New Jersey Taxing Information
The Legal Services Bureau (LSB) is the General Counsel to the Department and handles formal protests filed by taxpayers who dispute tax liabilities as well as collection actions.
The Department is authorized to contract with outside agencies to recover delinquent taxes. A Notice of Intent to Outsource letter will be sent to you prior to sending an account to a collection agency. If you do not respond, the account will be outsourced to a collection agency. Once you are contacted by the collection agency, that agency works with you to resolve the account.
If you fail to file taxes or owe money to the state the Taxation and Revenue Department will first notify you through a Notice of Assessment or Statement of Account.
If you still fail to pay a tax bill after you have received one of these delinquency notices, collection action will begin. You will receive a phone call during which you will be offered payment options such as a payment plan or installment agreement. If you fail to make an agreement or otherwise resolve your account, a lien may be filed to protect the state's interest.
At this point, some accounts may be referred to a private collection agency or a revenue agent may conduct a field visit with you or your representative in an attempt to resolve the debt. If you refuse to resolve the account, the state may consider a levy of personal assets or rights to assets. Collection actions may include court orders to close a business or seize its assets.
A levy authorizes the state to seize your property. A levy is made by seizure of property upon service of a warrant on a person who is in possession of any of your personal assets or rights to assets. A warrant of levy may be served on your employer for wages or any person that owes money to you or holds funds that belong to you. A levy may be stopped by posting security or paying the liability in full.
When you neglect or refuse to pay taxes after assessment and demand for payment has been made, a lien automatically exists, and a notice of the lien in favor of the state may be filed with the appropriate county clerk's office. When you pay the amount of tax due, a document releasing the lien will be prepared and filed.
A notice of lien provides public notice of the state's interest in a taxpayer's property or rights to property and may negatively affect the taxpayer's credit and ability to purchase or sell real estate or obtain a loan.
If you are unable to pay your tax liability in full, the Department may enter into a payment plan contract with you that will allow you to pay off tax debt over a period of time. There are two types of payment plans:
- Short-term: this pay plan will allow you 12 months or less to pay off taxes. A short-term payment plan is usually established without the filing of a lien. If you miss a payment the Department terminates the agreement and proceeds with collections.
- Installment Agreements: an installment agreement is a formal, written agreement between you and the state that allow you up to 60 months to pay tax debt. A lien or acceptable security is required for this type of agreement. When signing an installment agreement you declare definite liability.
When you are on a payment plan the Department does not actively seek collection. If you default on the agreement or do not file required returns the Department will send a Delinquent Agreement letter. If you do not respond the Department will send a Defaulted Agreement letter and enforced collection actions will resume.
Penalty is calculated at 2% per month or partial month to a maximum of 20% on the unpaid principal of tax due.
As a taxpayer you must exercise your right to protest within a certain timeframe. If you wish to dispute a tax liability or actions taken against you by the Department, you may do so in one of two ways. Choosing one remedy is an automatic waiver of the right to pursue the other:
- File a written protest with the Secretary of Taxation and Revenue without making a payment. You must do this in writing within 30 days of the date of notice or the date of the event you are protesting. If you are within the 30 day time period you may also ask, in writing, for an extension of up to 60 days. The Department will review your protest and schedule an informal conference or a formal hearing if it does not agree with your position. The hearing officer will hand down a Decision and Order. If you do not agree with the order you may appeal the decision to the Court of Appeals within 30 days of the date of the Decision and Order.
- Pay the liability and then file a refund claim. A refund claim may be filed if you think that you have paid or had withheld from you more than you actually owe. The refund must be claimed within three years from the end of the calendar year in which the tax was due or in which you paid a Department assessment. If the claim is denied, you may file a protest with the Department or file a lawsuit in Santa Fe District Court. This must be done within 90 days of the date the denial of your refund claim is mailed. If you fail to protest or bring suit in Santa Fe District Court within 90 days of the date of a written denial, the decision is final.
If you wish to obtain representation regarding your tax matters you must provide to the Taxation and Revenue Department (TRD) your written authorization. Use form ACD-31102, Tax Information Authorization to authorize a person wishing to represent you. Exceptions from the requirement to obtain written authorization include:
- Attorneys or accountants licensed to practice in New Mexico; or
- enrolled agents, with respect to income tax only.