ASSEMBLY APPROPRIATIONS COMMITTEE

STATEMENT TO

ASSEMBLY COMMITTEE SUBSTITUTE FOR

ASSEMBLY, No. 1420

STATE OF NEW JERSEY

DATED: FEBRUARY 5, 1996

      The Assembly Appropriations Committee reports favorably an Assembly Committee Substitute for Assembly Bill No. 1420.

      This Assembly Committee Substitute for Assembly Bill No. 1420 requires the Director of the Division of Taxation to establish a tax amnesty period of up to three months that will end no later than one year after the date of enactment of the substitute and also authorizes the director to establish a system for the payment of State taxes by credit card, debit card or electronic funds transfer.

      During the amnesty period a taxpayer that has failed to pay any State tax may pay the tax without any interest that may otherwise be due, without any costs of collection that may otherwise be due, and without the imposition of any civil or criminal penalties arising out of an obligation imposed under any State tax law. This amnesty period applies only to State tax liabilities for tax returns due on and after January 1, 1987 and prior to January 1, 1996. The amnesty provisions do not extend to any taxpayer under criminal investigation for any State tax matter.

      If a taxpayer eligible to use the amnesty period fails to pay taxes during the period, a 5% penalty, which is not subject to waiver or abatement, will be imposed in addition to all other penalties, interest, or costs of collection otherwise authorized by law, on the unpaid liability.

      The State Treasurer testified, and it is the understanding of the committee, that under the bill a taxpayer will be allowed "partial" amnesty, that is, a taxpayer paying a portion of an outstanding eligible liability will be allowed the amnesty provisions as to the amount paid and will be subject to the bill's penalties as to amounts not paid; and that the bill's penalties will not be applied to deficiencies assessed pursuant to a question of law or fact uncovered through routine audits of taxpayers otherwise in compliance with filing and payment requirements of State taxes.

FISCAL IMPACT:

      The substitute provides an appropriation of $10 million for the costs of advertising, implementing and administering the amnesty program. This program is estimated to increase collections by $80 million, for a net revenue increase among several taxes of $70 million.