The New Jersey Bulk Sales law intends to protect buyers from inheriting tax debt from sellers when purchasing business assets. This law was enacted to cover all outstanding taxes that a business asset may have, including final payment of sale taxes and any delinquent/deficient taxes owed by the seller. Business assets include tangible and intangible assets including real property (buildings, land, etc), as well as goodwill, materials, supplies, licenses, equipment, merchandise, product inventory, patents and copyrights. The retail sale of merchandise to clients is not considered bulk sales.
This law applies to the sale of rental properties, real estate used in trade or business, income producing properties that are obtained through foreclosure, and the sale of any real estate property owned by a business. The sale of a ‘simple dwelling house’, which refers to a 1-2 family home owned by an individual, estate or trust, or is being sold by a builder does not fall into the bulk sales category. However, the law was amended, essentially limiting the law to residential properties owned by LLC’s or corporations. Albeit; if the company is making a sale in the ordinary course of business, then it will be exempt from the law. Additionally, seasonal rentals are not included in this law as long as the property is not rented for more than 125 days in a row, and the owner has another primary residence.
The buyer or their attorney must submit a notification of bulk sales at least 10 business days in advance of the sale, excluding weekends and holidays. Filing by a third party or the seller does not protect the buyer from potential tax obligations regarding the property. In order to notify the state, a C9600 form must be completed, along with a valid NJ Tax ID number for the buyer and seller, a specified closing date set for at least 10 days after submission, mailing addresses for both parties and their attorneys, the signature of the buyer or their attorney, and a copy of the contract of sale that clearly shows the sale price with all terms and conditions of the sale listed. In the case that the buyer or their attorney is unable to get the seller’s NJ Tax ID number, they may submit the C9600 form without it. The C9600 and contract must be delivered through registered, certified mail or a package delivery company like Fed-Ex or UPS.
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