N.J. Admin. Code § 18:2-5.5

Current through Register Vol. 56, No. 21, November 4, 2024

Section 18:2-5.5 - Items previously assessed

(a) The following terms, when used in this section, shall have the following meanings:

1. "Delinquency tax assessment," "arbitrary tax assessment," or "estimated tax assessment" each mean an assessment made pursuant to 54:49-5, or any substantially similar provision under a specific State tax statute, whereby the taxpayer has failed to file a return or report as required under any tax law, or has filed a return or report that is insufficient for the Director to evaluate its accuracy, and the Director has estimated and assessed the taxes, fees, penalties, and interest due from the taxpayer.

2. "Additional tax assessment" means an assessment of additional tax made pursuant to 54:49-6, Deficiency assessment in certain cases, or any substantially similar provision under a specific State tax statute, whereby the taxpayer has filed a tax return or report, and the Director determines that there is a deficiency with respect to the payment of tax due because the amount of tax shown due on the report or return is less than the amount of tax due after adjustment of the amount due upon examination or audit of the return or report by the Director. The assessment of additional tax shall include interest and penalty imposed under any State tax law. For purposes of this section, the term "additional assessment" does not include an assessment issued because the amount of tax actually paid is less than the amount due as shown on the taxpayer's return or report.

3. "Jeopardy tax assessment" means an assessment made under the circumstances set forth at 54:49-7, 54A:9-14, or any substantially similar provision under a specific State tax statute.

(b) Except as provided by (c)1 below and 18:2-5.7, no claim for refund is permitted for items which were previously the subject of an assessment by the Director where the taxpayer was permitted 90 days to protest the assessment pursuant to 54:49-18, or similar provisions of any particular tax statute. Failure to timely protest the assessment constitutes a waiver of the taxpayer's right for review of that item.

(c) The extended refund request period exception is as follows:

1. A taxpayer may file a claim for refund of a payment of an additional assessment issued by the Director with respect to all taxes, if the taxpayer:

i. Neither has protested the additional tax assessment to the Director in compliance with the applicable statutory protest period nor appealed the additional tax assessment to the New Jersey Tax Court in compliance with the statutory appeal period;

ii. Pays the additional tax assessment in full, including all penalty and interest imposed thereon for which the taxpayer had received notice, within one year after the date the applicable statutory protest period has expired;

iii. Files a claim for refund of the payment made pursuant to (c)1ii above, on the refund claim form prescribed by the Director (Form A-1730) within 450 days after the date the protest period described in (c)1ii above expires;

iv. Uses a separate refund claim form for each type of tax paid for which a refund is sought, whether or not the notice of additional tax assessment included more than one tax and whether or not the taxpayer used only one check to pay two or more tax assessments; and

v. Explains in the refund claim form the ground(s) upon which the refund is claimed, limited to the ground(s) for the additional tax assessment provided in the notice of assessment, in accordance with the requirements of 18:2-5.8(g). However, a taxpayer who has already protested one or more grounds for an additional tax assessment but not another ground or who has already protested one or more periods of a multi-period additional tax assessment but not another period is not eligible to use the procedure prescribed by (c)1 above with respect to the ground(s) or period(s) that the taxpayer did not previously protest.

2. The Director will not consider the claim for refund if any of the requirements in (c)1 above are not met. No extensions of time to meet any such requirement will be allowed.

3. A refund will not be granted unless the taxpayer demonstrates that the ground(s) provided by the Division of Taxation in the notice of additional tax assessment is (are) erroneous as a matter of fact or law. The Division of Taxation will not consider any other ground(s) in reviewing the claim.

4. The maximum amount that may be refunded is the amount that is paid pursuant to (c)1ii above.

5. The procedures prescribed by (c)1 above do not apply to refunds of payments of costs of collection, delinquency, estimated or arbitrary tax assessments, jeopardy tax assessments when no return has been filed for the period(s) at issue, payments of penalty and interest without payment of an underlying additional tax assessment, and payments of penalty and interest imposed without assessment of an additional tax.

6. Payment of an additional tax assessment is due within the time established by the Uniform Procedure Law and the provisions of (c)1 above do not extend the due date of the payments of any additional assessment. Such assessment shall be due as set forth in 54:49-6, 54A:9-2(b), or any other similar provision of an applicable specific State tax statute.

7. An additional tax assessment is paid whether paid voluntarily by the taxpayer or involuntarily as a result of collection efforts undertaken by the Division of Taxation.

