VAINIERI HUTTLE
District 37 (Bergen)
Assemblyman PATRICK J. DIEGNAN, JR.
District 18 (Middlesex)
Assemblyman ANTHONY M. BUCCO
District 25 (Morris and Somerset)
Co-Sponsored by:
Assemblyman Egan and Assemblywoman Pinkin
SYNOPSIS
Eliminates transfer inheritance tax on Class C beneficiaries and increases filing threshold and applicable exclusion amount for New Jersey estate tax to $1,500,000.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act eliminating the transfer inheritance tax on Class C beneficiaries, increasing the filing threshold and applicable exclusion amount for the New Jersey estate tax to $1,500,000 and amending R.S.54:34-2 and R.S.54:38-1.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. R.S.54:34-2 is amended to read as follows:
54:34-2. a. (1) The transfer of property to a husband or wife, or a domestic partner as defined in section 3 of P.L.2003, c.246 (C.26:8A-3), of a decedent shall be taxed at the following rates:
For transfers made through December 31, 1984:
On any amount in excess of $15,000.00, up to $50,000.00 ......... 2%
On any amount in excess of $50,000.00, up to $100,000.00 ........ 3%
On any amount in excess of $100,000.00, up to $150,000.00 ..... 4%
On any amount in excess of $150,000.00, up to $200,000.00 ....... 5%
On any amount in excess of $200,000.00, up to $300,000.00 ....... 6%
On any amount in excess of $300,000.00, up to $500,000.00 ....... 7%
On any amount in excess of $500,000.00, up to $700,000.00 ....... 8%
On any amount in excess of $700,000.00, up to $900,000.00 ....... 9%
On any amount in excess of $900,000.00, up to $1,100,000.00 ... 10%
On any amount in excess of $1,100,000.00, up to $1,400,000.00 .. 11%
On any amount in excess of $1,400,000.00, up to $1,700,000.00 .. 12%
On any amount in excess of $1,700,000.00, up to $2,200,000.00 .. 13%
On any amount in excess of $2,200,000.00, up to $2,700,000.00 ...14%
On any amount in excess of $2,700,000.00, up to $3,200,000.00 .. 15%
On any amount in excess of $3,200,000.00 .............................. 16%
For transfers made on or after January 1, 1985 there shall be no tax imposed under this paragraph.
(2) The transfer of property to a father, mother, grandparent, child or children of a decedent, or to any child or children adopted by the decedent in conformity with the laws of this State, or of any of the United States or of a foreign country, or the issue of any child or legally adopted child of a decedent, shall be taxed at the following rates:
For transfers through June 30, 1985:
On any amount in excess of $15,000.00, up to $50,000.00 ........ 2%
On any amount in excess of $50,000.00, up to $100,000.00 ....... 3%
On any amount in excess of $100,000.00, up to $150,000.00 ...... 4%
On any amount in excess of $150,000.00, up to $200,000.00 ...... 5%
On any amount in excess of $200,000.00, up to $300,000.00 ...... 6%
On any amount in excess of $300,000.00, up to $500,000.00 ...... 7%
On any amount in excess of $500,000.00, up to $700,000.00 ...... 8%
On any amount in excess of $700,000.00, up to $900,000.00 ...... 9%
On any amount in excess of $900,000.00, up to $1,100,000.00 ... 10%
On any amount in excess of $1,100,000.00, up to $1,400,000.00 . 11%
On any amount in excess of $1,400,000.00, up to $1,700,000.00 . 12%
On any amount in excess of $1,700,000.00, up to $2,200,000.00 ..13%
On any amount in excess of $2,200,000.00, up to $2,700,000.00 ..14%
On any amount in excess of $2,700,000.00, up to $3,200,000.00 ..15%
On any amount in excess of $3,200,000.00 .............................. 16%
For transfers made from July 1, 1985 through June 30, 1986:
On any amount in excess of $50,000.00, up to $100,000.00 ....... 3%
On any amount in excess of $100,000.00, up to $150,000.00 ...... 4%
On any amount in excess of $150,000.00, up to $200,000.00 ...... 5%
On any amount in excess of $200,000.00, up to $300,000.00 ...... 6%
On any amount in excess of $300,000.00, up to $500,000.00 ...... 7%
On any amount in excess of $500,000.00, up to $700,000.00 ...... 8%
On any amount in excess of $700,000.00, up to $900,000.00 ...... 9%
On any amount in excess of $900,000.00, up to $1,100,000.00 .... 10%
On any amount in excess of $1,100,000.00, up to $1,400,000.00 .. 11%
On any amount in excess of $1,400,000.00, up to $1,700,000.00 .. 12%
On any amount in excess of $1,700,000.00, up to $2,200,000.00 .. 13%
On any amount in excess of $2,200,000.00, up to $2,700,000.00 .. 14%
On any amount in excess of $2,700,000.00, up to $3,200,000.00 .. 15%
On any amount in excess of $3,200,000.00 ............................. 16%
For transfers made from July 1, 1986 through June 30, 1987:
On any amount in excess of $150,000.00, up to $200,000.00 ...... 5%
On any amount in excess of $200,000.00, up to $300,000.00 ...... 6%
On any amount in excess of $300,000.00, up to $500,000.00 ...... 7%
On any amount in excess of $500,000.00, up to $700,000.00 ...... 8%
On any amount in excess of $700,000.00, up to $900,000.00 ...... 9%
On any amount in excess of $900,000.00, up to $1,100,000.00 ... 10%
On any amount in excess of $1,100,000.00, up to $1,400,000.00 . 11%
On any amount in excess of $1,400,000.00, up to $1,700,000.00 ..12%
On any amount in excess of $1,700,000.00, up to $2,200,000.00 ..13%
On any amount in excess of $2,200,000.00, up to $2,700,000.00 ..14%
On any amount in excess of $2,700,000.00, up to $3,200,000.00 ..15%
On any amount in excess of $3,200,000.00 .............................. 16%
For transfers made from July 1, 1987 through June 30, 1988:
On any amount in excess of $250,000.00, up to $300,000.00 ........ 6%
On any amount in excess of $300,000.00, up to $500,000.00 ...... 7%
On any amount in excess of $500,000.00, up to $700,000.00 ...... 8%
On any amount in excess of $700,000.00, up to $900,000.00 ...... 9%
On any amount in excess of $900,000.00, up to $1,100,000.00 ... 10%
On any amount in excess of $1,100,000.00, up to $1,400,000.00 . 11%
On any amount in excess of $1,400,000.00, up to $1,700,000.00 . 12%
On any amount in excess of $1,700,000.00, up to $2,200,000.00 ..13%
On any amount in excess of $2,200,000.00, up to $2,700,000.00 ..14%
On any amount in excess of $2,700,000.00, up to $3,200,000.00 ..15%
On any amount in excess of $3,200,000.00 .............................. 16%
For transfers made on or after July 1, 1988 there shall be no tax imposed under this subsection.
