US: tax-based failed e-payments, bad checks treated the same by regulators

The new regulation, signed by Governor Chris Christie on 11 September 2014 under the form of bills A-1153 and A-1162 (Chapters 45 and 46 of the Public Laws), erases dissimilarities between bounced paper checks and bounced electronic payments, capemaycountyherald.com reports.

Moreover, Chapter 45 extends criminal penalties and Chapter 46 extends civil sanctions, both against people who send insufficient e-payments just as if they were bad checks. Before September 2014, the criminal penalties that could be levied against taxpayers for passing bad checks had been more severe than those that could be assessed against people who had sent e-payments that failed to clear.

Just like a bad check, a failed electronic payment occurs when a taxpayer filing online designates a financial institution from which to draw payment, and the account either does not exist or there are insufficient funds in that account. The failure can occur for a number of reasons, such as incorrectly typing a checking account or bank routing number.

Businesses also are covered by the new laws as most taxes remitted by businesses must be made online. Online payments ensure the State receives taxes and fees when they are due, and they also help to greatly reduce processing costs. Taxpayers can print out a receipt to prove they paid the proper amount when it was due.

When e-payments fail, a notice is sent to taxpayers to notify them that the money was not available to pay the tax bill. Depending on the reason for the electronic failure, they may be assessed a USD 50 fee in addition to the amount they owe. Penalties and interest accrue just as they do for all taxpayers who make delinquent or deficient payments. If the taxpayer corrects the problem expeditiously, little additional monies are owed and the Division need not initiate further recovery efforts.

The Office of Criminal Investigation’s Technical Enforcement Unit is tasked with recovering funds owed as a result of failed electronic payments from taxpayers who don’t make good on the payments. It works cooperatively with the Economic Crimes Unit of the Mercer County Prosecutor’s Office to criminally charge violators. The Technical Enforcement Unit notifies the taxpayer of the failed payment. If the situation can be properly addressed, the taxpayer pays the penalty and interest that has accrued since the electronic payment failure was made.

Under the new regulation, violators can face charges up to a second-degree crime. