I am no longer featuring a weekly ASK THE TAX PRO here at TWTP – and am stockpiling questions submitted during the tax season for a new blog devoted to such questions to “open” in June. However I couldn’t resist responding to the following email from a New Jersey taxpayer -
“I saw your blog online and wondered if you'd heard about any errors in processing at the NJ Division of Taxation. Yesterday I received a statement of account underpayment claiming that my husband and I only had about $350 in NJ taxes withheld when our return and W2s show $3500 (we are dinosaur paper filers).
Their helpline consistently says to call back later because of high call volume, and I received an automated response to an email I sent them saying that because of high volume it might be more than 10 business days to get a response.
I would think the rush would be mostly over by now, so I'm wondering if there are lots of others in the same boat as me. I was looking online for evidence of this and found you. I'm concerned since the payment deadline for the $ they say I owe them is 5/15, and I'm not sure I'll be able to get through by then!”
A second email followed a day later -
“Update--finally got through on try #7 and, after being on hold for between 15-20 minutes got through to a representative who looked at it, confirmed it as a scanning error and told me to disregard the notice. I should have asked but didn't about the source of their high call volume--if they have a lot of errors, etc. It seems like they could design a better exception process to identify these errors before sending a notice... but, well, you know (and I know you know, because I read your blog).
Ahh, NJ”
Errors in processing returns at the NJ Division of Taxation? Does a bear relieve himself in the woods? I feel your pain!
I do believe I have previously blogged that at least half of the balance due CP notices sent out by the IRS are incorrect (I am being conservative). With NJ it is at least 2/3 – again being conservative.
I have seen balance due Statement of Accounts from NJDOT that have not given the taxpayer(s) credit for dependents, dependents in college, age 65, medical deductions, or state income tax withheld, even though the information is clearly stated on the NJ-1040 as originally submitted. For two years in a row a Statement of Account sent to a client did not include $100,000 in NJ Gross Income Tax withheld, even though Copy 2 of the W-2 was included with the mailing. Of course the wage income was properly reported.
The NJ-1040 is now a scannable form – which means that the information is machine-read and not entered into the system by a person. It seems to me that there are more errors from machine scanning than there were when a person sat at a keyboard and “manually” input the information.
With the scannable system you are told not to staple pages or forms together, as the metal in the staple will mess up the scanning process. NJDOT says they do not lose or misplace any loose pages or forms – yeah, right.
NJDOT processing errors are not limited to paper returns. A client recently received a balance due Statement of Account for a return that I submitted online via NJWebFile (I am required by NJ law to submit all my full-year resident NJ-1040s “electronically” unless the client tells me not to and signs an “opt out” form – for me the only method of so doing is NJWebFile). The Statement of Account failed to give the taxpayer credit for NJ Gross Income Tax withheld. The state tax withheld was clearly entered in the course of the NJWebFile input. Again, of course, the wages were included in the Statement.
Two years ago every single NJ-1040 with a balance due that I submitted via NJWebFile was FU-ed. In each case the taxpayer paid the tax due, using the coded payment voucher that was part of the confirmation print-out, by the April due date. And in each case the client was billed for the tax liability – which had already been timely paid - plus penalty and interest in September! Luckily in all but one case (that I know of) the taxpayer realized that NJ had FU-ed and either sent me the Statement of Account, as per my general instructions to clients, or called the DOT directly to report the error.
What happened was that instead of crediting the payment made by the client properly to tax year 2005 the money was applied to tax year 2004. So the system still showed an open balance due for 2005.
“I saw your blog online and wondered if you'd heard about any errors in processing at the NJ Division of Taxation. Yesterday I received a statement of account underpayment claiming that my husband and I only had about $350 in NJ taxes withheld when our return and W2s show $3500 (we are dinosaur paper filers).
Their helpline consistently says to call back later because of high call volume, and I received an automated response to an email I sent them saying that because of high volume it might be more than 10 business days to get a response.
I would think the rush would be mostly over by now, so I'm wondering if there are lots of others in the same boat as me. I was looking online for evidence of this and found you. I'm concerned since the payment deadline for the $ they say I owe them is 5/15, and I'm not sure I'll be able to get through by then!”
A second email followed a day later -
“Update--finally got through on try #7 and, after being on hold for between 15-20 minutes got through to a representative who looked at it, confirmed it as a scanning error and told me to disregard the notice. I should have asked but didn't about the source of their high call volume--if they have a lot of errors, etc. It seems like they could design a better exception process to identify these errors before sending a notice... but, well, you know (and I know you know, because I read your blog).
Ahh, NJ”
Errors in processing returns at the NJ Division of Taxation? Does a bear relieve himself in the woods? I feel your pain!
