New Jersey has serious budget trouble — a $275 million hole in the state budget and a bond rating downgraded a record number of times. When Gov. Chris Christie’s predecessor got into that kind of trouble, he offered a tax amnesty and raised a record $725 million. Christie called it “gimmicks and haphazard governing,” so his administration is not offering a tax amnesty. Here’s what they’re offering instead: delinquent taxpayers can pay a decade’s worth of back taxes by Monday with no penalties, no questions asked. Director of the state Division of Taxation Michael Bryan told NJTV News Anchor Mary Alice Williams that the new program helps taxpayers clean up outstanding liabilities at a significant savings.
Bryan said general amnesty is typically authorized by the Legislature in any state and it will have broader reductions in costs typically in the form of a reduced interest. He said that a lot of amnesties will be at least an abatement of half of the interest. He said that there will also be an incentive to participate in the program, since there is a penalty without participation. He said the state’s 2009 general amnesty had a 5 percent penalty if one did not participate. He said those items are not part of the program that he’s involved with now.
The new program offers people the chance to pay back taxes without penalties but they would still have to pay the taxes in interest. “The 2009 penalty is still there so there may be cases where if taxpayers are resolving issues that are that old, there may be a nominal penalty associated with that period,” Bryan said.
When asked the benefit of New Jersey residents clearing up their taxes, Bryan said it is a lower cost. He said that the cost of collections will be abated in addition to those available penalties. He said that he thinks it provides an opportunity for taxpayers to clean up some outstanding liabilities at a significant savings.
Bryan said that he does not have an official target of how much money the state expects to take in from this plan, but he is pleasantly surprised about the participation in the program. He said that there are tens of thousands of people calling, working through the website and coming in person to take advantage of the program. Bryan said that the range of people taking advantage of the program, class wise, is a broad spectrum.
“There’s lots of taxpayers with small balances due that this is enough of a carrot, so to speak, to come in and resolve the issue. We’ve got some middle income taxpayers showing up and what we refer to as high net worth taxpayers also coming in and participating,” Bryan said.