N.J. Admin. Code § 18:2-2.5

Current through Register Vol. 56, No. 11, June 3, 2024

Section 18:2-2.5 - Cost of collection defined

(a) Cost of collection means the amount of expense incurred by the State with respect to the issuance of a certificate of debt for, and the collection of, any State tax not paid within the time prescribed by law. These expenses include, but are not limited to, the following:

1. Cost of postage;

2. Cost of telephone;

3. Cost of photocopying;

4. State payroll hours used, including all associated overhead;

5. Cost of filing and prosecuting suit;

6. The cost of agents, contractors, subcontractors or others employed or otherwise engaged by the State of New Jersey subsequent to the entry of a certificate of debt for the efficient and expeditious collection of unpaid tax; and

7. Any other expense deemed by the Director to be reasonably related and necessary for the collection of any unpaid tax.

(b) The Director may impose the actual cost of collection, or, in lieu of ascertaining and imposing the actual cost of collection, can impose a fee as follows:

1. In the event that any State tax is not paid within the time prescribed by law and the Director issues a certificate of debt pursuant to 54:49-12, the greater of five percent of the tax or $ 100.00;

2. In the event that any State tax remains unpaid following the issuance of the certificate of debt and the Director takes any further collection action, including but not limited to, referral of the matter to the Attorney General, the greater of 10 percent of the tax or $ 200.00;

3. In the event that any State tax remains unpaid and suit is instituted against the taxpayer for collection of the tax, the greater of 20 percent of the tax or $ 500.00.

(c) The Director shall consider the following in determining whether to impose the actual cost of collection or a fee in lieu thereof:

1. Whether the taxpayer fails to properly maintain books and records as required;

2. Whether the taxpayer fails to make books and records available for examination;

3. Whether the taxpayer fails to secure proper license or fails to register with the Division of Taxation as required;

4. Whether the taxpayer operates under a voided corporate charter or after the revocation of authority to do business in New Jersey;

5. Whether the taxpayer remits payment which subsequently became dishonored or defaults on a bond or other security posted with the Division or on a Deferred Payment Plan;

6. Whether the Director finds that a taxpayer intends to leave this State, or to remove therefrom possessions, or any property subject to any State tax; or that taxpayer does any other act tending to prejudice, delay or negate proceedings to assess, collect, or pay any State tax;

7. Whether the taxpayer fails to collect, or truthfully account for, or file a return or file any other information as required;

8. Whether the taxpayer's non-compliance induces the Division of Taxation to issue a Warrant for Execution.

(d) In the event that any State tax remains unpaid and the Director refers a taxpayer's account to a private person, company, association, or corporation providing debt collection services prior to the entry of a certificate of debt, the Director may impose a referral cost recovery fee as follows:

1. In the amount of 10 percent of the amount referred for collection to the private debt collection service; or

2. If the contract for the private debt collection service has been publicly bid pursuant to 52:34-6 et seq., and the contract provides that the compensation to be paid by the State to the provider of private debt collection services is a specified percentage of the debt collected or to be collected, the referral cost recovery fee is equal to the percentage specified in the contract.

(e) In the event that the Director imposes an arbitrary assessment pursuant to 54:49-5 or 7, a fee for the cost of collection of 10 percent of the tax assessed, or $ 200.00, whichever is greater, will be imposed on that arbitrary assessment.

(f) Any fees imposed as cost of collection, or in lieu thereof, or as a referral cost recovery fee are in addition to any interest, penalties, or both, otherwise provided by law, and are payable to and recoverable by the Director, along with all penalties and interest, as if they were part of the tax imposed.

(g) Interest or penalties will not be assessed against any fees imposed as cost of collection, or in lieu thereof, or as a referral cost recovery fee; however, the cost of collection may reflect the passage of time between the date the costs were incurred and the date the costs are paid.

(h) For the purposes of calculating the percentage of the tax to be imposed in lieu of a fixed fee or the actual cost of collection, "tax" means the sum of the unpaid tax, penalties, and interest.

N.J. Admin. Code § 18:2-2.5

Amended by 47 N.J.R. 3150(a), effective 12/21/2015