SENATE COMMUNITY AFFAIRS COMMITTEE

STATEMENT TO

SENATE, No. 1440

STATE OF NEW JERSEY

DATED: SEPTEMBER 19, 1996

      The Senate Community Affairs Committee reports favorably Senate Bill No. 1440.

      This bill would require the State of New Jersey to pay interest on gross income tax overpayments refunded more than 45 days after the due date of the filing of a return, or 45 days after the permitted extension of the filing, whichever is later.

      Currently, interest is paid on refunds from the later of the date that a gross income tax return is filed or the date that the tax return is due, but the payment of interest is forgiven if a refund is made within six months. This bill decreases the forgiveness period to 45 days.

      This bill provides parity with the federal Internal Revenue Code, which provides a 45 day forgiveness period for interest on federal tax refunds. Refunded taxes are the taxpayer's property. Taxes are typically paid over by the taxpayer's employer, through wage and salary withholding. The refunded taxes may already have been in the possession of the State for as much as fifteen months. This bill will assure that taxpayers are compensated for delayed refunds, and will remove any incentive for delaying refund payments.