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Department of the Treasury
STATE VENDOR SET-OFF FOR STATE TAX

NO. 96-13-OMB

ORIGINATING AGENCY: OFFICE OF MANAGEMENT AND BUDGET

EFF DATE: 01/01/96

EXP DATE: INDEFINITE

SUPERSEDES: NONE

SUBJECT: STATE VENDOR SET-OFF FOR STATE TAX

ATTENTION: DIRECTORS OF ADMINISTRATION AND CHIEF FISCAL OFFICERS

FOR INFORMATION CONTACT: DAVID GAVIN
PHONE: (609) 292-6611

I. INTRODUCTION

In accordance with the New Jersey P.L. 1995, c. 159, "whenever any taxpayer
under contract to provide goods or services to the State of New Jersey or
its agencies or instrumentalities, and including the legislative and
judicial branches of State government, or under contract for construction
projects of the State of New Jersey or is agencies or instrumentalities,
and including the legislative and judicial branches of State government,
is entitled to payment for the goods or services or on that construction
project and at the same time, the taxpayer is indebted for any State tax
the Director of the Division of Taxation shall seek to set off so much of
that payment as shall be necessary to satisfy the indebtedness."

II. REQUIREMENTS

A. The Department of the Treasury, Office of Management and Budget, shall
notify each provider of goods or services, and the contractor or
subcontractor of a construction project under contract with the State, its
agencies or instrumentalities in an amount of $500,000 or greater of the
provisions of P.L. 1995, c. 159 in writing within 30 days after January 1,
1996.

B. The Department of the Treasury, Division of Purchase and Property, will
insert the notice of the provisions of P.L. 1995, c. 159 in all Requests for
Proposals and all contracts issued by the General Services Administration.

C. Department administrators must ensure that all employees involved
either
directly or indirectly with the procurement process, including directors of
administration, fiscal officers, program administrators, etc. are cognizant
of the established procurement procedures prior to entering into any
transaction with a vendor that may result in the commitment of State or
Federal funds. A contract entered into by the State, its agencies or
instrumentalities with a provider of goods or services, or a contractor or
subcontractor of a construction project after January 1, 1996 shall contain
a notice of the provisions of P.L. 1995, c. 159.

D. Department administrators must ensure that procedures are in place in
conjunction with the Department of the Treasury, Division of Taxation, for
notification of off-line payments and the withholding of off-line checks.
Off-line checks include, but are not limited to the following: Bail, Jury,
Lottery, Lifeline, Rental Assistance, Motor Fuels, and Division of Motor
Vehicle Refunds.

III. LANGUAGE PROVISION

NOTICE OF ALL STATE VENDORS OF SET-OFF FOR STATE TAX

Please be advised that pursuant to P.L. 1995, c. 159, effective January 1,
1996, and notwithstanding any provision of the law to the contrary, whenever
any taxpayer, partnership of S corporation under contract to provide goods
or services or construction projects to the State of New Jersey or is
agencies or instrumentalities, including the legislative and judicial
branches of State government, is entitled to payment for those goods or
services at the same time a taxpayer, partner or shareholder of that entity
is indebted for that taxpayer's, partner's or shareholder's share of the
payment due the taxpayer, partnership, or S corporation. The amount set-off
shall not allow for the deduction of any expense or other deductions which
might be attributable to the taxpayer, partner, or shareholder subject to
set-off under this act.

The Director of the Division of Taxation shall give notice of the set-off to
the taxpayer and provide an opportunity for a hearing within 30 days of
such
notice under the procedures for protests established under R.S. 54:49-18.
No request for conference, protest, or subsequent appeal to the Tax Court
from any protest under this section shall stay the collection of the
indebtedness. Interest that may be payable by the State, pursuant to P.L.
1987, c. 184 (c.52:32-32 et seq.) to the taxpayer shall be stayed.

Elizabeth L. Pugh
Director

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