N.J. Admin. Code § 18:32-1.3

Current through Register Vol. 56, No. 24, December 18, 2024

Section 18:32-1.3 - Security

(a) Protests to the Conference and Appeals Branch may be made before or after payment provided the protest is otherwise timely pursuant to N.J.A.C. 18:32-1.1.

1. The following concern collection of taxes while a finding or assessment is being protested to the Director:

i. In the case of an arbitrary or estimated assessment for which security is required pursuant to (a)2i below, and where such security has not been furnished to the Director, the Director may take any action permitted by statute for the purpose of collecting the tax in issue, including, without limitation, the filing of a certificate of debt or a levy on and sale of the taxpayer's property, even though the taxpayer may have protested the finding or assessment to the Director. The Director may institute collection activity at any time prior to the furnishing of the required security, whether or not the taxpayer has requested the form and amount of security that would be required to stay collection activity by the Director. The Director shall immediately stay all collection activity upon the furnishing of the security required by (a)2i or ii below.

ii. Where no security is required pursuant to (a)2ii or iii below, or where, pursuant to (a)2ii below, the Director has notified the taxpayer that such security is required and where such security has actually been furnished to the Director, the Director shall stay any action to collect the tax in issue while a finding or assessment is being protested to the Director.

iii. Any stay of collection activity provided for by this paragraph shall expire and be of no effect 90 days after the final determination of the protest is issued by the director, except as provided pursuant to (a)3 below.

2. The following concern security for tax while a finding or assessment is being protested to the Director:

i. Security shall be required in the case of a protest to the Director of any liability consisting in whole or in part of arbitrary or estimated assessments made pursuant to N.J.S.A. 54:49-5 or 7. The required security shall be in a form satisfactory to the Director and in an amount that, in the discretion of the Director, is sufficient to insure the payment of the tax in issue in the event that the finding or assessment is upheld. The Director shall, upon the request of the taxpayer, inform the taxpayer of the form and amount of security required.

ii. Security may be required in the case of any contested liability of $ 10,000 or more including penalties and interest (other than an arbitrary or estimated assessment) where the Director determines that there is a substantial risk of the taxpayer's failure or inability to pay a liability, based on the compliance history and financial condition of the taxpayer. Such security shall be in a form satisfactory to the Director and in an amount that, in the discretion of the Director, is sufficient to insure the payment of the tax in issue in the event that the finding or assessment is upheld. The Director shall make a determination as to whether security is required and as to the form and amount of any such security and give notice to the taxpayer of such determination.

(1) "Taxpayer compliance history" shall be construed to include any and all information obtained and/or maintained by the Director with respect to any State tax accounts of the taxpayer, including, but not limited to, information that the taxpayer has under reported or failed to report income.

(2) The Director may determine a taxpayer's financial condition by reference to a number of factors, including, but not limited to, the following:

(A) Income/employment data of taxpayer;

(B) Spouse and dependents;

(C) Federal and State filing and payment histories;

(D) Fixed monthly expenses;

(E) Loans payable;

(F) Assets and liabilities;

(G) Real estate owned and/or being purchased under contract;

(H) Life insurance policies;

(I) Real and personal property owned by spouse and dependents valued in excess of $ 200.00;

(J) All transfers of property made in the preceding three years (including cash);

(K) Status as a party to any lawsuit, trustee, executor or administrator;

(L) Holders of any money on taxpayer's behalf;

(M) Likelihood of receiving an inheritance; or

(N) The receipt or expectation of receipt of any benefits from any trust, compensation claim, damage claim, or contingent or future interest.

iii. No security shall be required in the case of any contested liability of less than $ 10,000 including penalties and interest (other than an arbitrary or estimated assessment).

3. The following concern collection of taxes after a complaint challenging a finding or assessment has been filed with the Tax Court:

i. The filing of a complaint with the Tax Court shall not stay the collection of a liability consisting in whole or in part of arbitrary or estimated assessments of tax made pursuant to N.J.S.A. 54:49-5 or 7, unless security has been furnished to the Director pursuant to (a)4i below.

ii. Except in the case of arbitrary or estimated assessments made pursuant to N.J.S.A. 54:49-5 or 7, the Director shall stay all activity to collect the tax at issue upon the filing of a complaint with the Tax Court where no security is required pursuant to (a)4i or ii below or where, pursuant to (a)4ii below, the Director has notified the taxpayer that such security is required and such security has actually been furnished to the Director.

iii. Any stay of collection activity provided for by this paragraph shall expire and be of no effect upon the entry of a judgment by the Tax Court determining that all or any part of the tax assessed is due and owing.

4. The following concern security for tax after a complaint challenging a finding or assessment has been filed with the Tax Court:

i. Security shall be required in the case of any liability consisting in whole or in part of arbitrary or estimated assessments made pursuant to N.J.S.A. 54:49-5 or 7. The required security shall be in a form satisfactory to the Director and in an amount that, in the discretion of the Director, is sufficient to insure the payment of the tax at issue in the event that the finding or assessment is upheld. The Director shall, upon the request of the taxpayer, inform the taxpayer of the form and amount of security required.

ii. Security may be required in the case of any contested liability of $ 10,000 or more including penalties and interest (other than an arbitrary or estimated assessment) where the Director determines that there is a substantial risk of the taxpayer's failure or inability to pay a liability, based on the compliance history and financial condition of the taxpayer. Such security shall be in a form satisfactory to the Director and in an amount that, in the discretion of the Director, is sufficient to insure the payment of the tax in issue in the event that the finding or assessment is upheld. The Director shall make a determination as to whether security is required and as to the form and amount of any security and give notice to the taxpayer of such determination. The provisions of (a)2ii(1) and (2) above shall apply in construing the provisions of this subparagraph.

iii. No security shall be required in the case of any contested liability of less than $ 10,000 including penalties and interest (other than an arbitrary or estimated assessment).

5. The following concern the effect of stay of collection activity:

i. Any stay of collection activity by the Director pursuant to (a)1i or iii above shall serve to extend the time period set forth in any statute of limitations which would otherwise require the Director to collect the tax within the time specified by the statute of limitations. The period of limitations shall be extended by the same number of days that the Director is required by this section to stay collection activity.

ii. A declaratory judgment action, instituted in the Tax Court by a taxpayer alleging that an assessment should not be made, shall serve to extend any statute of limitations which would otherwise bar the Director from making an assessment of the tax in issue beyond the period set forth in the limitations statute. The period of limitations shall be extended by the same number of days that the Director is required by this section to stay collection activity.

N.J. Admin. Code § 18:32-1.3

Amended by R.2014 d.016, effective 2/18/2014.
See: 45 N.J.R. 2198(a), 46 N.J.R. 398(b).
Rewrote the introductory paragraph of (a); and in (a)3ii and (a)4i, substituted "at" for "in" following "tax".