New Jersey Assembly Bill A3036

New Jersey 2022-2023 Regular Session

• Introduced: 2/28/22
• Refer: 2/28/22

Caption

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.

Impact

Should A3036 pass, it will impact how taxpayers engage with the state tax system, as it intensifies the consequences of not reporting federal income changes promptly. Currently, the Division of Taxation has a four-year window to assess deficiencies. However, with the changes stipulated in this bill, taxpayers will lose the ability to make refund claims if they do not report their federal income adjustments within a 90-day period. This modification may directly affect businesses and their financial strategies regarding tax compliance, potentially increasing state tax revenues through more accurate reporting.

Summary

Assembly Bill A3036 proposes significant changes to New Jersey's corporation business tax structure by eliminating the statute of limitations for deficiency assessments when a taxpayer fails to report changes in their federal tax return income to the Division of Taxation. The bill highlights the importance of timely reporting of income adjustments and aims to close loopholes that may allow taxpayers to avoid adequate taxation due to delayed notifications. Furthermore, the proposed legislation makes it clear that failure to report such income changes prohibits taxpayers from filing claims for refunds in these situations.

Contention

Critics of A3036 might argue that the bill unfairly penalizes taxpayers who may already be navigating complex financial situations during times of change. There is concern regarding fairness and whether this bill could lead to burdensome penalties that disproportionately affect smaller businesses or individuals. Proponents, however, may argue that such measures are necessary to ensure appropriate compliance and prevent potential revenue loss for the state. In essence, the legislation seeks to balance the need for timely tax collection with the rights of taxpayers to pursue refunds.