By Tim Clancy and Andrew Jones
Overview
The 2018 New Jersey Tax Amnesty Act was signed into law by Governor Phil Murphy on July 1, 2018. The timing of the amnesty program still has not been finalized, however, the start date is scheduled to be after November 1, 2018 and is required to end by January 15, 2019.
Some key components of the program include the following:
- The program is for eligible taxpayers who have failed to pay any State tax liabilities for tax returns due on or after February 1, 2009 through September 1, 2017.
- If a taxpayer does not take advantage of the program, an additional 5% non-abatable penalty will be imposed on any eligible debts not resolved during the program.
- The Department may waive 50% interest and all penalties, including non-participation penalties associated with the tax periods and types for which amnesty is granted.
- The Division of Taxation will be issuing further guidance on the start date, eligibility, and participation details in the coming months.
Considerations
Many states have introduced amnesty programs or permit other forms of voluntary disclosure programs so taxpayers can obtain good standing with the state. Typically, most programs offer the abatement of penalties, however, interest is still assessed on the taxes due. Under the New Jersey amnesty program, there is the potential for all penalties and 50% interest to be abated which can significantly reduce to the amount due to the state. Because the amnesty program provisions in the legislation still remain fairly general and the exact dates of the program have not been announced, taxpayers considering participation in the program should determine if a voluntary disclosure agreement (VDA) would be preferable. In some cases, taxpayers may decide that it is more advantageous to enter into a VDA to address their prior years’ tax liabilities. Taxpayers should consult with their tax advisors for further discussions either prior to or once additional guidance is provided by the State of New Jersey.
Please contact us to discuss the New Jersey tax amnesty program or any other state and local tax matter.
Contacts
Tim Clancy
State and Local Tax Practice Leader Windham Brannon, P.C.
+1 678 510 2804
[email protected]
Andrew Jones
State and Local Tax
Windham Brannon, P.C.
+1 678 510 2882
[email protected]
