The New Jersey Division of Taxation sent out questionnaires to approximately 1,200 businesses to determine their state tax filing obligations. The move comes as the state completes its first round of audits following the implementation of combined reporting in 2019. The questionnaires were described by Acting Director Marita Sciarrotta as a “discovery project” to ensure entities with nexus meet their tax compliance obligations.
The entities targeted by the campaign were included on combined returns but had not filed prior to 2019. Businesses that do not respond and have not filed past returns are potentially subject to estimated assessments going back to when the business first started doing business in the state. A failure to file returns expands the statute of limitations from four years to an unlimited amount of time.
Sciarrotta emphasized that the purpose of the campaign is to ensure proper reporting. The Division of Taxation is not interested in driving companies out of business and will evaluate each case individually to resolve any potential issues.
Argi O’Leary, Advocacy Principal at Ryan, notes that she has seen states stepping up their efforts with these “discovery projects” lately, especially when it comes to affiliated entities that may not have had or known about earlier compliance obligations. It is critical to understand the requirements applicable to every entity in your organizational chart and how those requirements can change based on business affiliations.
“Another effect of these questionnaires is that they may disqualify companies that receive them from participating in voluntary disclosure programs, subjecting those companies to increased assessments and additional penalties. In some cases, they can also disqualify affiliated companies from voluntary disclosure benefits,” notes Tony Gulotta, Principal in Charge of Ryan’s New York office.
Contact the experts at Ryan to ensure all your affiliated entities are in compliance with applicable state and local tax laws. If you have already been contacted by a state about tax compliance, we can help minimize your assessments and obtain the best result to bring you into compliance without compromising your business.
TECHNICAL INFORMATION CONTACTS:
Tony Gulotta
Principal
Ryan
212.871.3901
tony.gulotta@ryan.com
Argi O’Leary
Principal
Ryan
212.871.3901
argi.oleary@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.