Thursday, July 30, 2009

OOPS - THEY DID IT AGAIN!

Have you been following my posts on the latest FU by the NJ Division of Taxation at the NJ TAX PRACTICE BLOG? It’s déjà vu all over again!
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Back in 2006 there was a serious problem with the NJ Division of Taxation's processing of the payments of balance dues on 2005 Form NJ-1040s.
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Beginning in late August of 2006 I had heard from clients who received balance due notices from the Division of Taxation for 2005. In each case the client had remitted the balance due on their 2005 Form NJ-1040 on a timely basis - and each had documentation that the check was received and cashed by the DOT - but they were not given credit for the payment on the balance due notice!
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The Division of Taxation had credited each of the 2005 payments to the client's 2004 Form NJ-1040 account!
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NJ requires that tax practitioners file all full-year resident returns “electronically”, unless the client elects to “Opt Out”. Since I do not use tax preparation software the only option open to me is NJWebFile. Every single 2005 NJ-1040 that was FU-ed was submitted via NJWebFile.
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It is happening all over again. This past Saturday there were two letters in my mail drop from clients that received “Statement of Account – Underpayment” notices from their “Uncle Jon”.
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The notices suggested that the taxpayer did not send “Jon” the balance due on the 2008 NJ-1040. It requested payment of the balance due plus, or course, penalty and interest.
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Both of the NJ-1040s in question had been submitted via NJWebFile, and the correct payment was made by the April 15th deadline using the online generated 1040-V payment voucher. The clients had in their possession documentation that the check had been cashed by the NJDOT
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I emailed a contact in the NJ Division of Taxation regarding this FU, and sent a copy of my email to the new Acting Director of the Division.
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I have since heard from three more clients who have received erroneous billing notices.
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I have also heard from the Division of Taxation! It seems that the DOT did indeed do it again.
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I received two emails. One was from my “contact” (the highlight is mine):
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I have reviewed both accounts referenced below. In each instance, a payment was made to the division with the appropriate 2008 NJ-1040-V, but was misapplied to the incorrect tax year. Both accounts have been adjusted to reflect the payments:
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We are looking further into the matter to determine if there is an error with the pre-printed forms generated from the NJWebFile system. It is our commitment to minimize the errors in receiving and processing tax payments.
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Thank you for bringing the problem to our attention
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The other was from the Acting Director of the Division (again the highlight is mine):
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Mr. Flach –
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Thank you for bringing this to my attention. I also hope that the problem is isolated. My apologies to you and your clients. I will monitor this matter until appropriately resolved.
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Cheryl Fulmer
Acting Director
Taxation

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There is hope for the NJDOT yet! I was pleasantly surprised with the prompt reply from the Director. Let us hope that when Corzine is thrown out of office in the upcoming election she continues on as the Director.
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This incident is further proof that the best way to get a response from the NJ Division of Taxation is via email. In the past any “snail mail” correspondence to the Division has pretty much been totally ignored. And it also shows that it pays to go to the top!
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My course of action in future tax filing seasons is very clear. I will never again submit a NJ-1040 with a balance due via NJWebFile. I will prepare and submit all balance due returns manually. I expect I will have no problem convincing clients to “Opt Out” of electronic filing when I explain that the NJ online filing system is drastically flawed.
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So, if you submitted your 2008 NJ-1040 via NJWebFile, as anyone can do online at the NJ Division of Taxation website, and you had a balance due, which you paid in full by the April 15th deadline, do not be surprised if you receive a bill from the DOT for payment of the balance due that you had already paid. If you do call the number on the notice and tell the Division that they FU-ed and applied your payment to the wrong year.

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