New Jersey Tax Amnesty – 2009

New Jersey recently enacted its fourth State tax amnesty.  New Jersey tax amnesty began May 4, 2009 and will end on June 15, 2009. It is an effort to collect at least $100 million. The amnesty collection goal was recently recreased to $200 million.  The last amnesty program, which was in 2002, was initially estimated to bring in $150.0 million, but ended up generating a gross increase in State revenues of $277.0 million.

Penalty and Interest Savings

Generally, for taxpayers that qualify and are approved for amnesty, the New Jersey Division of Taxation will waive one-half (½) of the related interest and all of the penalties and collection costs. In exchange, the taxpayer must pay the outstanding tax and the remaining one-half (½) of the related interest by the end of the amnesty period. The amnesty is only eligible for taxes related to periods of 2002 or later.

For those taxpayers that are eligible but do not take advantage of the amnesty period, there will be an additional five percent (5%) penalty added to their tax liability.

Eligibility

Most taxpayers with an outstanding New Jersey State tax liability reportable on any tax return due on or after January 1, 2002 and prior to February 1, 2009, are eligible for tax amnesty during the tax amnesty period. A taxpayer who has filed a complaint with the New Jersey Tax Court or who is pursuing an appeal before any other judicial tribunal may be considered for tax amnesty only if approved by the Director. Taxpayers who are under criminal investigation or charge for a State tax matter are not eligible for amnesty.

A taxpayer may elect to participate and be granted tax amnesty for any eligible tax that is payable to the Division of Taxation. Taxes and fees that are not payable to the Division of Taxation (i.e., unemployment and disability taxes payable to the Department of Labor and Workforce Development, licensing fees payable to other State departments and agencies, and local property tax payable to municipal tax collectors) are not eligible for tax amnesty.

Tax amnesty will not be granted with respect to taxes, recovery fees, penalties and/or interest otherwise eligible for tax amnesty that were paid prior to the commencement of the tax amnesty period.

If a taxpayer has paid an eligible tax in full but still owes penalty and interest on that tax, the outstanding liability for penalty and one-half of the balance of the interest due as of May 1, 2009, is eligible for tax amnesty upon payment of the remaining one-half of the balance of interest that is due as of May 1, 2009, that is not eligible for tax amnesty and the waiver statement form.

Application for obtaining tax amnesty

To obtain tax amnesty, before the end of the amnesty period, the Division of Taxation must receive (i) all required tax returns/or forms, (ii) a properly completed and signed payment/waiver statement and (iii) full payment for amnesty eligible taxes plus one-half of the balance of interest due.

An amnesty application can be submitted electronically under the procedures and requirements that are available at the Division’s website at http://www.state.nj.us/treasury/taxation. The Division has not issued paper forms that need to be used to apply. The filing must be postmarked by midnight on June 15, 2009 or delivered to the Division of Taxation by the close of business on June 15, 2009.

A taxpayer will be denied tax amnesty if the amnesty application is not sufficiently complete for the Division to understand the period and tax for which amnesty is applied. A taxpayer that is denied amnesty by the Division can appeal the decision A taxpayer denied tax amnesty for any reason will have his or her payments applied to open tax periods.