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[Giordano Thibault]

Assetand interest disclosure of public officials is a well-established tool to prevent corruption and to help strengthen integrity in public administration. Countries use it to identify unexplained wealth, prevent conflicts of interest, and promote accountability and integrity of public officials.

Asset and interest disclosure is a mechanism by which public officials must submit information about income, assets, liabilities, expenditures, and other interests of the officials and their family members. This mechanism includes many elements, including the disclosure form, the scope of declarants (filing population), methods of submission (paper or electronic), procedures of submitting the form, validation and verification of the forms, publication of information, institutional set-up to deal with the disclosure system, sanctions, and others.

This technical guide focuses on the disclosure form. How and what data are requested in the form represents the disclosure system's main and most important input. It also defines declarations' role in the anticorruption value chain.

The purpose of the Bulk Sale Statute is to protect a purchaser from inheriting any tax debt from a seller of business assets. A bulk sale is the sale (or transfer or assignment) of an individual's or company's business asset/s, in whole or in part, outside of the ordinary course of business. When a bulk sale of business assets occurs, the New Jersey Division of Taxation needs to be notified so it can collect any taxes owed. Business assets are any assets that generate income or loss and may include:

The bulk sale may generate a capital gain that is subject to Income Tax. In addition, a business liquidating assets may need to make final payments of sales taxes, withholding taxes, etc. Any delinquent/deficient taxes owed by the seller also may be collected.

The purchaser of business assets, other than in the ordinary course of business, must notify the State at least 10 business days in advance of the sale. This will allow an escrow to be established if the seller has potential tax obligations. To report a bulk sale, file form C9600 .

A business asset is any asset that generates income or loss. Business assets can include goodwill, materials, supplies, licenses, patents, copyrights, equipment, leases, merchandise, inventory, realty, or vacant land. A business asset can be tangible or intangible.

The purchaser or the purchaser's attorney must submit all notifications of bulk sales. A filing by the seller or a third party does not protect the purchaser from being held responsible for potential tax obligations of the seller.

No. The only delivery options are through registered, certified or overnight mail - or through an express package delivery company such as Fed-Ex or UPS. The purchaser must have proof that the notice was delivered to 3 John Fitch Way in Trenton.

The Division received notification less than 10 business days before closing. Will the purchaser be protected from potential tax obligations of the seller?

No. If the closing occurs before the 10 business-day period and the Division has not assigned an escrow to the purchaser, it is a bulk sale violation and the purchaser will be held responsible for the tax obligation of the seller.

A violation occurs if a purchaser fails to supply the State with complete and timely notification of a bulk sale. When a purchaser fails to supply proper bulk sale notification, the purchaser is responsible for any State tax obligations resulting from the sale. The Division can take steps necessary to satisfy the seller's tax indebtedness including judgment, levy, and seizure of assets of the purchaser as well as the seller.

The purchaser must respond as directed in the notice. If notice came in without a contract, it must be re-submitted via certified or overnight delivery. Failure to provide all information requested will be treated as non-compliance. The Division has 10 days to respond from the date the Division has received all required information.

Data included to determine escrow amounts include (but are not limited to) Division determinations of tax obligations, information from audits, the expected gain from the sale of the assets, and any unfiled returns.

The purchaser or the purchaser's escrow agent must hold the required amount in escrow. If the purchaser or his/her agent does not hold the required escrow as instructed by the Division, the purchaser will be liable for the seller's tax obligations.

A closing or the transfer occurred without the purchaser notifying the Division, but the parties agreed upon an amount to hold in escrow. Is the purchaser protected from liability for the seller's tax obligations?

No. This sale is now considered a bulk sale violation. The agreed-upon escrow is a third-party agreement that the Division was not privileged to and does not satisfy the bulk sale notice requirements.

Can the escrow exceed the purchase price? Why?

Yes. The New Jersey Tax Court has indicated that the escrow can exceed the purchase price. Specifically, 'a purchaser may assume personal liability for the seller's delinquent taxes in excess of the price he pays for the business assets.' Bunting v. Director, Division of Taxation, 1 N.J. Tax 189, 197 (T.C. 1980).

It is still the purchaser's responsibility to hold the escrow as prescribed by the bulk sale section. It will be between the purchaser and seller to decide who will provide the additional funds at the time of closing to satisfy the escrow.

Once the Division is assured that all Division tax obligations of the seller have been met, it will issue a clearance letter to the purchaser or his/her agent allowing the purchaser to release the balance of the escrow funds to the seller.

If the realty that is being sold, transferred or assigned is used for business/income purposes, it is subject to bulk sale notification rules. A bank approval letter should be submitted with the C-9600 form.

If a property goes through a formal foreclosure process, a Sheriff's Deed (or Marshal's Deed) is used to transfer assets to a new owner without encumbrances. There is no need to submit a bulk sale notification.

If the seller buys, rehabilitates and then sells properties, these sales are not subject to the Bulk Sale Law. If the sale is not within a business's ordinary course of business, notification is required.

The State's Bulk Sales law exempts a one-or two-family residence owned by an individual, estate, or trust. Effective January 9, 2018, the law expanded the exemption to include any combination of individuals, estates, or trusts.

The only authorized agent is a seller's or buyer's attorney. Any other representative (i.e. Realtor, CPA, title agency) must provide an Appointment of Taxpayer Representative Form (Form M-5008-R) signed by the buyer or seller.

A purchaser files the C-9600 but before closing, assigns its rights to another party. Does the assignee also file form C-9600, even though none of the terms of the sales agreement changed, except for the substitution of the new purchaser?

No, but the Division must be notified. The assignee, by taking the place of the original purchaser/transferee, must now take on all of the previous party's rights and obligations under the law, including responsibility for holding the amount of escrow in the Division's notice to the original purchaser.

If the seller is a tax-exempt or non-profit organization, including but not limited to a church/synagogue/temple/mosque, and is selling its real property and/or tangible property not in the ordinary course of business, does the purchaser have to file a C-9600 form with the Division?

There are two transactions: the transaction between the seller and auction house, and one between the auction house and the ultimate purchaser. The notice requirement is applied to the first transaction: the auction house is the responsible party to notify the State regarding the sale. While not the purchaser, it is a transferee (if the assets have been moved to the auction site), or an assignee (assigned the rights to sell the asset on behalf of the owner). As such, the auction house, prior to their sale, must notify the Division. Once notified, the Division then can require the auction house to hold an amount necessary to comply with N.J.S.A. 54:50-38(c).

Corporate stock or membership interests owned by a business entity such as a corporation, LLC, LP etc. is a business asset of that business entity. Unless the business entity is in the ordinary course of buying and selling corporate stock or membership interests, the Division must be notified.

No. The Bulk Sale notification provision is not triggered by the sale (or transfer or re-assignment) of any grants, tax credits or other assistance provided by the New Jersey Economic Development Authority. However, the individual or entity that benefits from any credits must obtain a Business Assistance and Incentive Clearance Certificate from the Division of Taxation before the sale, transfer, or assignment of any credits. Please click the link for instructions on applying for the Clearance Certificate.

No. Transactions entered into on and after January 1, 2021, that are intercompany transfers made between combined group members of a New Jersey combined return under the New Jersey Corporation Business Tax Act are exempt from the Bulk Sales notification requirements as long as the transfers are part of the unitary business of the combined group. However, transactions that occur before January 1, 2021 are still subject to the Bulk Sales notification requirements, unless otherwise exempt for some other reason.

The Office of Foreign Assets Control ("OFAC") of the US Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States.

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