New Jersey State Tax Payment Plan Options

new jersey tax payment plan

The State of New Jersey offers individual taxpayers options for those who cannot pay tax liabilities in full. One option for taxpayers is the ability to pay off their balance over a series of monthly payments. It is known as a payment plan, but it is also called an installment agreement. With a payment plan, you generally will end up paying more in the long run because of interest and penalties.

Duration of a New Jersey Tax Payment Plan

3 to 60 Month Payment Plan

The State of New Jersey will accept tax payment plans from 3 to 60 months. Generally, NJ will allow payment plans for 36 months or less, without the need to review the taxpayer’s financial status. It means the taxpayer must agree to a monthly payment amount that pays off the entire delinquent tax debt. Also, the payment amount must cover penalties, interest, and fees, within 36 monthly payments.

Up to 60 Month Payment Plan Under the Financial Hardship Scenario

If the taxpayer cannot afford to pay off the debt in 36 monthly payments, and otherwise does not qualify for any other form of relief, the Division may accept a lesser monthly payment figure if the taxpayer can establish a financial hardship. Taxpayers illustrate a financial hardship by providing financial information which shows they are unable to pay off the delinquent tax debt in the standard 36-month payment terms. The Division states they will consider granting payment plans for up to 60-month payment terms under the financial hardship scenario.

Overview of  Some Requirements

Before the taxpayer may enter into an Installment Agreement, the taxpayer must file all necessary tax returns. Taxpayers must have a delinquent tax debt of $500 or more, and the monthly payment amount must be at least $25. Furthermore, taxpayers must include all unpaid balances in the plan. Taxpayers will still be subject to all set-off programs (set-off programs allow the state to apply your refunds to the delinquent tax debt) until the unpaid balance is paid in full. Also, the Division will continue to add interest and collection fees until the taxpayer satisfies the outstanding balance in full.

NJ Usually Will File a COD

Usually, NJ’s Division of Taxation will automatically file a Certificate of Debt (“COD”) with the  New Jersey Superior Court’s Clerk if the delinquent tax debt is higher than $5,000 and the taxpayer seeks a payment plan greater than 12 months. A COD is the New Jersey equivalent of a tax lien. If the Division issues a COD, the state will also begin to assess a Cost of Collection Fee. The State of NJ adds the collection fee to the amount of taxes owed.

Guidelines to Setup a Plan

Taxpayers, or their representatives, can set up an Installment Agreement with the State of New Jersey by contacting their assigned caseworker or by preparing and filing a Payment Plan Request Form.  Taxpayers, or their representatives, should be mindful to attempt to include a hold or stay. The hold, or stay will pertain to enforced collection as part of the written payment agreement to protect the taxpayer from later being subject to enforced collection.

Disclaimer: This article is not legal or tax advice. This article should not be used as a substitute for the advice of a competent attorney or tax professional admitted or authorized to practice in your jurisdiction.