Confusion Reigns over NJ Income Tax Filing Deadline

Governor has said it will not be April 15, but there’s been no real guidance beyond that, even as feds reset deadline for mid-July
Credit: Edwin J. Torres/ Governor's Office
Gov. Phil Murphy at one of the daily briefings he and state officials have been giving on the coronavirus outbreak in New Jersey

UPDATED, 9:30 a.m., April 1, 2020: Gov. Phil Murphy, Senate President Steve Sweeney and Assembly Speaker Craig Coughlin have issued a joint statement, extending the state income-tax filing deadline and the corporation business-tax filing deadline from April 15 to July 15 because of the COVID-19 pandemic. In addition, they have announced a change in the state budget timetable, extending the close of the current fiscal year to September 30 from June 30.

The month of April has begun with New Jersey standing as the only state in the country not to relax its deadline for filing state income-tax returns in response to the ongoing novel coronavirus pandemic.

While Gov. Phil Murphy continues to suggest publicly that an announcement from his administration is imminent — as he did again Tuesday during his daily media briefing on the crisis — his signaling hasn’t stopped a groundswell of confusion from erupting on social-media pages and in other forums.

The federal government and most other states have already taken action to give taxpayers a break.

The federal extension granted last month pushed the traditional filing deadline back from April 15 to July 15. State lawmakers have also sent Murphy a bill seeking a similar extension for state income taxes, citing the hardships many are facing amid the pandemic.

A news release issued Tuesday by the New Jersey Society of Certified Public Accountants indicated 37 states have adopted the federal government’s July 15 deadline, with another eight extending to other dates. That leaves New Jersey as the only state with its own income tax not to announce an extension before the end of March, the group said.

“Clarity for New Jersey taxpayers is desperately needed in light of the uncertainty and challenges caused by the spread of the coronavirus, and tax practitioners and clients anxiously wait for details from the administration in the midst of this fast-moving, emergency situation,” the release said.

Complications relating to state budget

Among a package of economic-relief bills that state lawmakers rushed to Murphy’s desk last month in response to the outbreak was the measure calling for an extension of the state deadlines for filing both gross-income and corporate-business taxes.

While the state legislation was drafted prior to the federal government finalizing its own extension. it allowed for the state tax-filing deadlines to be extended to as late as June 30. That’s an important date for the state budget because it is the last day of New Jersey’s fiscal year, and the state constitution does not allow for a deficit to be carried forward.

But the Trump administration’s decision to move the federal deadline all the way back to July 15 has created a big dilemma for state fiscal officials. April income-tax payments are typically a significant source of revenue for the state budget, which has been ravaged by the crisis as nonessential businesses across the state have been ordered closed by the governor to help stop the spread of the disease.

Murphy, a first-term Democrat, brought up the issue during his media briefing Tuesday, saying he’s held productive meetings with legislative leaders and is hoping to be able to announce something very soon about both the state budget and relaxing the April 15 deadline.

“We are, as soon as we can, looking to come to folks with guidance about where the budget is heading and specifically about tax-filing deadlines,” Murphy said. “More to come when we have information for you.”

Not if, but big questions about when

It’s possible that Murphy could conditionally veto the legislation seeking to delay the state filing deadline to as late as June 30, or take some other executive action working cooperatively with lawmakers to extend the deadline to July 15, as most other states have done. But he did not indicate what options are being discussed with legislative leaders during Tuesday’s briefing.

Several Republican lawmakers have been calling on Murphy to act more swiftly, and the news release from the NJ CPAs indicated many taxpayers are already mistakenly assuming that New Jersey’s deadline has also been extended to July 15.

“Please provide New Jersey taxpayers with the relief that they so desperately need,” the group said.

Last week, Murphy said during another media briefing that he would “almost certainly” be granting a filing extension, and that a final decision was being held back pending resolution by Congress of the details of a $2 trillion federal stimulus bill, which ultimately was enacted Friday.

Meanwhile, the focus of discussions in Washington, D.C. have already turned to what should be included in the next round of federal coronavirus aid, and Murphy on Tuesday made a pitch for the federal government to figure out a way to uncap the federal deduction for state and local taxes to provide more relief to New Jersey residents amid the pandemic.

Known as SALT, the previously unlimited deduction for state and local taxes was capped at $10,000 by President Trump and the then-Republican Congress in 2017. While many viewed the write-off as one that largely benefitted the wealthy, limiting the federal SALT deduction has hurt a number of middle-income residents in high-tax states like New Jersey, where the average local property tax bill was nearly $9,000 last year.

The governor’s call for relief from the SALT cap was echoed on Tuesday by U.S. Rep. Josh Gottheimer (D-5), who, like Murphy, has long complained about the $10,000 limit. Gottheimer cited New Jersey’s ongoing struggles with COVID-19 — there were 18,696 positive cases as of Tuesday’s press briefing — as a new reason to provide residents with the full tax break.

“Our state has the second highest number of coronavirus cases in the country, and with those numbers continuing to rise, our families need real economic relief,” Gottheimer said.