New Jersey Releases Details of Tax Amnesty Expiring January 15th

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We previously reported on the new tax amnesty enacted in New Jersey (State Tax Alert 8/5/18). This week the state announced that amnesty started November 15 and runs through January 15, 2019.The Division of Taxation has updated its NJ Tax Amnesty website with complete details.


Amnesty is eligible for any tax returns originally due between February of 2009 and August of 2017. Only taxes administered and collected by the Division are eligible, including personal and business income tax, sales tax, excise taxes, and fees. Ineligible are local property taxes and payroll taxes administered by the NJ Department of Labor.


The Benefits

Taxpayers with delinquent obligations will pay only the tax they owe, plus one-half of the amount of interest. All penalties are abated, as are referral cost recovery fees that may have been added by the Division's collection agency (Pioneer Credit Recovery) or any other collection fees. The tax and one-half interest must be fully paid by January 15, 2019.


The savings can be substantial. A $10,000 liability from tax year 2012 would have accrued more than $3,500 of interest by December 31, 2018. Penalties and collection costs could raise the total to over $17,000. Under amnesty, that liability may be settled for about $11,700.


When amnesty ends, a special penalty of 5% will be imposed on any liabilities not paid during the period. This penalty cannot be waived or abated. Taxpayers currently in a payment plan can file and pay under amnesty; otherwise they will owe the penalty on any balance remaining at January 15, 2019.


A tax liability under amnesty is subject to the same audit verification as any other liability. Amnesty neither protects taxpayers from audit, nor does it increases the risk of audit. Once you file under amnesty, you may no longer amend the return for a refund or otherwise appeal the amount paid.


Filing for Amnesty

Taxpayers with existing assessments should have already received an amnesty notice. To file for amnesty, log in to the Amnesty Processing Center with the Amnesty ID and PIN provided on the notice.


If a tax return was not previously filed, it must first be filed in order to qualify for amnesty. It should be filed electronically if that option is available. If it must be paper-filed, the Division has a special amnesty program post office box where it should be sent instead of the normal filing address. Whether e-filed or paper-filed, payment should not be submitted with the return. Once the return is submitted, you may log into the Amnesty Processing Center to make the payment under amnesty. LM Cohen can help you prepare delinquent returns and file them under amnesty.


All required tax returns and payments submitted electronically must be received by 11:59 p.m. on January 15, 2019. All mailed returns and payments must be postmarked by January 15, 2019.


Please contact your LM Cohen professional to find how NJ Tax Amnesty may benefit your situation. All our prior State Tax Alerts, as well as useful alerts about federal Tax Cuts and Jobs Act topics, are available on the Updates page of our website.

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