Small businesses in New Jersey are getting a second chance to pay their back taxes and file late.
A tax amnesty program, signed into law by Gov. Phil Murphy in July, opened Thursday and will go through Jan. 15.
The amnesty program allows individuals and businesses to pay back taxes or file past returns without penalties and with reduced interest in most cases.
The program covers late filings or back taxes starting Feb. 1, 2009, and before September 2017.
A Treasury Department spokesperson said the department is hopeful the program will bring in approximately $200 million, which would match the 2019 budget estimate.
“This is based on our experience with voluntary compliance through previous amnesties,” Jennifer Sciortino said. “Our enforcement programs and audit teams work diligently all year round to bring the remainder of nonfiling/nonpaying individuals and businesses into compliance.”
The department said more than 750,000 letters have been sent to businesses and individuals believed to have qualifying accounts. And, of the known delinquencies, a greater preponderance are businesses.
Ralph Albert Thomas, CEO and executive director at the New Jersey Society of CPAs, said his group not only is in favor of the program, it pushed for a longer amnesty period after surveying its members earlier this year.
“Tax relief can come in all shapes and sizes, but these results show that CPAs are in favor of options that can both minimize tax burdens on New Jersey residents as well as raise considerable funds for the state,” Thomas said in a statement earlier this year.
Chris Whalen, a CPA who operates a firm that bears his name out of Red Bank, said the amnesty program will benefit businesses.
Whalen said the reason why some businesses don’t file their taxes has a lot to do with the misperception that filing and paying need to happen concurrently.
“I tell people, we need to separate a delinquent filing from a deficient filing,” he said.
Whalen said people who don’t file put themselves at greater financial risk because of the late filing fee.
“Late penalty fees are not as bad as late filing,” Whalen said.
Those that tend not to file or are late in payments are sole proprietorships or cash-only businesses, Whalen said.
That’s because larger companies have more reporting burdens and it is harder for them to fly under the radar.
John Ficara, acting director of the Division of Taxation, said businesses should take advantage of this opportunity.
“We are pleased to offer taxpayers a chance at compliance and a fresh start through the New Jersey Tax Amnesty program,” he said in a statement. “Since tax amnesty is offered for a limited time, we’re encouraging taxpayers to take advantage of the program before the Jan. 15 deadline or risk incurring greater penalties.”
Taxpayers who do not take advantage of the program will incur a 5 percent penalty, according to the law.
Those who owe have been sent official letters from the state informing them of the program.