New Jersey Announces Tax Amnesty Effective Until January 15, 2019:

Helpful Information for Businesses and Individuals with Unpaid/Unfiled New Jersey Taxes

The New Jersey Division of Taxation recently announced that it will be conducting a tax amnesty program from November 15, 2018 until January 15, 2019.  During this two-month window, certain qualifying businesses and individuals, who have failed to pay New Jersey taxes, will have an opportunity to come forward to satisfy unpaid tax liabilities.  Under the amnesty program, New Jersey will waive one-half of the interest due on the tax, as well as waive 100% of certain late filing and late payment penalties.

Amnesty programs, while common among the several states, may only come once every several years, or less frequently, for a given state.  Accordingly, New Jersey’s current amnesty program presents a unique opportunity for qualifying businesses and individuals to satisfy unpaid taxes and to do so with the potential for significant savings on interest and penalties.  Thus, for any individual or business with potential New Jersey tax exposure, we recommend exploring the amnesty program, as the amount of tax and interest due under an amnesty agreement can be significantly less than under an assessment or audit.

Additional key considerations for the amnesty program are as follows, per the New Jersey Division of Taxation website:

Eligible Tax Periods

Tax liabilities incurred for tax returns due on or after February 1, 2009 and prior to September 1, 2017 are eligible for amnesty.

Audit Implications

Participation in amnesty neither increases nor decreases your chances for audit selection. A tax liability under amnesty is subject to the same verification and assessment as all other liabilities.

Qualifying for Amnesty

Almost everyone qualifies for amnesty. If you have filed an administrative or judicial appeal related to a tax assessment, you may participate in amnesty only if you withdraw your appeal, waive all rights to a future appeal, and receive written approval from the Director of the Division. You are not eligible for amnesty if you are under criminal investigation or charge for a State tax matter by a county prosecutor or New Jersey’s Attorney General.

Eligible Taxes

In order for a tax to be eligible for New Jersey tax amnesty, it must be administered and collected by the New Jersey Division of Taxation. This excludes taxes such as local property taxes and payroll taxes owed to the New Jersey Department of Labor.

The primary amnesty-eligible taxes include:

  • Corporation Business Tax
  • Sales and Use Tax
  • Personal Income/Related Taxes
    • Resident Return
    • Non-Resident Return
    • Fiduciary Return
    • Composite Return
    • Inheritance and Estate Taxes

A listing of other taxes qualifying for amnesty can be found at New Jersey’s website here.

Remote Seller Sales Tax Considerations: Interaction with Wayfair and New Jersey’s Economic Nexus Provisions

On June 21, 2018, the U.S. Supreme Court overturned the requirement that remote sellers must have a physical presence in a state in order to be required to collect that state’s Sales Tax (South Dakota v. Wayfair) (Wayfair). A remote seller is one who sells tangible personal property, specified digital products, or services for delivery into a state via the Internet, catalog, or telephone, and has no physical presence in that state. As a result of the Wayfair decision, states may now impose Sales Tax collection and remittance obligations on remote sellers.  Effective November 1, 2018, New Jersey has a rule that requires remote sellers to collect in remote New Jersey sales tax if the remote seller has $100,000 or more in sales or 200 or more transactions (or both).

For purposes of the amnesty program, it is relevant to note that because the program only applies to returns due before September 1, 2017, there are no Wayfair-affected periods currently considerable for amnesty.  It is possible future amnesty programs may cover periods affected by Wayfair.

Next Steps & Key Dates

For those interested in participating in the amnesty program, the amnesty application and all tax returns and payments under the amnesty program are due before January 15, 2019.  For those seeking to participate, we recommend immediate action to ensure qualifying for the program.

Please contact a member of Barnes Dennig’s State and Local Tax team for any questions regarding New Jersey’s amnesty program, the Wayfair decision, or any related state and local tax matters.