Conducted another successful “Famous” State Tax Seminar, that is.
I am talking about the New Jersey chapter of the National Association of Tax Professionals, whose annual state tax update seminar I attended on Saturday, as usual at the Woodbridge Hilton in Iselin. I have been to just about every one of the 20+ the chapter has sponsored, missing only a couple due to the weather.
The room was packed full – thanks to the relatively good weather. I was surprised that there were only two “vendors” who had rented tables. While I personally do not visit the vendors at this function, I am concerned because this represents a loss of income to the chapter, I wonder if the lack of vendors means the chapter charges too high a fee, or if other attendees also avoided the vendor tables as I do and not enough business was generated to justify the expense. The two vendors who did show were new to NJ-NATP, and represented services of interest to many tax professionals. I will admit I took one vendor’s brochure while passing through the hall.
The purpose of the seminar is to provide updates to and discuss new developments in the various taxes of the State of New Jersey and, often, the taxes of neighboring states. If time permits there is usually also a general information presentation that is of interest to accountants and tax preparers.
The day’s schedule began, after the usual greetings, with an all-too brief “keynote” presentation by the current Director of the NJ Division of Taxation – Michael Bryan, CPA. Whether the 30-minute time allotment was due to the Director’s schedule or the time constraints of the day’s itinerary I do not know.
Mr. Bryan had appeared at last year’s seminar, where he was touted as the “fair haired boy” with high expectations for reforming and repairing the NJDOT. Coming to the seminar I had felt there was not much noticeable improvement in the Division in the past year. I was, however, aware that, to his credit, the new Director had created a Director’s Advisory Council and a state Taxpayer Advocate Office. Now, thinking back, it appears to me that I did not have to deal with as many NJDOT FUs in 2011 as I had in past years – so perhaps there has been progress.
The Director told us that NJDOT, like the IRS, in giving more scrutiny to claims for the Earned Income Credit. If the IRS believes that close to 1/3 of all Earned Income Credit claims are fraudulent, it follows that a similar percentage of NJ claims could also be suspect. All state returns that include the EITC are individually processed.
He also reported that he is making progress on processing correspondence. All correspondence received by the Division is now initially scanned and entered into the system. I have found over the years that the rule, and not the exception, is that my written correspondence to NJDOT is totally ignored. If not totally ignored, I certainly do not receive any reply or response.
Mr. Bryan expects that electronic filing of state corporate income tax returns will begin for calendar year 2012 activity – for returns filed in 2013. E-filing of CBT returns will not be mandatory.
The Director was followed by Sheri Silverstein, the chief of the new Office of the Taxpayer Advocate, who was given slightly more time.
Ms Silverstein discussed the guidelines for submitting cases to the OTA –
(1) You face a threat of immediate adverse action for a disputed liability, or
(2) You have experienced a delay of more than 120 days to resolve a tax account problem or in receiving a response to an inquiry to the Division.
Considering that my written correspondence is generally never responded to, I certainly have not received a response to an inquiry to the Division in more than 120 days – so I will be reviewing my 2011 state correspondence file later this week.
The OTA also investigates “systemic” problems – deficiencies in the NJDOT systems that affect many taxpayers.
One apparently submits a request for assistance from the OTA on Form NJ-OTA-911 (Request for Assistance from the Office of the Taxpayer Advocate). This form was discussed by several speakers during the day, but no sample or blank form was included in our package of handouts.
During the Taxpayer Advocate’s presentation a member of the audience brought up a very serious “systemic” problem – which probably should have been done during the Director’s time – the fact that the NJ Division of Taxation does not acknowledge or question taxpayer, individual or corporate, overpayments.
If a taxpayer sends the IRS too much money in payment of a tax, or submits a payment that the Service is not sure where to apply, that taxpayer will, relatively promptly, receive a letter from the IRS acknowledging the overpayment, or the unidentified payment, and ask what the taxpayer wants done with the money (i.e. a refund or application to another tax, or where it should be properly applied).
If the NJ Division of Taxation receives an overpayment it does absolutely nothing, hoping that the taxpayer will not realize that an overpayment was made and therefore allow the State to keep the money to waste on political pork and entitlements.
This is indeed a serious ongoing problem, and one that I will address in a future posting at this blog.
The Taxpayer Advocate promised to “look into” the issue.
Another problem was presented by a few audience members. It seems that a client wanted to dissolve a corporation and the tax pro submitted all the appropriate paperwork. Before being issued a tax clearance the client is informed that the Division has no record of the 1990 (or 1991 or 1992) corporate income tax return being filed, and requests a copy before issuing the clearance and officially dissolving the corporation.
Very few corporations, and even less tax professionals (although not me), would have a copy of a tax return filed 20+ years ago on file. This certainly creates a hardship in the client and preparer, and causes delays that result in (already excessive) additional minimum corporate tax payments by the client.
In last year’s presentation Director Bryan discussed the issue of alleged “too old” tax deficiencies. Here is what I reported in last year’s “review” of the NJ-NATP state tax seminar –
“A participant told the Director about receiving a notice from NJDOT for a tax (and accumulated penalty) due from the late 1980s. Mr. Bryan told us he was aware of this problem and that it was totally ridiculous. He plans to in the very near future establish a reasonable date and “write off” alleged outstanding balances from before this date.”
More work needs to be done on this issue – as more than one audience member had experienced the same problem when trying to dissolve client corporations.
Next up was the non-update presentation on “Relocating from New York/New Jersey to Florida – Tax Implications” from attorney Mary W Browning. Ms Browning did a good job discussing residency and domicile issues as they apply to both the state income tax and state estate and inheritance tax.
to be continued . . . . .