New Jersey would allow deductions for theft losses under two federal rules

New Jersey would let residents deduct theft losses allowed under either of two specified federal rules. The state deduction would equal the federal deduction allowed to a New Jersey resident under either specified rule. Residents could not deduct a loss already counted in income calculated after expenses or used for another tax break in the same tax year. This rule would take effect on the January 1 after enactment. Residents would deduct losses for the tax year when they occurred.

The state tax director would waive covered penalties after approving a fraud victim's application. New Jersey residents who show the director they were victims of fraud could apply. They would still owe the underlying tax. Penalties must come from late filing or payment caused by, or closely tied to, the fraud. The director may ask for proof. For good-faith applications, interest would pause during review. Collection would also pause if the resident supplies requested records. If the application is denied, interest would be charged for the review period. The director could end either pause for bad faith or a major false statement. This rule would take effect on the January 1 after enactment.

The state tax director would offer approved fraud victims a plan to pay covered tax debt over time. The plan would cover a New Jersey resident's outstanding state income tax debt caused by, or closely tied to, the fraud. The director would set the plan's length based on the resident's finances, fraud losses, and other relevant factors. The plan could last up to 10 years. This rule would take effect on the January 1 after enactment.