As
I had mentioned in my “review” of the recent NJ-NATP “Famous State Tax Seminar”,
a member of the audience brought up a very serious problem with the NJ Division
of Taxation. To follow up on this I have
sent the following letter to Michael Bryan, Director of the NJ Division of
Taxation:
Dear
Mr. Bryan:
Thank
you for addressing the NJ chapter of the National Association of Tax
Professional’s annual State Tax Seminar last Saturday, and for bringing along
the state’s new Taxpayer Advocate, and speakers John Kelly and Jim Gordon. Mr. Gordon’s annual presentation is always,
at least for me, the highlight of the seminar.
I
want to add my voice to that of a colleague who brought up a very serious “systemic”
problem during the presentation by Sheri Silverstein - the current practice of
the NJ Division of Taxation to totally ignore individual and business taxpayer
overpayments.
If
a taxpayer sends the IRS too much money in payment of a tax on a Form 1040,
1120, 1041, 941 or whatever, or submits a payment that the Service is not sure
how to apply, the taxpayer will, relatively promptly, receive a letter from the
IRS acknowledging the overpayment, or the unidentified payment, and asking what
the taxpayer wants done with the money -. send a refund or apply it to another
tax liability - or how to properly apply the payment.
If
the NJ Division of Taxation receives an overpayment on a tax return, or an
inadequately identified payment, it does absolutely
nothing! One has the impression that
the Division hopes the taxpayer will not realize that an overpayment was made
and therefore allow the State to keep the money.
This
practice first came to my attention when I discovered a huge error in the
processing of balance due 2005 Form NJ-1040s that were submitted online via
NJWebfile.
The
NJWebFile system automatically created a payment voucher with pre-printed
taxpayer and payment information. The
client would send a check to the NJ Division of Taxation along with this
payment voucher in time to meet the April 15th deadline.
The
error was that the extensive pre-printed code on the bottom of the voucher,
which was “read” by the Division’s computer system when the payment was being
processed, indicated that the payment was for tax year 2004 and NOT 2005. The
payment was applied to the taxpayer’s 2004 “account”, obviously creating an
overpayment, and in the fall the taxpayer received a billing notice for the tax
due on the 2005 NJ-1040, which had already been timely paid, plus penalty and
interest.
When
this improperly applied payment created an overpayment in the 2004 “account”
why did the NJ Division of Taxation not refund the overpayment, or send a
notice to the taxpayer telling them that there was an overpayment on their 2004
account and asking for clarification, or apply the 2004 overpayment to the
alleged 2005 balance due? The Division
totally ignored the existence of the overpayment, hoping to keep the money.
This
problem happened again in 2007.
In
another example of this practice, I recently come across a situation where a
corporate employer double-paid the NJ Gross Income Tax withheld from employees
for the year. I had submitted the
payments quarterly when filing the NJ-927 online, and the taxpayer erroneously
sent payment for the total withholding when filing the annual W-3
transmittal. The NJ Division of Taxation
has never contacted the client about this double payment.
This
is a very serious problem that needs to be addressed as soon as possible. If you need to contact me about this issue
you can email me at rdftaxpro@yahoo.com.
Thank
you for your cooperation. I look forward
to a change in the policy of the NJ Division of Taxation on this issue.
Very
truly yours,
Robert
D Flach
I
also sent a “cc” to Sheri Silverstein, the NJ Taxpayer Advocate.
I
would urge any fellow NJ tax professional who has come across this problem in
the course of your practice to write a similar letter to the Director, with
copy to the Taxpayer Advocate, detailing your experience.
I
will let you know if I get a reply.
TAFN
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