New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 2 - GENERAL POLICIES AND PROCEDURES › Subchapter 2 - PENALTIES AND INTEREST › Section 18:2-2.6 - Assessment of tax

Current through Register Vol. 56, No. 14, July 15, 2024
(a) Upon audit or investigation of a return that
				has been filed, where the Director determines that there is a deficiency with
				respect to the payment of any tax due, the additional taxes will be assessed
				together with penalties of five percent of the additional tax and interest at the
				rate of three percentage points above the prime rate assessed for each month or
				fraction thereof, compounded annually at the end of each calendar year, from the
				date the tax was originally due to the date of actual payment. Any prior year's
				outstanding tax, penalty, and interest will be added together to become the basis
				for further calculations of interest. The taxpayer will be given notice of such
				assessment and a demand will be made for payment.
Example:
1. Taxpayer's
				gross income tax return was due on April 15, 2013, and filed on October 24, 2013. A
				Notice and Demand is sent by the Division to the taxpayer on December 30, 2013.
				Payment is made on February 15, 2014. Interest will be calculated from April 15,
				2013, to February 15, 2014, at the rate of three percent above the prime rate for
				each month or fraction thereof on the tax and any penalty, such as late filing and
				late payment penalty, that may be imposed. Accrued interest computed for the period
				January 1, 2014, through February 15, 2014, shall be calculated on the total of the
				tax, penalty (if any), and accrued interest calculated from April 15, 2013 through
				December 31, 2013.
2. Corporation X was
				a fiscal year taxpayer whose year ended July 31, 1984. The final return was due and
				filed on November 15, 1984. Upon audit in July, 1987, it was determined that there
				was a $ 1,000 deficiency with respect to tax due. If Corporation X pays the
				deficiency on the final day of the 90 day tax amnesty period authorized by P.L.
				1987, c.76, which ends December 8, 1987, the following amounts would be due:
Deficiency assessed:
$ 1,000.00
Simple interest calculated at nine percent per annum
						*
$ 275.75
from November 16, 1984 through December 8, 1987
........
Total due
$ 1,275.75
........
* Through statutory interest to December 8, 1987
						was 18 percent, P.L. 1987,
c. 76 mandates a nine percent rate for debts paid
						during the 90 day amnesty
period.
3. Corporation X
				fails to pay the deficiency assessed within the amnesty period. When payment is made
				on May 6, 1988 the taxpayer remits $ 1,746.63 which represents the following
				amounts:
Deficiency assessed:
$ 1,000.00
Late payment penalty: five percent of the balance
$
						50.00
of tax due
Simple interest calculated at the rate of one and
$
						555.00
one-half percent per month from November 16, 1984
through December 8, 1987
........
$ 1,655.00 PLUS
...............
Interest on $ 1,655.00, calculated at an annual rate of the prime
				  rate plus five percentage points compounded daily from December 8, 1987 until the
				  date of payment (May 6, 1988). The applicable prime rate shall be the rates
				  effective on July 1, 1987, October 1, 1987 and January 1, 1988. For the purposes of
				  this example the prime rate is assumed to be:
July 1, 1987
8.25 percent
October 1, 1987
8.75 percent
January 1, 1988
9.00 percent
$ 91.63
........
Total
$ 1,746.63
........
4.
				Taxpayer's gross income tax return was due on April 15, 1994 and filed on October
				24, 1994. A Notice and Demand is sent by the Division to the taxpayer on December
				30, 1994. Payment is made on February 15, 1995. Interest will be calculated from
				April 15, 1994 to February 15, 1995 at the rate of three percent above the prime
				rate for each month or fraction thereof. Accrued interest computed for the period
				January 1, 1995, through February 15, 1995, shall be calculated on the total of the
				tax, penalty (if any) and accrued interest calculated from April 15, 1994 through
				December 31, 1994. In addition, late filing and late payment penalties may be
				imposed on the balance of the tax due.