NJ Division of Taxation - Frequently Asked Questions About New Jersey's Bulk Sale Notification Requirement and The Division of Taxation's Form C-9600 (2024)

What is a Bulk Sale and why must it be reported to the New Jersey Division of Taxation?

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:

• Tangible property such as inventory or materials;
• Real property (land, buildings etc.); and
• Intangible assets, such as goodwill.

Sales of assets made in the ordinary course of business, such as retail sales to customers, are not considered bulk sales.

Examples of bulk sales transactions:

• A mechanic owns an auto repair business and decides to retire. He sells his auto repair business (including tools, equipment and inventory) to another mechanic.
  
• A baker gives all his business assets (the bakery and its equipment) to another person as a gift.

Examples of transactions that are not bulk sales:

• A paint store makes a retail sale of brushes and floor stain to a contractor.
• An established developer regularly buys and sells properties in New Jersey.

What taxes are the Division of Taxation trying to collect through the notification of a Bulk Sale?

All taxes and fees the seller is subject to administered by the Division of Taxation. In addition, a business liquidating assets may need to make final payments of sales taxes, withholding taxes, minimum payments, etc. Any delinquent/deficient taxes owed by the seller also may be collected.

How do I report a bulk sale to the State of New Jersey?

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 .

(The bulk sale rules also may be applied when property is transferred in ways other than a sale. See P.L. 1995 chapter 161 (C54:32B-22C) and P.L. 2007, c. 100, sec. 5, codified as N.J.S.A. 54:50-38.)

What is a business?

A business is any endeavor from which revenue or consideration is realized for the purpose of generating profit or loss.

What is a business asset?

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.

Who notifies the Division of Taxation of a bulk sale?

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.

How does the purchaser properly notify the Division of a bulk sale?

The Division of Taxation considers a notification to be proper if the purchaser provides a completed form C9600 . A completed form includes, among other information:

• Valid New Jersey tax ID numbers for both the seller and purchaser;
• A specific closing date, which must be at least 10 business days after submission;
• Proper mailing addresses for both parties and/or their attorneys;
• Signatures of the purchaser or the purchaser's attorney;
• A copy of the executed contract of sale, court order, or assignment agreement clearly showing the sales price and all the terms and conditions of the transfer.

The Division of Taxation must receive the C-9600 and a copy of the contract at least (10) business days before the closing date. Business days exclude weekends and holidays. (See C9600 )

Submit these documents via registered or certified mail to:

Documents can also be sent by overnight mail, Fed-Ex, or UPS to:

Can the C-9600 and contract be hand-delivered or faxed to the Division?

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.

Is there a fee for filing the C-9600 form?

No.

Why is a copy of a signed contract of sale, transfer or assignment required as part of the C-9600 form notice?

The Division of Taxation needs the terms of any sale or transfer agreement to determine and collect any taxes that might be owed as a result of the transaction.

Can the purchaser submit the notice without the seller's' New Jersey Tax ID number?

If the purchaser cannot obtain the seller's New Jersey Tax ID number, the purchaser may submit a C-9600 without the number, and the Division will contact the seller to obtain the information.

What if a purchaser fails to satisfy the notice requirements?

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.

How will the State respond to the C-9600?

The State will reply by sending one or more of the following documents:

• Escrow Letter - Sent to the purchaser with a copy to the seller, stating the amount of money to be held at the time of transfer;
• Returns Required Letter - Sent to the seller, outlining which returns must be filed and taxes and fees paid to obtain clearance for the bulk sales case;
• Clearance Letter - To the purchaser stating the purchaser will not assume any obligation of the seller and no escrow is required.
• Insufficient Notice - To the purchaser, listing items that are missing from the notification and must be sent in order to make the notification complete.
• Bulk Sale Violation - To the purchaser, it states that the purchaser has assumed the seller's tax obligation for the sale.

How should a purchaser respond to an insufficient notice?

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.

How much time does the Division have to respond after a purchaser sends a bulk sale notification?

The Division will send a response within 10 business days of receipt of the bulk sale notification.

Is there any way to expedite service?

No.

Can any response letter (escrow, clearance, etc.) be faxed or emailed?

No, the Division sends all correspondence via first-class mail.

What if the Division misses the 10-day deadline for notifying the purchaser of required payments into escrow?

If the Division fails to respond to a bulk sale notification within 10 business days, the purchaser will not be liable for any State tax obligation of the seller.