Every week, Mansion Global poses a tax question to real estate tax attorneys. Here is this week’s question.
Q: I read about the recent passage of a tax abatement program in New Jersey. How does it work?
A: The tax abatement program, signed into law by Gov. Phil Murphy on July 1, will allow those who have unpaid taxes to settle up with the state without penalties and with less interest.
The law applies to most state taxes, including property tax. Residents with unpaid taxes for the time period between Feb. 1, 2009 and Sept. 1, 2017, are eligible, according to Robert J. Alter, a partner at the law firm McElroy, Deutsch, Mulvaney & Carpenter who is based in Morristown, New Jersey.
More:How Can I Lower My Very High Property Taxes in New Jersey?
New Jerseyans are still on the hook for the tax, but paying during the amnesty period means penalty fees will be forgiven and only half of the interest accrued is due.
Taxpayers must be able to pay the entire balance, the tax plus the reduced interest, during the amnesty to qualify. The exact dates of the amnesty have not been set, Mr. Alter said, but the 90-day period must end by Jan. 15, 2019. It may not begin until the fall.
Mr. Alter said the amnesty can be a useful tool in many situations, other than the obvious lapse in keeping current with the state’s request for funds. An amnesty payment could be a way to save money for those who have already worked out an installment agreement, for instance, or can help put an end to litigation or audit.
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New Jersey has offered tax amnesty programs in the past, said Stuart Saft, a partner at law firm Holland & Knight, adding that the state is always willing to negotiate a settlement.
"People can always make a deal to pay taxes over a period of time, with interest," he said. However, if they can pay in a lump sum, the amnesty can save money and put an end to the process.
Also worth noting, those who do not resolve their eligible debts during the amnesty period are subject to an additional 5% penalty, according to the New Jersey Division of Taxation website.
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