Two clients of ours timely filed their federal and New Jersey extensions on April 15th, paying by electronic debit. (One filed at 7am and the other at 12 noon, well before the midnight deadline.) Both clients were waiting on K-1s, so they couldn’t file in April. They both timely filed their returns (one in June, the other in October) and both asked for refunds. Imagine the clients (and our) surprise when New Jersey assessed the late filing penalty!
New Jersey is notorious with tax professionals for taking a long time to process electronically filed returns. This year, the state took one week to process returns (and extensions) filed around April 15th. Thankfully, tax professionals can run reports that prove the return (or extension) was timely filed. The report, called an “Electronic Postmark Report,” shows the exact time the return (or extension) was transmitted.
What is New Jersey supposed to do when they late process a payment? New Jersey is supposed to back date it when the return or extension is timely filed to the filing date (here, April 15th). My first client responded to the notice and (eventually) New Jersey agreed that it was their fault, and the payment date was changed to April 15th. That client has received his refund. My second client will have to go through the same process and he, too, will eventually receive his refund.
This is also a reminder to you that many notices sent by tax agencies are wrong in part or in whole. Do not blindly pay a notice! Send it to your tax professional and have them check it for accuracy. Thankfully, both of my clients did that.
As for New Jersey, it would be nice if you either timely processed electronically filed extensions and returns or fixed this systemic issue…but I’m not holding my breath.
