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BUSINESS FORUM

Hot Savings – Reduce NJ SUI Rates in August

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What’s my New Rate?

In July all New Jersey employers received a Notice of Employer Contribution Rates.  This is not a bill, but rather a summary of the manner in which the NJ Department of Labor calculates your employer contribution rate for unemployment and disability.  This form enables you to determine whether a voluntary contribution would save you money in the subsequent year.  A voluntary contribution increases the reserve balance and may reduce your contribution rate.  In many circumstances a voluntary contribution represents an excellent opportunity to reduce labor costs. 

The Clock is Ticking

The unemployment expense is a substantial component of your labor cost. Staffing agencies should give it careful attention. If you wish to make a voluntary contributionto your reserve balance you have 30 days from the notification date to do so. In addition, we suggest that you verify the amount of the employer contributions and the benefits charged to your account.  Report any discrepancies to the NJ Dept. of Labor.

 Won’t my Payroll Company Take Care of This?

Outside payroll services generally don’t test the new rates for cost saving opportunities. We can assist you in determining if a voluntary contribution makes sense for you. We can provide you with an illustration of the benefits you stand to reap from making such a contribution. You will be able to weigh the considerations and act accordingly. 

 

 

 

Hit by the NJ Exit Tax on Sale of Real Estate? You Can Recoup Your Money

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The New Jersey “Exit Tax”, which became law in 2007, requires the real estate seller to file a GIT/REP form

Exiting NJ?

(Gross Income Tax form) in order to record a Deed for  the transfer of his property.

When a non-resident sells property, New Jersey will withhold this income tax in the amount of either 8.97 percent of the profit or 2 percent of the total selling price, whichever is higher. Therefore, even if the property is sold at a loss, tax must be withheld to fulfill the two percent requirement.

What Can I do?

It’s important to realize that while the Exit Tax requires a substantial withholding, it doesn’t have any impact on the actual tax liability. If the seller files a NJ tax return he is refunded the difference between what was withheld and what is owed. This recovery can be very significant when one factors in the selling costs and original purchase price, both of which reduce the taxable gain.

Estates Should Pay Special Attention

The recovery is often even greater in the case of real estate sold by an estate, as there is a step up in cost basis which would typically minimize a gain on the sale, often resulting in full recovery of the entire withholding. To quickly expedite the recovery of the excess withholding, it would be prudent to timely file Form NJ1040 NR (individual) or NJ1041 (estate/fiduciary).

How do I know if I am considered a “non-resident”?

So who’s considered a “resident” and who’s a “non-resident” with regard to this tax? The law defines a resident taxpayer as one of the following:

  • An individual who is and intends to continue to maintain a permanent place of abode (home, residence) in New Jersey on/after the day of transfer
  • An estate established under the laws of New Jersey
  • A trust established under the laws of New Jersey

A nonresident is simply defined as “any taxpayer that does not meet the definition of resident taxpayer.”

New NJ Program Offers Siestas instead of Layoffs

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Alternative to Slow-Period Layoffs:

NJ Program Helps Maintain Your Workforce 

Businesses that are thinking about laying off employees because of a slowdown in activity—but fear losing talented labor or getting socked with an increased Unemployment Insurance (UI) tax rate—may have an alternative, thanks to an innovative state program. Under the “shared-work” legislation a company that has to slice payroll expense by significantly cutting employees’ work hours may be able to have the NJ Department of Labor partially offset workers’ reduced pay by giving them “short-time” unemployment benefits. 

Employers may find that their UI tax rate is lower under the “short-time” approach, compared to having laid-off employees collect full unemployment. In addition to getting at least some of their pay, employees will be able to keep their health insurance and other benefits while they work fewer hours.

Here’s the fine print

For each company, the state may approve the program for a period no longer than one year and may, upon employer request, renew the approval of the program for additional periods.  Of course, there are certain filing and other requirements. For one thing, the business needs to complete a formal Shared-Work Plan Application and submit it to the New Jersey Department of Labor, Shared-Work Approval Unit (the application is available at NJ Department of Labor, Shared-Work Application).

 The business must have at least 10 employees; and the “affected unit” of the company—a specified plant or other facility, department, shift or other definable unit, must be composed of two or more employees.  Among other requirements, the reduction in weekly work hours of the affected employees must be not less than 10% and not more than 60% of the “usual weekly hours of work”.

 Not everyone’s eligible

Some kinds of employment—like subsidized seasonal employment during off-season, and employment that is temporary or intermittent on an ongoing basis—are not eligible for this program. 

