Bulletin: NJ2024005

Dear Associates:

Please be advised that the New Jersey Bulk Sales Notification Requirement Process has been modified. N.J.S.A. Section 54:50-38, also known as the New Jersey Bulk Sale Law, governs the reporting requirements when a business sells or transfers a significant portion of its assets, such as in the sale of a business or substantial portion of inventory. The law is designed to ensure that the seller's outstanding tax liabilities are settled before the transaction is finalized.

The law protects the State of New Jersey from losing tax revenue by holding the buyer responsible for any outstanding tax liabilities of the seller, such as unpaid sales tax, corporation business tax, or employer withholding tax. If the buyer does not comply with the law, they may inherit the seller’s tax liabilities. Under N.J.S.A. 54:50-38, the buyer of business assets must notify the New Jersey Division of Taxation at least 10 business days before the sale occurs. This is done by filing a Bulk Sale Notification Form (Form C-9600) with the Division of Taxation. The notification gives the Division of Taxation time to determine if the seller owes any outstanding taxes.

Once the notification is filed, the Division of Taxation may issue an escrow letter to the buyer, instructing them to withhold a certain amount of the purchase price until any outstanding tax liabilities are resolved. The buyer is required to withhold that amount until the Division of Taxation certifies that the seller has no outstanding tax obligations or until the tax debts are satisfied.

The notification process described above and under N.J.S.A. 54:50-38, remains in effect; however, effective immediately, the New Jersey Bulk Sale Section has announced the discontinuance of Form TTD. The form is no longer available for submission. Form TTD, known as the “Asset Transfer Tax Declaration Form," permitted a Seller, subject to an escrow hold, to submit the form in order to report and pay income tax that reflected a more reasonable estimate of the taxes due rather than relying upon the amount set-forth in the Bulk Sales escrow letter.

NOTE: Please be advised that the Bulk Sales Law is a State of New Jersey tax-related reporting requirement, and as such, compliance with the Law is beyond the scope of coverage afforded under a policy of title insurance and the information provided in this bulletin regarding the Bulk Sales Law is provided for informational purposes only.

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