Bill Text: NJ A6035 | 2018-2019 | Regular Session | Introduced
Bill Title: Eliminates period of limitation for deficiency assessment under corporation business tax when taxpayer fails to notify Division of Taxation of an income change on their federal tax return and prohibits claim for refund in such circumstance.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2019-12-05 - Introduced, Referred to Assembly Appropriations Committee [A6035 Detail]
Download: New_Jersey-2018-A6035-Introduced.html
Sponsored by:
Assemblyman RONALD S. DANCER
District 12 (Burlington, Middlesex, Monmouth and Ocean)
SYNOPSIS
Eliminates period of limitation for deficiency assessment under corporation business tax when taxpayer fails to notify Division of Taxation of an income change on their federal tax return and prohibits claim for refund in such circumstance.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning the timely report of certain tax filings under the corporation business tax, amending various sections of the statutory law.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 13 of P.L.1945, c.162 (C.54:10A-13) is amended to read as follows:
13. If the amount of the taxable income for any year of any taxpayer as returned to the United States Treasury Department is changed or corrected by the Commissioner of Internal Revenue or other officer of the United States or other competent authority, or where a renegotiation of a contract or subcontract with the United States results in a change in said taxable income, or where a recovery of a war loss results in a computation or recomputation of any tax imposed by the United States, such taxpayer shall report such changed or corrected taxable income, or the results of such renegotiation, or such computation or recomputation, within 90 days after the final determination of such change or correction or renegotiation, or such computation or recomputation, or as required by the director, and shall concede the accuracy of such determination or state wherein it is erroneous. Any taxpayer filing an amended return with such department shall also file within 90 days thereafter an amended report with the director. The periods of limitation to make deficiency assessments under R.S.54:49-6 and to file claims for refund under R.S.54:49-14 shall commence to run for additional four year periods from the date that taxable income is finally changed or corrected by the Commissioner of Internal Revenue; provided, that the additional periods of limitation shall only be applicable to the increase or decrease in tax attributable to the adjustments in such changed or corrected taxable income.
The period of limitation to make deficiency assessments under R.S.54:49-6 shall not apply to a taxpayer that fails to file an amended report within 90 days pursuant to this section. If a taxpayer fails to file an amended report within 90 days, the taxpayer shall be prohibited from filing a claim for refund under R.S.54:49-14.
The penalties for failure to timely file a return under R.S.54:49-4 shall apply to a taxpayer that fails to file an amended report pursuant to this section.
(cf: P.L.1992, c.175, s.19)
2. R.S.54:49-6 is amended to read as follows:
54:49-6. a. After a return or report is filed under the provisions of any State tax law, the director shall cause the same to be examined and may make such further audit or investigation as he may deem necessary, and if therefrom he shall determine that there is a deficiency with respect to the payment of any tax due under such law, he shall assess the additional taxes, penalties, if any, pursuant to any State tax law or pursuant to this subtitle, and interest at the rate of three percentage points above the prime rate due the State from such taxpayer assessed for each month or fraction thereof, compounded annually at the end of each year, from the date the tax was originally due until the date of actual payment, give notice of such assessment to the taxpayer, and make demand upon him for payment.
b. No assessment of additional tax shall be made after the expiration of more than four years from the date of the filing of a return; provided, that in the case of a false or fraudulent return with intent to evade tax, or failure to file a return or an amended return, the tax may be assessed at any time. If a shorter time for the assessment of additional tax is fixed by the law imposing the tax, the shorter time shall govern. If, before the expiration of the period prescribed herein for the assessment of additional tax, a taxpayer consents in writing that such period may be extended, the amount of such additional tax due may be determined at any time within such extended period. The period so extended may be further extended by subsequent consents in writing made before the expiration of the extended period. For purposes of this subsection, a return filed before the last day prescribed by law or by regulations promulgated pursuant to law for the filing thereof, shall be considered as filed on such last day.
(cf: P.L.1993, c.331, s.3)
3. R.S.54:49-14 is amended to read as follows:
54:49-14. a. Any taxpayer, at any time within four years after the payment of any original or additional tax assessed against him, unless a shorter limit is fixed by the law imposing the tax, may file with the director a claim under oath for refund, in such form as the director may prescribe, stating the grounds therefor, but no claim for refund shall be required or permitted to be filed with respect to a tax paid, after protest has been filed with the director or after proceedings on appeal have been commenced as provided in this subtitle, until such protest or appeal has been finally determined. The signing of an agreement by the taxpayer and the director extending the period for assessment shall likewise extend the period for filing a claim for refund.
b. No taxpayer shall be precluded from claiming a refund of additional tax assessed solely on the ground that the taxpayer neither protested or appealed from any part of the assessment. A taxpayer may, pursuant to this subsection, file a claim for the refund of the assessment of additional tax if (1) the taxpayer neither protested nor appealed from the assessment, (2) the taxpayer paid the assessment in full within one year after the expiration of the period allowed for filing a protest of the assessment, (3) the taxpayer files the claim for the refund within 450 days of the expiration of the period allowed for filing such a protest, and (4) the amount of the refund claimed pursuant to this subsection does not exceed the amount of the assessment paid. The time periods provided shall apply solely for purposes of refund claims under this subsection and shall be inapplicable with respect to any penalty and interest payments that may be due. A refund claim shall be filed under oath, in a form as the director may prescribe, and shall state the grounds therefor, which grounds shall be limited to those issues raised by the deficiency assessment itself and shall not include any additional issues with respect to the original assessment of tax. The filing of a claim for refund by the taxpayer under this subsection shall neither extend or toll the time to request a hearing or appeal an additional assessment of tax as otherwise provided by law. The denial of a claim for refund shall be an action of the director subject to review pursuant to R.S.54:51A-14.
c. Each taxpayer shall file a separate refund claim. A refund claim on behalf of a class is not permitted.
d. If a tax is declared to be discriminatory in a final judicial decision from which all appeals have been exhausted, the director may, within the director's sole discretion, refund or credit only the discriminatory portion of the tax.
e. If a taxpayer fails to report to the director an adjustment to the taxpayer's income on the taxpayer's federal income tax return in a manner required by law, the taxpayer shall be prohibited from filing a claim for refund pursuant to this section.
(cf: P.L.1998, c.106, s.13)
4. This act shall take effect immediately.
STATEMENT
This bill eliminates the statute of limitations for corporation business tax assessments in cases where a taxpayer fails to notify the Division of Taxation of an income change to their federal tax return.
The period of limitation for the Division of Taxation to make a deficiency claim against a taxpayer is four years. If a taxpayer's income changes on their federal return due to an Internal Revenue Service (IRS) determination, the taxpayer's income for State tax purposes may be affected. Currently, taxpayers are required to report such a change to the Division of Taxation within 90 days. However, if a taxpayer fails to make a report, the period of limitation may run out before the Division of Taxation learns of the change to the taxpayer's income. Additionally, if a taxpayer reports to the Division of Taxation a change to their federal return following 90 days, the taxpayer may nevertheless file a claim for a refund. The period of limitation and allowance of a refund therefore provide an incentive to not timely report a change to income.
Pursuant to this bill, in addition to eliminating the limitation period, taxpayers will be prohibited from filing a claim for refund if they fail to notify a change to the Division of Taxation within 90 days. The bill also clarifies that the penalties associated with late filing of a return apply to a taxpayer that does not timely file a report of change to their federal tax return.