b. (Deleted by amendment.)
c. The transfer of property to a brother or sister of a decedent, wife or widow of a son of a decedent, or husband or widower of a daughter of a decedent shall be taxed at the following rates:
(1) For transfers through June 30, 1988:
On any amount up to $1,100,000.00 ......................................... 11%
On any amount in excess of $1,100,000.00, up to $1,400,000.00 ..13%
On any amount in excess of $1,400,000.00, up to $1,700,000.00 ..14%
On any amount in excess of $1,700,000.00 .............................. 16%
(2) For transfers made on or after July 1, 1988:
On any amount in excess of $25,000.00, up to $1,100,000.00 .... . 11%
On any amount in excess of $1,100,000.00, up to $1,400,000.00 ..13%
On any amount in excess of $1,400,000.00, up to $1,700,000.00 ..14%
On any amount in excess of $1,700,000.00 ......................... 16%
For transfers made on or after January 1, 2015 there shall be no tax imposed under this subsection.
d. The transfer of property to every other transferee, distributee or beneficiary not hereinbefore classified shall be taxed at the following rates:
On any amount up to $700,000.00 ............................................. 15%
On any amount in excess of $700,000.00 .................................. 16%
For every purpose of this subtitle all persons, including the decedent, shall be deemed to have been born in lawful wedlock and this provision shall apply to the estate of every decedent whether said decedent died before March 25, 1935, or shall die thereafter, but it shall not entitle any person to a refund of any tax paid before the aforementioned date.
(cf: P.L.2003, c.246, s.37)
2. 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.
(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] estate's property subject to tax by other jurisdictions bears to the entire estate taxable under this chapter.
(c) Notwithstanding the provisions of subparagraphs (a) and (b) of this paragraph, upon the transfer of the estate of every resident decedent dying after December 31, 2014, the tax imposed by this section shall only apply if the decedent's taxable estate plus adjusted taxable gifts determined in accordance with the provisions of the federal Internal Revenue Code of 1986 (26 U.S.C. s.1 et seq.) in effect on December 31, 2001 exceeds $1,500,000 as calculated in accordance with the provisions of the federal Internal Revenue Code of 1986 (26 U.S.C. s.1 et seq.) in effect on December 31, 2001, provided however, that the applicable exclusion amount for the purposes of subsection (c) of section 2010 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.2010) shall be $1,500,000.
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 for the transfer of the estate of every resident decedent dying after December 31, 2001 but before January 1, 2015 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 for the transfer of the estate of every resident decedent dying after December 31, 2014 is based upon an applicable exclusion amount of $1,500,000 for purposes of subsection (c) of section 2010 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.2010), 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)
3. This act shall take effect immediately.
STATEMENT
This bill eliminates the transfer inheritance tax on "Class C" beneficiaries and increases the filing threshold and applicable exclusion amount under the New Jersey estate tax to $1,500,000.
Specifically, this bill amends the New Jersey transfer inheritance tax to eliminate the tax on transfers made to "Class C" beneficiaries on or after January 1, 2015. Presently, transfers to "Class C" beneficiaries are taxed at a rate of 11 to 16 percent depending on the amount transferred, with the first $25,000 exempt from taxation. "Class C" beneficiaries include brothers and sisters and daughters-in-law or sons-in-law of a decedent.
Among the oldest of state taxes, the transfer inheritance tax imposes a tax on beneficiaries for the receipt of assets from a New Jersey resident decedent, as determined by the value of the assets transferred and the beneficiary's relationship to the decedent. By applying separate rate schedules which tax transfers to non-relatives or collateral relatives more heavily than transfers to immediate family members, the tax schedule seeks to alleviate the burden of taxation on those relatives closest to the deceased. This bill would effectively treat transfers to brothers and sisters as well as daughters-in-law and sons-in-law of a decedent on par with exempt transfers to other immediate family members, including the spouse, domestic partner, civil union partner, father, mother, grandparent, or child of a decedent.
Additionally, this bill increases the threshold for filing a New Jersey estate tax return from a gross estate of $675,000 to a taxable estate of $1,500,000. The bill also increases the applicable exclusion amount for the New Jersey estate tax calculation from $675,000 to $1,500,000. The bill applies to resident decedents dying after December 31, 2014.
Currently, 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 federal Internal Revenue Code in effect on December 31, 2001 exceeds $675,000.
The New Jersey 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 inheritance 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.
