New Jersey Says “Happy Holidays” with the Gift of Tax Amnesty

The New Jersey Division of Taxation recently announced a two-month Tax Amnesty program to allow qualified individuals and businesses to file past returns and pay back taxes with one-half of interest owed and no penalties. All returns and payments must be received or postmarked by January 15, 2019.

The state has gone to great lengths to get the word out about the program, sending letters to 750,000 taxpayers who are believed to be eligible and launching a marketing blitz on TV, radio and online.

Although the state says on the NJ Tax Amnesty website to consider the program a gift, it isn’t exactly rooted in holiday cheer and goodwill. The timing may coincide with the holiday season, but the goal is to raise more than $200 million from the program and avoid budget cuts or other adjustments. Regardless of the motivation, the NJ Tax Amnesty program does represent an enormous opportunity for taxpayers to settle their tax debt at a much lower cost.

Who Is Eligible for the NJ Tax Amnesty Program?

The NJ Tax Amnesty program applies to anyone with outstanding tax filings or payments that were due between February 1, 2009 and September 1, 2017. This includes individuals who owe personal income, estate or inheritance taxes, as well as businesses that owe corporate, sales, payroll or motor fuels taxes.

You may qualify for amnesty even if you’re already on a payment plan for back taxes. Talk to your caseworker to find out how an amnesty payment would affect your payment plan.

Of course, there are exceptions. For example, if you’re under criminal investigation for a tax-related matter by a county prosecutor or the state attorney general, you can’t take advantage of this program. However, participating in this program and settling your debt could help you avoid criminal investigation or prosecution in the future.

Also, if you’ve appealed a tax assessment, the appeal would have to be withdrawn, you would have to waive rights to a future appeal, and the Division of Taxation would have to grant you written approval in order to be eligible for amnesty.

All amnesty requests must be filed electronically through the NJ Tax Amnesty website. If you received a letter, it includes an Amnesty ID and PIN to simplify the filing process. If you have multiple IDs and PINs, you may have multiple returns to file and balances for different periods.

If you didn’t file a tax return, you have to file the missing return to quality for amnesty. Then you can log into the Amnesty Processing Center to make the payment. Businesses that aren’t currently registered in New Jersey can take advantage of this program but must complete a Business Registration Application first.

If you didn’t receive a letter but think you might owe back taxes with the state, it’s a good idea to consult with your accountant.

Why Should You Take Advantage of the NJ Tax Amnesty Program?

This program allows you to become free of New Jersey tax debt. Penalties are waived and interest is cut in half. That’s a big deal. The interest you pay typically far exceeds the penalties for delinquent tax filings and payments.

Also, if you owe state taxes and don’t settle your debt by January 15, 2019, an additional 5 percent amnesty penalty will be imposed on all eligible remaining tax balances. This penalty cannot be waived or abated.

Some taxpayers are hesitant to participate in such a program because they’re afraid that they’ll become a target for an audit in the future. That’s not the case. According to the NJ Tax Amnesty website, the taxes you owe under the NJ Tax Amnesty Program are verified and assessed in the same way as any other owed taxes.

Keep in mind that partial amnesty is not available with this program. If you can’t pay everything you owe, consider paying as much as possible to minimize the costs you’ll incur from the 5 percent amnesty penalty.

The NJ Tax Amnesty program could significantly reduce what you owe in back taxes. If you’ve received a notice from the New Jersey Division of Taxation or think you may be eligible but aren’t sure how to proceed, talk to your accountant as soon as possible. The program ends on January 15, 2019.

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