Governor Corzine Applauds Tremendous Success of New Jersey Tax Amnesty Program

Says unexpected additional revenue should be targeted at direct property tax relief

TRENTON - Governor Jon S. Corzine today announced the State could collect as much as $700 million in unpaid, back taxes through its tremendously successful Tax Amnesty program and said that the money should be directed to New Jersey homeowners as property tax relief.

"Today, because of an unprecedented response to the tax amnesty program that I initiated this winter, the state has collected back tax revenues that are far in excess of the $200 million that the State Treasurer anticipated," Governor Corzine said.  "When revenues fell, the last item we cut was property tax relief.  Now that we have recovered some lost revenues, the first thing we will restore is property tax relief.  This money belongs to the taxpayers, and we're going to give it back to them in property tax relief."

The tax amnesty program, which ended Monday, allowed anyone who owed back taxes a brief window of opportunity to square his or her account without interest or penalties. The program was expected to raise $200 million, but a spike in participation in the final days pushed the amount collected past $600 million and the total could be as much as $700 million when all of the checks clear.

The Department of Treasury said that to its knowledge this is the largest single tax amnesty program executed in state.  Democratic leadership from the Senate and Assembly have both pledged to use the unexpected revenue towards property tax relief.

"Given the bleak news we have been hearing for months, this new development certainly brightens an otherwise gloomy day," said Senate President Richard J. Codey. "Prior to this announcement we had been forced to prioritize relief for taxpayers that need it most - seniors, the working poor and the disabled. This revenue boost will enable us to expand that relief to help hardworking middle class taxpayers who have also felt the pinch of a struggling economy."

 "Today's announcement is great news in this tough budget year for New Jersey property taxpayers and families," said Assembly Speaker Joseph J. Roberts Jr. We have always said that we would seek to provide as much property tax relief as possible, and these updated figures allow us to honor that commitment to put property taxpayers first."

"In crafting the FY 2010 budget, we had to make some very tough choices," Governor Corzine said. "But all along the way, we have made the right choices to be fiscally responsible and honor our progressive values. If we continue to make the right choices in using this money to backfill the $9 billion budget gap, New Jersey property tax payers will get much-needed and much-deserved tax relief this year."

The New Jersey Tax Amnesty was enacted as part of a series of solutions to close a shortfall in the FY2009 budget. From May 4 through June 15, the State waived penalties and half the interest owed on unpaid taxes for tax returns due on or after January 1, 2002, and before February 1, 2009.

Based on a strong response to the program, Treasurer R. David Rousseau last month revised the estimated revenue from the program from $100 million to $200 million.

In the final few days of the program, however, the response was far in excess of projections. The Division of Taxation estimated that $600 million was collected through the last days of the program; a figure could rise by another $50 to $100 million after all payments are received and taken into account.

"With nearly 17,500 envelopes still to be opened and processed, we have collected more than $600 million," Governor Corzine said. "Since this extraordinary development must be appropriately considered by the legislature, the leaders and I both agree that the budget should be recommitted to the Senate and Assembly Budget Committees on Monday with the expectation of a final floor vote on Thursday, June 25."

"Governor Corzine's insistence on the amnesty program was obviously the right decision as we worked to balance the budget," Rousseau said. "Amnesty achieved the dual benefit of helping taxpayers get out from under a heavy tax liability and helping the budget ease the property tax burden being shouldered by New Jersey homeowners."

The Treasurer also commended Acting Taxation Division Director Cheryl Fulmer and Amnesty Administrator Mark Wintermute for what is projected to be the most successful tax amnesty program in the country.

"Dedicated staff worked long hours, particularly over the last weekend and until midnight Monday, to administer this program," the Treasurer said. "The final push resulted in an extraordinary outcome, which will make it possible to put relief dollars back into the pockets of property taxpayers."

Attached below is additional information about the 2009 New Jersey Tax Amnesty program:

2009 Tax Amnesty Program

Program Timeline:

• March 17, 2009 - New Jersey Tax Amnesty was enacted in March 2009 as part of a series of solutions to close a shortfall in the FY 09 budget. From May 4 through June 15, the State waived penalties and half the interest owed on unpaid taxes for tax returns due on or after January 1, 2002, and before February 1, 2009. At the time of enactment, collections were projected at $100 million.
• May 19-20, 2009 - Based on rate of response to the program to date, State Treasurer revises tax amnesty estimate to $200 million.  Additional anticipated revenue scored as part of solution to growing shortfall in FY 09 budget.
• June 12, 2009 - Taxation estimates that it will reach its targeted goal of $200 million.
• June 15, 2009. Taxation records Friday, June 12 as having highest one-day revenue total of $201 million. Amnesty program closes at midnight. Estimated to-date revenue from Amnesty program now reaches $582 million.
• June 18, 2009 - Amnesty collections total an estimated $617 million. Taxation still opening Amnesty mail based on June 15 postmark. 17,500 pieces of mail still to be opened, counted and processed.

Program Outreach:

• Enacting legislation provided $10 million to administer Amnesty program; $2.2 million allocated to advertising.
• Direct Mail: Taxation mailed out more than 600,000 notices to taxpayers with known liability to New Jersey.
• Networking: Taxation circulated program information in both a targeted and blanket manner.  Taxation advertised with tax, corporate, and legal trade journals in New Jersey and across the country in getting the NJ Amnesty message out. Taxation's program was not only on New Jersey's state web pages, it was also placed on state government web pages across the country, targeting multi-state companies with existing or potential tax liabilities to New Jersey. Trade organizations also provided complementary e-mail blasts to their memberships.
• Tax Amnesty was also advertised in publications that had international reach.
• Administrator outreach: nearly 75 speaking and on-site events in 40 days, including annual meetings of tax attorneys and NJ CPAs.
• Other media: Amnesty message was on digital screens at train stations, on coffee cups in convenience stores, on billboards, buses, YouTube, cable, and radio.
• Electronic payment option provided taxpayers with the convenience and ease necessary to maximize participation. While many payments were still received through the regular mail, an estimated 92 percent of the 95,204 transactions to date were applied electronically through the Tax Amnesty web page.

Other keys to success:

• Amnesty programs open opportunities for contested/disputed tax cases to be cleared up and resolved. In this Amnesty, taxation had great success with erasing a backlog of old cases that had been languishing in conferences and tax court. Clearing up these cases contributed to the success of Amnesty, it also allows taxation to focus on resolving more current cases.
• Multi-State company compliance. Taxation received a tremendous response from its national and international outreach. Under New Jersey law, companies that have economic nexus to New Jersey have tax responsibilities here, and taxation received significant tax revenue from companies that recognized this responsibility. This compliance helped the Amnesty program and added taxpayers to the state's tax base.

Other Preliminary Statistics to date:

• Over 100,000 phone calls and e-mails received and answered by the Amnesty Hotline.
• Percentage Collections by tax to date:

Corporation Business Tax                    56%

Sales & Use Tax                                  23%

Gross Income Tax                               14%

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Photos from Governor Corzine's public events are available in the Governor's Newsroom section on the State of New Jersey web page, http://www.nj.gov/governor/news/