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Legislature Authorizes Tax Sweep

Jul 06, 2004

Among the almost 400 measures approved by the New Jersey Legislature in its late-night marathon session on Thursday, June 24, was a bill which authorizes the New Jersey Division of Taxation to do a wide-ranging sweep of all business entities which hold licenses issued by any State agency, in an effort to collect any State taxes which may be owing. This bill, enacted as P.L. 2004, Ch. 58, gives the Director of the Division of Taxation the authority to request the taxpayer identification numbers and other business entity information of any business which holds a State-issued license, from the agency which issued the license.If the licensing authority does not have the information, the Division of Taxation may request it from the licensed business.The Division of Taxation is then authorized to check its records to ensure that the business is current on all tax liabilities to the State. If a business is found to have a delinquent tax judgment, the new law allows the Director of the Division of Taxation to demand the immediate suspension of the business’s license, with no right to a hearing or other due process.If the State determines that there is a tax liability which has not been reduced to a judgment, the State will issue a Notice of Deficiency and the business will have the opportunity to contest the matter under normal procedures. This law will clearly impact auto retailers, who hold multiple State-issued licenses, from the MVC Dealer’s License, the Division of Banking and Insurance Retail Installment Seller’s License, to body shop, PIF, and ERF licenses.If, as appears to be the case, the State intends to use this law to conduct a broad sweep in an effort to collect delinquent or disputed taxes, then dealerships can expect to have their tax status reviewed.They may or may not receive a prior request for information or notice as part of this procedure. The license suspension provisions of this law clearly give the Division of Taxation a powerful threat to hang over the head of any business that has an outstanding tax liability. The only bright spot in this legislation is that it gives something similar to an amnesty in the event a business is found not to have been appropriately registered with the Division of Taxation with regard to any State tax.If it is determined that a business is not in compliance with any applicable business registration requirements, they will be given 10 days to comply.NJ CAR will monitor the actions of the Division of Taxation in implementing this new law and will update members when any more information becomes available.