How New Jersey collects
New Jersey's collection process moves in stages, and costs are added at each one:
- Bills and notices. The Division of Taxation sends a bill or a notice of deficiency or delinquency. Filing a late return doesn't extend the time to pay, and late payments add penalties and interest.
- Collection agency referral. If notices go unanswered, the account can be referred to the Division's contracted collection agency. A Referral Cost Recovery Fee is added to each outstanding item. Once an account is with the agency, Division staff generally can't help with it, and you have to work with the agency's caseworker.
- Notice and Demand for Payment. A certified demand can lead to a judgment.
- Certificate of Debt. If the debt still isn't paid, a Certificate of Debt (COD) is filed with the Clerk of the New Jersey Superior Court. A COD has the same force and effect as a docketed judgment, and it works as a lien. No lawsuit is required. A Cost of Collection fee is added.
- Enforcement. With a COD or judgment in place, the Division's Judgment Unit can ask your bank to turn over funds, place liens on vehicles in coordination with the Motor Vehicle Commission, and take other levy actions.
Set-off programs, which apply state and other payments to the debt, continue until the balance is paid in full.
Fees stack up. Between collection agency recovery fees, cost of collection on a COD, penalties, and interest, a New Jersey balance can grow much faster than the original tax suggests. Resolving it before referral is significantly cheaper.
New Jersey payment plans
New Jersey offers payment plans for almost any unpaid balance:
- Standard plans can be approved for up to 60 months. Longer plans have additional requirements and may need a financial statement.
- The monthly payment must be at least $25.
- The plan must cover all unpaid balances and all required returns. Missing returns have to be filed first.
- Businesses must file all missing New Jersey returns and complete a Responsible Person Acknowledgement and Judgment Authorization.
- Interest continues to accrue while you pay, and every plan is subject to approval.
If your account is already with the collection agency, the plan is arranged through the agency and may come with additional requirements, including a possible judgment.
Owe New Jersey, and maybe New York or the IRS too? We'll resolve them together.
Get a Free ReviewResponsible-person liability for business taxes
New Jersey can hold a responsible person personally liable for certain business taxes, including sales and use tax and gross income withholding tax, as well as several other trust and fee taxes. A responsible person can be any officer or employee whose job includes collecting and paying those taxes. New Jersey looks at factors like check-signing authority, control over which creditors get paid, involvement in preparing returns, day-to-day management, and knowledge that taxes weren't being paid.
Certificates of Debt can be filed against you individually as well as against the business. The business payment plan form asks the responsible person to acknowledge the liability and authorize a judgment, so understand what you're signing before you sign it. We review the facts with you first. For federal payroll taxes, see payroll tax debt.
Releases, subordination, and satisfaction
A docketed judgment is satisfied by paying the full balance. In hardship situations, such as a refinance or a foreclosure, the Judgment Unit may issue a release or subordination of the lien with supporting documentation. If you're selling or refinancing property with a COD on record, start early so the closing isn't delayed.
Settling for less
New Jersey law allows the Division to enter into closing agreements and compromises in limited circumstances. It's not a routine program the way the IRS offer in compromise is, and outcomes vary widely. We evaluate whether a compromise request is realistic before recommending one. For most taxpayers, a payment plan, sometimes combined with penalty relief, is the practical resolution.
Commuters and multi-state filers
Many New Jersey residents work in New York or Pennsylvania and file in more than one state. Credits for taxes paid to other states, missed nonresident returns, and federal adjustments can all create New Jersey balances. We look at every state and the IRS together. See New York tax debt.