Owning and operating a business is no small feat, and it’s not uncommon for business owners to face financial challenges that result in back taxes. If you’re dealing with the weight of unresolved taxes, it’s crucial to address the issue promptly to prevent further complications and protect your business’s financial health. Tomes Law Firm is the NJ tax attorney you can trust to provide the tax relief expertise you need – and the peace of mind you want.

What Are Back Taxes?

Back taxes refer to unpaid taxes from prior years, and they can accumulate quickly, leading to significant financial strain. Business owners can find themselves in this predicament for various reasons, including unexpected financial setbacks, bookkeeping errors, or simply a lack of understanding of complex tax laws.

The Consequences of Unresolved Owing Tax Payments

Ignoring your back tax issues can have severe consequences for your business, including:

  • Tax Penalties and Interest: The IRS imposes penalties and interest on unpaid back taxes. These financial penalties can grow rapidly, making it even more challenging to pay off your debt.
  • Tax Liens: Unresolved back taxes can result in tax liens being placed on your business assets or property, creating legal claims that can lead to asset seizure.
  • Wage Garnishments: The IRS has the authority to garnish your business’s wages, which can seriously impact your cash flow and ability to operate effectively.
  • Business Closure: In extreme cases, the IRS may pursue forced collection actions, which can lead to the closure of your business.

Partner with an NJ Tax Attorney for Relief

Each NJ tax attorney at Tomes specializes in providing swift back tax relief solutions for business owners. We understand the intricacies of the tax code and can help you navigate the complex process of resolving your back taxes.

Our skilled attorneys will assess your unique situation, negotiate with tax authorities on your behalf, and explore all available options to reduce or eliminate your back tax burden. We’ll work diligently to secure the most favorable outcome for your business. We have a deep understanding of the tax laws specific to New Jersey and the IRS, and offer comprehensive range of services, including:

  • Back-Tax Assessment: We’ll conduct a thorough analysis of your tax situation, identifying the root causes and the extent of your tax liability.
  • Tax Negotiation: Our skilled negotiators will engage with tax authorities to reach favorable agreements and payment plans on your behalf.
  • Tax Abatement: If applicable, we’ll pursue strategies to reduce or eliminate your owed taxes, known as tax abatement.  This legal process allows for a reduction or elimination of your tax liability. This can provide much-needed relief for business owners struggling with back taxes.
  • Asset Protection: We’ll help safeguard your business assets from potential seizures and liens, ensuring your business remains operational.
  • Strategic Tax Planning: To prevent future back tax issues, we offer strategic tax planning services tailored to your business needs.

Don’t Delay – Seek Relief Today

If your business is burdened by back taxes, it’s essential to take action promptly. Ignoring the issue can lead to increasingly severe consequences. A Tomes Law Firm NJ tax attorney is here to provide the back tax relief expertise you need to protect your business and secure its financial future. Contact us today at 732-333-0681 to schedule a consultation.

Frequently Asked Questions: NJ Back Taxes

What exactly are back taxes in New Jersey?

Back taxes in New Jersey are unpaid state taxes that remain due after the filing or payment deadline. Once a tax becomes overdue, New Jersey automatically assesses interest, which compounds over time, as well as separate statutory penalties for late filing and late payment. These amounts become part of the taxpayer’s debt to the State and may result in a state tax lien against the taxpayer’s property.

How do I find out if I owe back taxes in New Jersey?

To find out whether you owe back taxes in New Jersey, you can check your account status with the New Jersey Division of Taxation. Taxpayers can contact the Division’s Customer Service Center, use available online tax services, or submit a written request for account information. The Division can confirm whether there is an outstanding balance, missing return, assessment, or other tax issue associated with your account.

Can I still file this year’s taxes if I owe back taxes from prior years?

New Jersey taxpayers must still file their current-year tax return even if they owe back taxes from previous years, as long as they are required to file based on income or other filing requirements. The State will not prevent you from filing a new return because of an existing tax debt. However, unpaid prior-year taxes will continue to accrue interest and may include late payment penalties.

What penalties and interest will I owe for unpaid back taxes in New Jersey?

In New Jersey, unpaid back taxes can result in penalties and interest. A late filing penalty may include $100 per month plus 5% of the unpaid tax (up to 25%), along with a 5% underpayment penalty. Interest is also charged on unpaid balances and continues to increase over time. If the tax debt remains unpaid, the State may take collection actions, including placing a tax lien on property, entering judgments, levying assets, or pursuing other legal collection remedies. Some penalties may not be removed or waived once imposed.

Can I set up a payment plan or arrangement to pay back taxes?

New Jersey taxpayers who cannot pay their back taxes in full may be able to set up a payment arrangement with the New Jersey Division of Taxation. Depending on the circumstances, options may include an installment payment agreement, an offer in compromise, or requests for certain penalty relief. An attorney can help determine which option fits your financial situation and negotiate on your behalf.

How far back can New Jersey tax authorities collect back taxes?

New Jersey generally has a limited time to assess additional taxes, but no general time limit to collect taxes that have already been assessed. For most taxes, the assessment period is four years, while Gross Income Tax assessments are generally limited to three years, unless an exception applies. Once a tax is assessed, the State can continue collecting the debt through liens, levies, and other legal collection methods.

Will my tax refund be applied to pay my back taxes?

