New Jersey Launches Tax Amnesty Program

As part of a major New Jersey state budget overhaul adopted last July, the New Jersey Division of Taxation announced a tax amnesty program (the “Program”), which officially launched on November 15, 2018 and will run through January 15, 2019. The Program provides individuals and businesses with the opportunity to pay back taxes or file past returns with no penalties and reduced interest.

The Program is available to most taxpayers with outstanding New Jersey tax liabilities for any tax return due on or after February 1, 2009 and prior to September 1, 2017. Unlike under prior amnesty programs, taxpayers who are currently under audit or on a payment plan are eligible to participate. The New Jersey Division of Taxation recently mailed notices to all taxpayers who are known to have amnesty-eligible deficiencies or delinquencies to encourage participation in the Program.

Taxpayers who have been notified by the Office of Criminal Investigation in the New Jersey Division of Taxation that they are under criminal investigation or charge for a New Jersey state tax matter, as certified by a county prosecutor or the Attorney General, are not eligible for the Program. An exception applies if the Office of Criminal Investigation certifies to the Director of the New Jersey Division of Taxation (the “Director”) that the state tax matter involving the taxpayer was resolved. In addition, a taxpayer who has filed an administrative or judicial appeal related to a New Jersey state tax assessment may apply for the amnesty, but only if the taxpayer waives all rights to a future appeal and receives written approval from the Director. Lastly, the Program is not available for taxes that are not administered and collected by the New Jersey Division of Taxation (such as unemployment-type taxes administered by the Department of Labor).

In order to receive tax amnesty under the Program, a taxpayer must pay the outstanding taxes due and 50% of the related interest due as of November 1, 2018 by the end of the amnesty period, i.e., by January 15, 2019. Most penalties associated with the outstanding liabilities will be forgiven, except for civil fraud and criminal penalties, which must also be paid in full. The taxpayer must also file all delinquent tax returns, and must agree to waive any right to appeal the amounts paid, also by January 15, 2019. Notably, taxpayers who are eligible for the Program, but do not take advantage of it, will incur an additional 5% penalty on any eligible amounts not resolved during the tax amnesty period. This is in addition to all other applicable penalties, interest and other costs authorized by law.

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