Our recommendation

This program could cut payroll expenses for some businesses while enabling them to retain valued employees during a time of economic disruption. Still, disclosure, documentation, UI costs and other issues should be considered. Please contact one of our CPAs to see if this program is suitable for you.

                                     

Resolve Your NJ Tax Debt, No Penalties!

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Businesses and individuals facing unpaid New Jersey tax liabilities may be able to get a break on penalties—although not on interest—according to a recent NJ Division of Taxation announcement. But you have to act quickly. From now until November 17, businesses and individuals with liabilities from tax periods 2005 through 2013 may be able to enter into a “closing agreement” with the Division.

And why should I do this now? Because under this limited-time offer (remember, the clock runs out on November 17) the Division of Taxation will accept—in full and final satisfaction of the outstanding tax liability—an amount that reflects reduced or eliminated penalties, with no charge for collection or recovery fees. Better yet, the tax liability will not be subject to further audit.

Not so good: no refund can be claimed by the taxpayer on this matter. You win some, you lose some.

Here are some more details

• Most penalties can be reduced to zero. But an Amnesty Penalty on taxes due on or after 1/1/2002 and before 2/1/2009 will still apply.

• Interest will not be waived, but it will only be calculated on the tax and reduced penalties (and the penalties may drop to zero, anyway).

• Recovery Fees—a 10% fee on each tax liability that was previously forwarded to the Division’s authorized collection agency—may be waived.

• Also, costs of collection may be eliminated. Normally, if the Division has to collect a tax debt by filing a Certificate of Debt (judgment,) a 10% fee is applied to cover legal and collection costs.

Is there a hitch? Sort of. If you don’t pay the balance due by November 17, 2014 or provide sufficient proof that you or your businesses do not owe it, then any and all penalties, interest, costs of collection, and/or recovery fees will remain due. The state may also pursue further collection activity. You may pay the balance due in one lump sum or you may make several payments to satisfy the amount due. But the full amount must be paid by November 17, 2014 in order to take advantage of the reduced penalties, and eliminated costs of collection, and recovery fees.

For assistance please contact our Tax Manager, Steven Citron. You may also visit the NJ Division of Taxation website for more information at Resolve Your Tax Debt – Fall 2014

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NJ Alimony Reform Bill Signed Into Law by Governor Christie

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Major changes are here for those currently going through a divorce. On September 10, 2014 Governor Christie signed the NJ Alimony Reform Bill, bill A845, into law.

What does the new law accomplish?

• For marriages less than 20 years, the length of alimony payments cannot exceed the length of the marriage unless a judge determines that there are “exceptional circumstances”.

• Judges would be able to end alimony payments if the recipient cohabits with a partner, even if they don’t get married.

• Judges would have the authority to modify alimony payments if the payer has been unemployed for more than 90 days.

• The term “permanent alimony” would be replaced with the language “open duration alimony”.

While the new law applies primarily to future divorces, it does allow for a “rebuttable presumption” that alimony payments will end once the ex-spouse making the payments reaches the full retirement age for Social Security.

Jeff Urbach, Partner at Urbach and Avraham, CPAs spearheads our litigation support department which specializes in matrimonial accounting. Jeff and his team of valuation analysts and fraud examiners guide couples and their attorneys through the myriad of financial and tax issues of divorce. Please call our office if you or someone you know is going through a divorce to see how we can assist and what effect the new law could have on your situation.

NJ Employers-Reduce Your Unemployment Tax Rates-August Deadline

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Did you check your NJ SUI rates?
In July all New Jersey employers received a Notice of Employer Contribution Rates. This is not a bill, but rather a summary of the manner

in which the NJ Department of Labor calculates your employer contribution rate for unemployment and  disability. This form enables you

to determine whether a voluntary  contribution would save you money in the subsequent year.

Can I reduce the NJ SUI rate?
A voluntary contribution increases the reserve balance and may reduce your contribution rate. Each employer should calculate the amount

of the voluntary contribution required to reduce the rate. The required voluntary payment should be compared to the savings realized from a lower rate.

The unemployment expense is a substantial component of the labor cost of staffing agencies. You should give it careful attention. If you wish to make a

voluntary contribution to your reserve balance you have 30 days from the date of your notice to do so. We recommend that you verify all the NJ DOL

calculations including the amount of the employer contributions and the benefits charged to your account. Report any discrepancies to the NJ Dept. of Labor.

By making a voluntary payment, employers may reduce the NJ SUI rate for the coming year. Please be aware that this payment increases your reserve

balance and helps reduce the NJ SUI rate in future years as well.