On September 17, the New Jersey Division of Taxation announced a limited-time program allowing taxpayers to resolve their outstanding debt with limited imposition of penalties through a Closing Agreement Program (“Program”).1 This Program is available to New Jersey taxpayers with liabilities from tax periods 2005 through 2013. The Program is open to both businesses and individuals and runs from September 17 through November 17, 2014. Taxpayers who enter into the Program and pay outstanding tax bills will receive the benefit of reduced or eliminated penalties2 with a resulting reduction of interest, no costs of collection, and no recovery fees. The tax liability will not be subject to further audit and no refund may be claimed by the taxpayer on the matter.
Operation of Program
The Program provides that the taxpayer request a closing agreement with the Division.3 The Division is mailing a letter to some taxpayers that includes a schedule of liabilities showing a reduced amount. Taxpayers that do not receive a letter with a reduced schedule of liabilities should contact the Division to determine if they can reduce their debt. Prior to acceptance, the Division will review the taxpayer’s information and determine whether to approve the agreement. Upon receipt of the Division’s approval, the matter is closed. Specifically, the taxpayer waives all rights to any further administrative review or judicial appeal regarding the tax liability. The closing agreement does note that a matter may be reopened in the event of fraud, malfeasance, or misrepresentation of a material fact.
In addition to the closing agreement, the Program requires that a taxpayer remit all tax liability due to the Division prior to the November 17, 2014 expiration date. Failure to enter into a closing agreement and remit the tax due by November 17, 2014 will result in no reduction of tax liability, penalties, interest, collection costs, or recovery fees.
Even though Division officials have publicly stated that they do not expect New Jersey will have another tax amnesty program anytime soon, this Program is the most recent iteration of several taxpayer-friendly programs overseen by the Division that have many characteristics similar to a taxpayer amnesty program.
In announcing the Program, the Division noted that a key aspect of it is the ease and convenience of resolving unpaid tax liabilities with the state of New Jersey. It is a positive sign that the Division views taxpayer convenience as being an important facet of the collection process.
Business and individual taxpayers who have outstanding tax liabilities may take advantage of the Program. Also, while not explicitly stated as being part of the audience targeted by this Program, taxpayers that have already satisfied liabilities but have outstanding penalties may wish to consider reaching out to the Division to see if they may be able to receive benefits through this program.
Because the Program concludes on November 17, 2014, taxpayers considering entry into the Program should evaluate any potential outstanding tax liabilities as soon as possible.