When a tax return is filed after the due date or the tax due is paid late, penalty and interest charges may be assessed. In some instances, we may also impose collection fees.
We charge interest for every month (or part of a month) your tax remains unpaid.
The rate is calculated as: Prime Rate + 3%, compounded annually. At the end of each calendar year, any tax, penalties, and interest remaining due will become part of the balance on which interest is charged. For information on interest rates, see Technical Bulletin TB-21(R) .
Late Filing Penalty
When you do not file a return by the due date or extended due date we may assess a Late Filing Penalty. The Late Filing Penalty is 5% of the tax due for each month (or part of a month) the return is late. The maximum penalty for late filing is 25% of the balance due. We also may charge $100 for each month the return is late.
Late Payment Penalty
In addition to interest, we may also charge a Late Payment Penalty of 5% of the tax due.
Collection Fees - The Collection Process
Referral Cost Recovery Fee
A Referral Cost Recovery Fee is added to your tax liability if your tax bill is sent to our collection agency. This fee is in addition to any interest or penalties.
Effective January 1, 2022, the fee is 11%.
December 31, 2021 and prior, the fee was 10.7%.
You will also be charged a Referral Cost Recovery Fee for delinquent tax returns.
Once you file your delinquent returns, you may receive an updated billing notice if you still have a tax liability. The Referral Cost Recovery Fee will not be reflected on this billing notice. It is shown as a separate item on the Schedule of Liabilities sent to you from the agency.
Any revised billing notice sent to you from the Division does not give you more time to make your payment to the collection agency. If you do not make your payment on time you will be charged additional fees.
Cost of Collection Fee
If a certificate of debt is issued, a fee for the cost of collection of the tax also may be imposed.
If you can show reasonable cause for failing to file a return or pay any tax when due, we may waive part or all of your penalty.
Applicable Laws and Rules
N.J.S.A. 54:49-12.3 and N.J.A.C. 18:2-2.5(d).