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Buono-Sweeney Tax Amnesty Bill Approved By Senate Budget Panel

Senator Barbara Buono (D-Middlesex) and Senate Majority Leader, Stephen Sweeney (D-Salem, Cumberland, Gloucester) at the bill signing for Pension and Benefits Reform

The Senate Budget and Appropriations Committee today approved a bill to establish a 45-day amnesty period for New Jerseyans to pay delinquent taxes without civil or criminal penalties.

The bill (S-2678) sponsored by Sen. Barbara Buono (D-Middlesex), the chairwoman of the committee, and Senate Majority Leader Stephen Sweeney (D-Gloucester, Cumberland and Salem) would also relieve the delinquent taxpayer of paying one-half of the interest on the delinquent amount that would have otherwise accrued.

“We are facing a national economic crisis the likes of which we haven’t seen in decades,” Sen. Buono said. “Each month brings fresh reports of state revenues declining even further than we feared. The administration estimates a tax amnesty program would net the state an additional $100 million in revenues at a time when we are cutting deeply into existing spending programs and scrambling for every source of income we can find.”

The bill specifies that the amnesty period cannot extend beyond June 15, 2009, which means that the bill would have to be signed into law no later than May 1, 2009. Amnesty would only apply to State tax liabilities for tax returns due on or after January 1, 2002 and prior to February 1, 2009. The start date corresponds with the cutoff date imposed under the previous tax amnesty program in 2002.

“The amnesty program embodied in our bill is not all carrot and no stick,” said Sen. Sweeney. “First of all, any taxpayer who is eligible for amnesty and fails to take advantage of the program during the 45-day amnesty period would be subject to a 5 percent penalty, which cannot be waived, on top of all other penalties, interest and costs of collection otherwise authorized. And anyone who is under criminal investigation or has been charged in a state tax matter would not be allowed to participate.”

The amendments would provide that only one-half of the interest owed on the delinquent taxes would have to be paid to the State. The amendments would also eliminate the requirement that the taxpayer pay the costs of collection. The Division of Taxation indicates that it would prefer not to hinge tax amnesty on the payment of these costs.

“With the shortfall in state revenues, it’s imperative we collect every penny that is owed to the state,” Sweeney said. “It is especially unfair that law-abiding taxpayers are struggling through this economic downturn and still meeting their obligations while there are others out there who have not stepped up and paid their fair share. This will give them a chance to pay what they owe and get back on the tax rolls.”

“Tax amnesty is not something the state can or should do every year, but given the grave fiscal situation we’re in, this is an appropriate time to help close our revenue shortfall while giving people a chance to do the right thing without fear of penalty or prosecution,” Buono said.

The bill, which was approved 10-3, specifies that the amnesty period cannot extend beyond June 15, 2009, which means that the bill would have to be signed into law no later than May 1, 2009. It now goes to the full Senate for a vote.

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