I do believe I have previously blogged that at least half of the balance due CP notices sent out by the IRS are incorrect (I am being conservative). With NJ it is at least 2/3 – again being conservative.
I have seen balance due Statement of Accounts from NJDOT that have not given the taxpayer(s) credit for dependents, dependents in college, age 65, medical deductions, or state income tax withheld, even though the information is clearly stated on the NJ-1040 as originally submitted. For two years in a row a Statement of Account sent to a client did not include $100,000 in NJ Gross Income Tax withheld, even though Copy 2 of the W-2 was included with the mailing. Of course the wage income was properly reported.
The NJ-1040 is now a scannable form – which means that the information is machine-read and not entered into the system by a person. It seems to me that there are more errors from machine scanning than there were when a person sat at a keyboard and “manually” input the information.
With the scannable system you are told not to staple pages or forms together, as the metal in the staple will mess up the scanning process. NJDOT says they do not lose or misplace any loose pages or forms – yeah, right.
NJDOT processing errors are not limited to paper returns. A client recently received a balance due Statement of Account for a return that I submitted online via NJWebFile (I am required by NJ law to submit all my full-year resident NJ-1040s “electronically” unless the client tells me not to and signs an “opt out” form – for me the only method of so doing is NJWebFile). The Statement of Account failed to give the taxpayer credit for NJ Gross Income Tax withheld. The state tax withheld was clearly entered in the course of the NJWebFile input. Again, of course, the wages were included in the Statement.
Two years ago every single NJ-1040 with a balance due that I submitted via NJWebFile was FU-ed. In each case the taxpayer paid the tax due, using the coded payment voucher that was part of the confirmation print-out, by the April due date. And in each case the client was billed for the tax liability – which had already been timely paid - plus penalty and interest in September! Luckily in all but one case (that I know of) the taxpayer realized that NJ had FU-ed and either sent me the Statement of Account, as per my general instructions to clients, or called the DOT directly to report the error.
What happened was that instead of crediting the payment made by the client properly to tax year 2005 the money was applied to tax year 2004. So the system still showed an open balance due for 2005.
.
My question to NJ, which remains unanswered, is this - If the payment was applied to tax year 2004 there would be an overpayment for that year. Why did the NJDOT not automatically refund this overpayment, or at least issue a letter of inquiry to the taxpayer? If the IRS shows an unidentified payment applied to a particular tax year “account” that produces an overpayment it will at least send out a letter of inquiry.
In the past when I received an erroneous NJ Statement of Account I would write to the NJDOT. I would, and will, never call the NJDOT, or the IRS for that matter. Based on past experience, both mine and my clients’, I do not trust what I would be told via phone. I want a written documentation of all contact. For the most part it appeared that my correspondence was totally ignored. In some cases the problem was taken care of by NJDOT, but I was never given the courtesy of a written acknowledgement or response. In many cases I had to write to upper-level NJDOT management, as far up as the Director, before I got appropriate action.
Lately I have had good responses when I send an email to the “address” indicated on the specific Statement of Account notice. Emails I send to the general DOT email address take forever to get a response, although one is always eventually received.
I would not worry about not being able to get through to NJDOT by a stated deadline. If they are wrong and you are right, as is the case more often than not, there will be no penalty or interest assessment.
One item to note – if you are wrong and owe NJ money you are charged interest from day one. If they are wrong and owe you money don’t expect the check to include any interest. What's good for the goose (NJ) is apparently not good for the gander (taxpayer).
On the whole dealing with the IRS is a pleasure compared to dealing with the New Jersey Division of Taxation.
TTFN
In the past when I received an erroneous NJ Statement of Account I would write to the NJDOT. I would, and will, never call the NJDOT, or the IRS for that matter. Based on past experience, both mine and my clients’, I do not trust what I would be told via phone. I want a written documentation of all contact. For the most part it appeared that my correspondence was totally ignored. In some cases the problem was taken care of by NJDOT, but I was never given the courtesy of a written acknowledgement or response. In many cases I had to write to upper-level NJDOT management, as far up as the Director, before I got appropriate action.
Lately I have had good responses when I send an email to the “address” indicated on the specific Statement of Account notice. Emails I send to the general DOT email address take forever to get a response, although one is always eventually received.
I would not worry about not being able to get through to NJDOT by a stated deadline. If they are wrong and you are right, as is the case more often than not, there will be no penalty or interest assessment.
One item to note – if you are wrong and owe NJ money you are charged interest from day one. If they are wrong and owe you money don’t expect the check to include any interest. What's good for the goose (NJ) is apparently not good for the gander (taxpayer).
On the whole dealing with the IRS is a pleasure compared to dealing with the New Jersey Division of Taxation.
TTFN
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