8. Examples:

i. The Division of Taxation issues an additional corporation business tax assessment for the taxpayer's 2013 fiscal year which results from an adjustment to the property fraction of the allocation factor used by the taxpayer in its return for that year. The notice of additional tax assessment does not refer to any other reason for the assessment. The taxpayer follows the refund procedure prescribed in (c)1 above. It contends that it is entitled to a refund of the tax paid on the ground that the payroll fraction of the allocation factor that it used in its 2013 return was erroneous. Since the ground provided in the notice of assessment does not refer to the payroll fraction of the allocation factor, the Division of Taxation will not consider that ground in reviewing the claim for refund.

ii. The Division of Taxation issues an additional corporation business tax assessment which results from an adjustment to the taxpayer's net operating loss and to the payroll fraction of the allocation factor used in the taxpayer's fiscal 2013 corporation business tax return. The taxpayer protests the adjustment to the net operating loss but not the adjustment to the payroll factor. The taxpayer may not later pay the corporation business tax stemming from the adjustment to the payroll factor and seek a refund of that payment under (c)1 above.

iii. The Division of Taxation issues an additional sales and use tax assessment to a taxpayer. The taxpayer protests the sales tax component of the assessment but not the use tax component. The taxpayer may not later pay the tax stemming from the use tax component of the assessment and claim a refund of that payment under (c)1 above.

iv. The Division of Taxation issues an additional sales tax assessment and a corporation business tax assessment at the same time to a taxpayer. The taxpayer protests the sales tax assessment to the Conference and Appeals Branch but not the corporation business tax assessment. The protest, appeal or payment of the sales tax assessment does not preclude the taxpayer from using the procedure prescribed by (c)1 above with respect to payment of the corporation business tax assessment.

v. An individual taxpayer residing in New Jersey fails to file a gross income tax return for the calendar year 2013. The taxpayer does not provide any information to the Division of Taxation concerning the taxpayer's 2013 income and expenses, although requested to do so. Thereafter, the Division of Taxation issues a delinquency gross income tax assessment for that year. As the assessment is not an additional tax assessment, the refund procedure prescribed in (c)1 above is not available to the taxpayer.

vi. An individual taxpayer residing in New York files a gross income tax return for the calendar year 2013. The Division of Taxation reviews the return. The Division of Taxation requests the taxpayer to provide copies of Federal schedules and a detailed calculation of the income and deductions shown on the return. Thereafter, the Division of Taxation issues an arbitrary gross income tax assessment for that year, estimating the additional tax owed and assessing applicable penalty and interest charges. As the taxpayer did not supply the required report to the Division of Taxation, the refund procedure prescribed in (c)1 above is not available to the taxpayer.

vii. The Division of Taxation issues an additional sales tax assessment to the taxpayer, who neither protests nor appeals the assessment and, instead, requests a payment plan. The Division of Taxation grants the taxpayer a three year period in which to pay the assessment. The taxpayer pays the assessment in full at the end of the three year period. The refund procedure prescribed in (c)1 above is not available to the taxpayer since the taxpayer did not pay the additional tax assessment in full within one year after the expiration of the statutory 90-day period for protesting the assessment to the Division of Taxation and of the statutory 90-day period for appealing the assessment to the New Jersey Tax Court.

viii. A taxpayer protests an additional sales tax assessment to the Division of Taxation and takes no further action with respect to the assessment other than paying the tax within one year after the expiration of the statutory 90 day period in which to protest the assessment to the Division of Taxation. Since the taxpayer filed a protest with the Division of Taxation, the refund procedure prescribed in (c)1 above is not available to the taxpayer.

ix. The Division of Taxation issues a notice of additional tax assessment reflecting assessments in corporation business tax and sales and use tax. A taxpayer using the refund procedure prescribed by (c)1 above is required to use a separate refund claim form with respect to a refund of a payment of the corporation business tax and to a refund of a payment of the sales and use tax.

x. Taxpayer timely files a 2013 resident gross income tax return claiming a credit for taxes paid to other jurisdictions on wages taxed by both New York and New Jersey. Upon audit it is determined that the taxpayer failed to report a taxable distribution from a New Jersey S Corporation which also necessitates that the credit be amended. The taxpayer does not appeal the assessment within 90 days of the notice. Taxpayer files a claim for refund under (c)1 above amending the credit for taxes paid to other jurisdiction as a result of a New York audit increasing New York source wages. The taxpayer is precluded from claiming a refund under this provision on that the ground for the additional tax assessment is not the same ground for the taxpayer's refund request.

N.J. Admin. Code § 18:2-5.5

Amended by 47 N.J.R. 3150(a), effective 12/21/2015