New Jersey Taxing Information
The New Jersey Division of Taxation is responsible for collecting taxes for the State of New Jersey Department of Treasury. Taxpayers that are behind on their taxes or need assistance should be aware that the Division has numerous options available for handling tax issues. If an individual or business fails to work with the Division regarding their unpaid liability they may be subject to penalties, interest, wage or bank garnishment or other consequences.
If you disagree with an assessment made by the Division you have a few options:
- You may file an appeal within 90 days of the date of the determination. The Tax Court must receive the appeal along with any fees within this timeframe; or
- You may file a proper, written protest and request an informal administrative conference with the Conference and Appeals Branch. You may choose to have someone else such as a designated personal agent, lawyer or accountant represent you or you may represent yourself; or
- If you paid the entire assessment within one year after the time to protest or appeal has expired for assessments regarding tax periods commencing on or after January 1, 1999, you may subsequently file a refund claim on Form A-1730. This must be done within 450 days after the time to protest or appeal has expired.
- Interest will still accrue on the unpaid debt regardless of whether an appeal or protest has been filed.
If your unpaid tax bill is sent to the Divisions collection agency there will be a Referral Cost Recovery Fee of 10% of the tax due added to your debt.
The Division of Compliance Activity is responsible for the collection of delinquent and insufficient tax payments from business and individuals.
If you are unable to pay your tax bill in full, you may qualify for a payment agreement by submitting the Deferred Payment Request Form. Cases will be reviewed on an individual basis. Any payment plan that is authorized by the Director of the Division of Taxation will include the original unpaid tax along with any penalties and interest owed. Interest will continue to accrue until the liability is paid off in full.
The Division is also allowing more flexibility for businesses and individuals who are struggling with a current installment agreement. If you have a current installment agreement and are facing a situation of financial hardship you may be able to adjust the payment terms.
Power of Attorney
You may choose to have a qualified person represent you before the Division of Taxation by completing and signing the Appointment of Taxpayer Representative (M-5008-R).
A responsible person may be held liable for any taxes due from a corporation. A responsible person is the officer or employee whose obligation it is to remit trust fund taxes (Sales tax, Gross Income Withholding tax and Motor Fuels tax) to the State of New Jersey on behalf of the organization.
The Division of Taxation participates in many set-off programs, which are designed to prevent individuals or businesses that have tax debt from receiving a payment from the federal or state government. The current programs are:
- SOIL (Set-Off of Individual Liability) SOIL is administered by the Division of Revenue who will issue a notice to taxpayers that have outstanding tax liability or debts to other state agencies and/or the Federal Treasury. After a 35-45 day waiting period, SOIL will withhold NJ Gross Income Tax Refunds, Homestead Rebates and Saver Rebates.
- FOIL (Set-Off of Federal Refunds for Individual Liability) If you have received a tax bill from the New Jersey Division of Taxation for Gross Income Tax liability you have 90 days before a Notice of Intended Federal Set-Off is issued. Once the Notice of Intended Federal Set-Off is issued you have 60 days to resolve the Income tax debt before the liability information is submitted to the Federal Management System (FMS). FMS will then be authorized to send any Federal Income Tax refunds to the State of New Jersey to pay off the liability. The Federal government will then issue you a notice explaining the set-off and any associated fees (currently $22 processing fee per transaction). FMS is updated monthly with submissions of debtor information.
- State Reciprocal Set-Off - New Jersey currently has a reciprocal agreement with the state of Maryland and will soon implement reciprocal agreements with Delaware, New York and Connecticut. The agreements allow individual tax refunds to be set-off and sent to these states if the individual has outstanding tax debts there.
- State Vendor Set-Off - If a state vendor has tax debt, the State Vendor Set-Off program allows contract payments to be withheld from the debtor and the payments to be applied to the liability.
- Federal Treasury Offset Program - The Federal Treasury Offset Program is a mutual agreement between the State of New Jersey and the Federal government. TOP is designed to withhold payments from the Federal government that are due to contract vendors who have outstanding state tax debts. Ninety days after a bill is received from the Division of Taxation, a Notice of Federal Set-Off is issued providing the taxpayer 60 days to resolve the debt or be subject to an offset.
The Division of Taxation generally has 4 years from the time you file your taxes to assess additional taxes. There is no time limit if you failed to file a return or filed a fraudulent or false return.