SALT TALK: State Tax Debts: Don’t Believe Everything You Read

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Oct 5, 2020 11:40:00 AM
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This week’s post is unusual in that it takes us to two very disparate points in time: The first being sometime last week, and the second being the third grade. This week, one of my clients received a “Notice of Intended Federal/NJ State Offset.” It’s a good thing I paid careful attention to my third grade teacher, Mrs. Maupin, who reminded us at least once a week not to believe everything we read.

Just imagine that you are in a legitimate tax controversy with one of many tax jurisdictions. You are able to rest easily as you know it is being handled by your expert advisor at Berdon. The audit process was difficult but you decided, along with your advisor, that the auditor was simply inexperienced and clearly came up with the wrong result. So a timely protest is filed with the appropriate office. You even receive correspondence indicating your timely protest has been received and will be scheduled for review sometime in the future.

But look what arrives in the mail (see below). The jurisdiction is threatening to hijack your federal refund because of an outstanding tax liability. Wait! Isn’t that why we filed a request for a conference? Is this actually an outstanding tax liability that the jurisdiction can demand payment for before the taxpayer has the conference he is entitled to under the law? The answer is clearly no!

So what is going on here? It seems like a little bullying to me. Mrs. Maupin also told us in the third grade that we shouldn’t bully. So why is this taxing jurisdiction being a bully? I don’t believe any of my third grade classmates currently work in the tax field, so that could be one reason. The other reason, given to me by the tax jurisdiction, was something to the effect of “the computer did it and we will take care of it.”

Let’s hope so. The moral of today’s story: Taxpayers (and practitioners), don’t believe everything you read; and tax jurisdictions, please don’t be a bully. Oh wait, a third moral: Should you receive notice from a tax jurisdiction, don’t panic. Contact me at or your Berdon Advisor.

Wayne Berkowitz, a tax partner and co-leader of the State and Local Tax Group at Berdon LLP, advises on the unique requirements of governments and municipalities across the nation.




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