Businesses and individuals facing unpaid New Jersey tax liabilities may be able to get a break on penalties—although not on interest—according to a recent NJ Division of Taxation announcement. But you have to act quickly. From now until November 17, businesses and individuals with liabilities from tax periods 2005 through 2013 may be able to enter into a “closing agreement” with the Division.
And why should I do this now? Because under this limited-time offer (remember, the clock runs out on November 17) the Division of Taxation will accept—in full and final satisfaction of the outstanding tax liability—an amount that reflects reduced or eliminated penalties, with no charge for collection or recovery fees. Better yet, the tax liability will not be subject to further audit.
Not so good: no refund can be claimed by the taxpayer on this matter. You win some, you lose some.
Here are some more details
• Most penalties can be reduced to zero. But an Amnesty Penalty on taxes due on or after 1/1/2002 and before 2/1/2009 will still apply.
• Interest will not be waived, but it will only be calculated on the tax and reduced penalties (and the penalties may drop to zero, anyway).
• Recovery Fees—a 10% fee on each tax liability that was previously forwarded to the Division’s authorized collection agency—may be waived.
• Also, costs of collection may be eliminated. Normally, if the Division has to collect a tax debt by filing a Certificate of Debt (judgment,) a 10% fee is applied to cover legal and collection costs.
Is there a hitch? Sort of. If you don’t pay the balance due by November 17, 2014 or provide sufficient proof that you or your businesses do not owe it, then any and all penalties, interest, costs of collection, and/or recovery fees will remain due. The state may also pursue further collection activity. You may pay the balance due in one lump sum or you may make several payments to satisfy the amount due. But the full amount must be paid by November 17, 2014 in order to take advantage of the reduced penalties, and eliminated costs of collection, and recovery fees.
For assistance please contact our Tax Manager, Steven Citron. You may also visit the NJ Division of Taxation website for more information at Resolve Your Tax Debt – Fall 2014