To ring in the holiday season, the New Jersey Division of Taxation announced a new tax amnesty program. However, much like the holidays, the window closes fast. The amnesty period runs from November 15, 2018 until 11:59 p.m. on January 15, 2019, just about the same time you are putting away your holiday ornaments. Only taxes administered and collected by the New Jersey Division of Taxation are eligible for the amnesty program. Local property tax and payroll taxes due to the New Jersey Department of Labor as well as unclaimed property remitted through the Division of Unclaimed Property are excluded from the amnesty program. Although a separate program exists for unclaimed property, that does not sunset on January 15, 2019.
The New Jersey amnesty program is an addition to recently enacted legislation which went into effect on November 1, 2018 in response to the recent Wayfair Supreme Court decision affecting remote sellers of goods and services into the state. This sales/use tax legislation establishes reporting collections for companies selling over $100,000 in any year or more than 200 transactions.
Taxes due between the periods of February 1, 2009 through September 1, 2017 are eligible for the program. As an incentive to enter the amnesty program, New Jersey will waive penalties for late filing and underpayment and will reduce interest due by 50 percent. However, tax payers who do not respond to the amnesty will be assessed a 5% penalty, in addition to existing interest and penalty after the program ends on January 15, 2019. Details of the program are available here.
Eligible taxpayers should expect to receive notification in the mail from New Jersey in the coming days. All who receive notification are encouraged to file requests electronically at the amnesty processing center. Those who do not receive notification but wish to apply must do so through a Non-Outreach Portal set up for this program.
Duff & Phelps is aware of four additional state tax amnesty programs including Connecticut, Indiana, Tennessee and New Mexico.
As reflected on the New Jersey State website, the program is being promoted as a gift: "If you've been wishing relief from back taxes, NJ Tax Amnesty could be the best gift you get this season." However, bear in mind the gift comes with a cost: any taxes imposed on taxpayers that do not participate in the program will be subject to an additional 5% penalty.
Given the short window of opportunity, Duff & Phelps' sales and use tax professionals can help your organization weigh the options presented in New Jersey, in addition to the approximately 35 other states that have recently issued rules or legislation in response to the Wayfair decision.
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