If you owe back taxes in New Jersey, the State may apply your tax refund to your outstanding balance. This process, known as a tax refund offset, allows the New Jersey Division of Taxation to use all or part of your state tax refund to pay unpaid state tax debts or certain other qualifying debts owed to state agencies.

Can back taxes result in liens, wage garnishments, or other collection actions?

If you do not pay your New Jersey back taxes, the State may take collection actions to recover the debt. Depending on the circumstances, the New Jersey Division of Taxation may file a Certificate of Debt, place a tax lien on your property, garnish wages, levy bank accounts, offset tax refunds, or use other collection methods authorized by law.

Is there an amnesty program or reduced interest offer for back taxes?

New Jersey does not currently have an active tax amnesty program. In the past, the State has offered temporary amnesty programs that allowed eligible taxpayers to pay back taxes with reduced penalties and, in some cases, reduced interest. An attorney can advise you on any current relief options that may apply to your situation.

How do I respond to a notice from the NJ Division of Taxation?

If you receive a notice from the New Jersey Division of Taxation, it is important to respond within 90 days. Within that time, you may either file a written protest requesting an administrative hearing with the Conference and Appeals Branch or file a complaint directly with the New Jersey Tax Court, depending on the circumstances. If you are requesting penalty relief, you must submit a signed written statement explaining the reasonable cause for your noncompliance.

What happens if I owe back taxes in New Jersey?

New Jersey imposes penalties and interest on unpaid back taxes. Tax debts may continue to grow through delinquency penalties, interest charges, and additional collection costs. Unpaid state tax liabilities become personal debts and may result in a state tax lien or other collection actions, such as a Certificate of Debt, which allows the State to pursue enforcement remedies.

How do penalties and interest work on unpaid New Jersey taxes?

In New Jersey, unpaid taxes can continue to grow because of penalties, interest, and collection costs. If a taxpayer files late, pays late, or does not pay the full amount due, the Division of Taxation may assess penalties in addition to the unpaid tax. Interest generally accrues on unpaid balances and continues until the debt is paid. If the account moves into collection status, additional fees and enforcement costs may also apply. If the debt remains unresolved, New Jersey may take collection actions such as filing a Certificate of Debt, placing a tax lien, intercepting refunds, garnishing wages, or levying certain assets.

Can I set up a payment plan for back taxes in NJ?

New Jersey taxpayers may be able to set up payment arrangements for unpaid state taxes, but eligibility depends on their financial circumstances and whether the debt has already moved into formal collection. Approved payment agreements generally continue to accrue interest until the balance is paid.

Will owing back taxes stop me from filing future tax returns?

Owing back taxes in New Jersey does not stop you from filing future tax returns. Taxpayers are still required to file current-year returns on time if they meet the filing requirements, even if they have unpaid balances from prior years. An existing tax debt remains a separate obligation and may continue to accrue interest and penalties or be subject to collection actions.

Can the state garnish wages or seize assets for back taxes?

New Jersey has the authority to collect unpaid taxes through enforcement actions such as wage garnishment and asset seizure. Before taking these steps, the State generally must provide notice of the tax debt and an opportunity to pay. If the debt remains unpaid, New Jersey may file a Certificate of Debt and take further collection actions, including issuing a tax warrant to seize certain property.

What if I received a notice about back taxes — what should I do?

If you receive a back tax notice from the New Jersey Division of Taxation, review the notice carefully and act promptly. Check the tax period, amount claimed, reason for the balance, and any response deadline listed on the notice.

You should:

  1. Verify the information by comparing the notice with your tax records and payment history.
  2. Respond by the deadline if you disagree with the assessment or need to provide additional information.
  3. Pay any amount you agree is owed to reduce additional interest and penalties.
  4. Request a review, hearing, or appeal if you believe the assessment is incorrect.
  5. Use available online services, such as the NJ Tax Portal, when appropriate for submitting information, making payments, or managing your tax account.

Can penalties or interest be waived or reduced?

New Jersey taxpayers may request relief from certain penalties and penalty-related interest if they can show reasonable cause. Examples may include serious hardship, a good-faith misunderstanding of tax requirements, or reliance on incorrect written guidance from the State.

In some cases, penalties may be reduced or removed. However, interest on the underlying unpaid tax generally cannot be reduced below the statutory minimum. To request relief, taxpayers typically must submit a detailed written statement explaining the circumstances, provide supporting information, and meet all required deadlines.

Does filing an extension delay payment penalties?

No. Filing a tax extension does not delay payment penalties. An extension only gives you more time to file your tax return; it does not extend the deadline for paying taxes you owe. If payment is not made by the original due date, interest and penalties may still apply.

How do I find and contact the NJ Division of Taxation about back taxes?

If you owe back taxes in New Jersey, you can contact the New Jersey Division of Taxation for help with your account, payment options, or collection questions.

  1. Phone: Call the Division’s Customer Service Center at (609) 292-6400.
  2. Email: You can email nj.taxation@treas.nj.gov. Avoid including sensitive information like your Social Security number, bank account details, or other confidential data in an email.
  3. Online: Visit the New Jersey Division of Taxation website to find online services, payment options, and tax account information.
  4. If you received a notice and demand for payment, make sure to respond and resolve the balance within the time stated in the notice (often 15 days) to avoid additional collection actions.

Facing back taxes, a state notice, or an IRS audit in New Jersey? Frances Anne Tomes, Esq. has helped clients across Freehold and the surrounding area resolve tax debt, negotiate with tax authorities, and protect their assets for over 33 years.

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