1 AN ACT providing for a State tax amnesty period, supplementing 2 Title 54 of the Revised Statutes and making an appropriation. 3 4 BE IT ENACTED by the Senate and General Assembly of the State 5 of New Jersey: 6 7 1. In addition to the powers of the Director of the Division. New Jersey is administering a tax amnesty program that runs through January 15, 2019. There are significant advantages to delinquent taxpayers that capitalize upon this program. Read more to determine which NJ state taxes apply and to determine your eligibility.
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These programs will waive penalties if you pay your back taxes
Amnesty is a governmental act of pardon or a decision not to punish a person, business, or entity. Under a tax amnesty program, a state provides a time period during which people can file late tax returns or pay off outstanding tax debts without penalty. It's a great way for states to raise some quick revenue.
Problems That Amnesty Can Fix
Amnesties seek to solve three types of tax problems: late tax returns, taxes owed, and understated tax liabilities.
The state will typically waive late filing penalties as long as past due tax returns are filed during the amnesty period. Most will also waive late payment penalties—and sometimes they'll even waive the interest—if the outstanding balance is paid in full during the amnesty period.
The state typically waives penalties as well, such as late payment fees and accuracy and fraud penalties when a taxpayer files an amended return to report his true and correct tax liability. He must also pay the additional tax owed during the amnesty period.
Status of Active State Amnesty Programs
Amnesty periods are by no means ongoing or permanent and not all states offer them. Statuses can change yearly. Only four states offer active amnesty programs as of May 2018: Connecticut, Indiana, Texas, and Tennessee.
When they establish and publicize their tax amnesty programs, states specify the terms and the effective dates, as well as exactly which types of taxes are included.
Connecticut's amnesty program covers individual, corporate, and sales and use taxes through November 30, 2018. The taxes must have come due prior to December 31, 2016. The state will waive penalties and 50 percent of any interest.
Indiana's program ends on December 31, 2018, for taxes that came due after January 1, 2017. It covers both income and sales and use taxes. Indiana will waive all taxes due prior to 2017, as well as penalties and interest.
As for Texas 403, you're rapidly running out of time if you owe taxes to this state. The program ends on June 29, 2018. It covers taxes and returns due before January 1, 2018, with some exceptions such as returns that are under audit and certain business taxes.
Finally, Tennessee's amnesty program spares only businesses. There's no single universal cutoff date. Businesses that have enrolled in the Streamlined Sales Tax (SST) program are eligible for amnesty for the ensuing 12 months. Those that meet this requirement are eligible for a waiver of all taxes due as well as penalties and interest.
Other States
Both Alabama and South Carolina have announced that they'll offer amnesty programs in the near future. As of May 2018, South Carolina had not yet specified the types of taxes that will be covered. Alabama's eligibility period will run from July 1, 2018, through September 30, 2018, for all taxes except property taxes and those associated with motor vehicles and fuel.
The remaining states have no current or anticipated programs, but this could change at any time so check with your state's Department of Revenue periodically for current updates.
How State Tax Amnesty Works: Arizona as an Example
One of Arizona's Tax Recovery Programs—it's actually offered two in recent years—ended in 2015. The program reduced or waived civil penalties and interest for unpaid tax liabilities for any tax year ending before January 1, 2014, for annual filers, or before February 1, 2015, for all other filers.
Taxpayers had to submit amnesty applications, payments for past due taxes, and all original or amended returns in order to qualify. You were ineligible for the program if you had ever been under criminal investigation or the subject of criminal litigation. Convictions for tax crimes also disqualified you, and you would be ineligible if you had agreed to a resolution for your tax debt with the state.
In return, the Arizona Department of Revenue waived or abated any civil penalties and interest. The ADR also agreed to forego any administrative, civil, or criminal actions. Tax returns were still candidates for audit, however.
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Anyone who applied for amnesty surrendered his right to appeal any decisions made in the case.
The following tax types were eligible for amnesty: income tax, car rental surcharge, county excise taxes and any other privilege excise tax administered by the Department, electric and natural gas use taxes, jail excise tax, jet fuel excise and use tax, severance tax, tax on hotels, tax on water use, telecommunication services excise tax, transaction privilege tax, and use tax.
Taxpayers had to include payment of the outstanding tax due with their amnesty application.
An Alternative to State Tax Amnesty
Many states offer another option for taxpayers to pay their delinquent tax bills and get relief from penalties and hopefully interest as well, although these 'voluntary disclosure agreements' mostly concern sales and use tax and corporate income tax.
The purpose of these VDA programs is to encourage taxpayers who might have potential liability to voluntarily come forward and pay the tax due. If you haven't been contacted by your state's Department of Revenue because of your tax delinquency, you can come forward, pay your back taxes and interest, and agree to pay your taxes on time going forward.
Each state has its own laws and rules, but most limit the 'look back' period to three to five years, which limits penalties and interest.
Federal Tax Amnesty
It's a wonderful thought, but the IRS doesn't currently offer tax amnesty unless you happen to have undisclosed off-shore accounts. It does provide the Fresh Start Program, however, which makes it easier for taxpayers to pay back taxes and avoid tax liens. Even small business taxpayers can benefit from Fresh Start.
The initiative helps struggling taxpayers by taking steps to provide new penalty relief to the unemployed, including avoiding failure-to-pay penalties, and by making installment agreements available to more people.
The New Jersey Division of Taxation reminds taxpayers to take advantage of the New Jersey Tax Amnesty program as the January 15 deadline is fast approaching. TaxAmnesty provides individuals and businesses with the opportunity to pay back taxes or file past returns with no penalties and reduced interest, but Tax Amnesty payments must be paid no later than January 15.
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Signed into law in July 2018, the New Jersey Tax Amnesty launched on November 15, 2018. The program applies to outstanding tax filings or payments that are due on or after February 1, 2009 and prior to September 1, 2017. Benefits to Tax Amnesty include waived penalties such as late filing and late payment, and one-half of the balance of interest due as of November 1, 2018.
“Thousands of New Jersey taxpayers have already taken advantage of the benefits of the Tax Amnesty program but time is running out,” said John Ficara, Acting Director of the Division of Taxation. “We strongly urge anyone who qualifies for amnesty to take advantage of the program by the January 15 deadline, to avoid incurring greater penalties.”
Taxpayers who do not take advantage of Amnesty before January 15 will incur a five percent penalty that cannot be waived or abated. This is in addition to all other penalties, interest and other costs authorized by law.
In November, the Division of Taxation mailed a letter to all taxpayers who are known to have amnesty-eligible deficient and/or delinquent accounts. In addition, an extensive outreach program has been undertaken to reach as many taxpayers as possible.
For more information, New Jersey taxpayers or their representatives may contact Taxation representatives at 1-800-781-8407 Monday through Thursday from 8 a.m. until 6 p.m. and Friday from 8 a.m. until 5 p.m. or visit www.TaxAmnesty.nj.gov.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190102005089/en/
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SOURCE: State of New Jersey'><Property FormalName='PrimaryTwitterHandle' Value='@nj_taxation
Jennifer Sciortino
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