State of New Jersey Department of the Treasury Division of Revenue REVENUE CONSOLIDATION Visit us on Christine Todd Whitman Governor Roland M. Machold State Treasurer FTA Conference June 7, 2000 State of New Jersey Division of Revenue

00527/98 -Page 2 State of New Jersey Division of Revenue History and Background F Summer 1975 vGross Income Tax Law was signed vEffective January 1, 1976 vFolded into the Division of Taxation/ Department of the Treasury vDivision of Taxation collected the gross income tax withholdings F Division of Employer Accounts/ Department of Labor vWage Requesting State vDepartment of Labor collected the unemployment insurance and disability insurance withholdings

00527/98 -Page 3 State of New Jersey Division of Revenue History and Background F Late 1970s vDivision of Taxation developed a wage reporting system vAssist the State in the enforcement of gross income tax, welfare and unemployment laws F Early 1980 vNJ became a wage reporting unemployment State vWage Reporting function was transferred to the Division of Employer Accounts/ Department of Labor vPrimarily to take advantage of federal funding

00527/98 -Page 4 State of New Jersey Division of Revenue History and Background F vDivision of Taxation implemented an integrated tax, registration and accounts receivable system (TAXNET) F vDepartment of Labor wanted to develop a new system to maintain employer accounts vOMB denied the request vOMB recommended that it be consolidated with TAXNET vDepartment of Labor disagreed with recommendation

00527/98 -Page 5 State of New Jersey Division of Revenue Phase I of Consolidation F Executive Reorganization Plan vIssued January 14, 1997 vEffective March 15, 1997 F Created the Division of Revenue vProcessing and recollection activities © the Division of Taxation including NJ-941 © other State agencies

00527/98 -Page 6 State of New Jersey Division of Revenue Taxation Responsibilities F Tax Policy F Tax Interpretation F Tax Enforcement F Customer Service Inquiries

00527/98 -Page 7 State of New Jersey Division of Revenue Revenue Responsibilities F Data Collection and Posting to Taxpayer Accounts F Maintaining Client Registration F Processing Tax Forms and Checks F Accounting and Reporting F EFT and Credit Card Payments

00527/98 -Page 8 State of New Jersey Division of Revenue Joint Responsibilities F Forms Design F Telefiling F Internet Filing F Edit Maintenance

00527/98 -Page 9 State of New Jersey Division of Revenue Phase II of Consolidation F Late 1997 vDepartment of Labor © Needed Registration and Employer Tax Systems © Employer numbering was running out of new numbers © Still wanted a new employer system vGovernors Office/ Treasurer’s Office © Wanted to create One-Stop Shopping for Business © Wanted Department of Labor to transfer Employer Accounts to Revenue vAll parties decided to compromise

00527/98 -Page 10 State of New Jersey Division of Revenue Phase II of Consolidation F Department of Labor vDepartment agreed to the following: © consolidate the TAXNET and Department of Labor registration files into a single revenue registration file © adopt the FEIN as the new unique employer ID number and to re-number all existing accounts © combine the payment and return of tax and labor withholdings vGovernors Office/ Treasurer’s Office agreed to © a new employer accounting system for the Department of Labor

00527/98 -Page 11 State of New Jersey Division of Revenue Phase II of Consolidation F Executive Reorganization Plan vIssued March 30, 1998 vEffective May 29, 1998 F Created One-Stop Shopping for Business vBureau of Wage Reporting, Department of Labor vDivision of Commercial Recording, Secretary of State

00527/98 -Page 12 State of New Jersey Division of Revenue Primary Purpose F Provide the business community with convenient, seamless access to multiple State government services vImprove cooperative public/private relationship vBusiness centered vCommon sense approach

00527/98 -Page 13 State of New Jersey Division of Revenue Provide a Single Doorway F Employer registration F Corporate tax return filing and contribution reporting F Internet access for filings and payments F Expanded Electronic Funds Transfer (EFT) program

00527/98 -Page 14 State of New Jersey Division of Revenue Former Structure F Businesses filed with the Department of Labor, the Secretary of State, and the Division of Taxation for the following: - initial registration - quarterly filing - annual reporting - changing business status F Total of 11 forms to 3 Departments

00527/98 -Page 15 State of New Jersey Division of Revenue New Structure F Businesses now file with the Division of Revenue for the following: - initial registration - quarterly filing - annual reporting - changing business status F Total of 4 forms to 1 Department

00527/98 -Page 16 State of New Jersey Division of Revenue Benefits of Consolidation ¨ Elimination of redundant data ¨ Reduction of hardware systems and software package ¨ Provide a single source of inquiries to employers for initial start-ups

00527/98 -Page 17 State of New Jersey Division of Revenue New NJ-927 F Combines the UC-27 and NJ-941 F Mailed quarterly F Returned with one check to one address F Preprinted rates for UI/DI F Data from two forms on one card sized return F Filing date for both is the 30th of the month after end of quarter F Expanded EFT available to UI/DI F NJ-927 electronic filing

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00527/98 -Page 20 State of New Jersey Division of Revenue Implementation Problems F Combining two different registration files F Designing consolidated returns with all information on one duplex card size return F Allocation of funds between two trust accounts F Confidentiality problems with data F Coordinate the submission of dates

00527/98 -Page 21 State of New Jersey Division of Revenue Implementation Problems - Continued F Notifying the employer community F Notifying CPA, tax preparer and payroll communities F Working with software vendors F Payroll companies did not want to lose float on UI funds F Different interest rates and penalties

00527/98 -Page 22 State of New Jersey Division of Revenue Common Problems NJ-927 F Failure to detach change form from NJ-927s F More than one check with one return F Mail sent to wrong address F Division of Taxation paid weekly and monthly and Department of Labor paid quarterly F Use of old forms

00527/98 -Page 23 State of New Jersey Division of Revenue Common Problems NJ Continued F Failure to detach check stub vNo additional documents should be enclosed F Stapled or paper-clipped the check to the NJ-927s F More than one return in an envelope F Use of unauthorized computer generated returns

00527/98 -Page 24 State of New Jersey Division of Revenue WR-30 F Not much changed -- WR-30 F Mailed quarterly with NJ-927 F Returned to separate address F UP to 99 employees preprinted F Over 100 electronic filing (changing to 50 in 2001)

00527/98 -Page 25 State of New Jersey Division of Revenue Client Registration F One registration file for Division of Taxation and Department of Labor F Based on FEIN F UI/DI secondary number for old businesses - new number is same as FEIN F Mailing address is Department of Labor address

00527/98 -Page 26 State of New Jersey Division of Revenue Client Registration Packet F One registration package (NJ-REG) - Commercial Recording - Division of Taxation - Department of Labor - New Hires Program

00527/98 -Page 27 State of New Jersey Division of Revenue What We Did Not Consolidate? F The following were not consolidated: vEnforcement or criminal prosecution effort vField audit vEmployer accounting systems vBillings and delinquent filing notices vDebt collections and penalty abatements vDebt judgments and bankruptcy actions

00527/98 -Page 28 State of New Jersey Division of Revenue Summary F Create a more business friendly environment F Establish one doorway to New Jersey F Reduce burdens placed on businesses F Process information faster and more efficiently F Public/Private Partnership

00527/98 -Page 29 State of New Jersey Division of Revenue Questions and Answers F F F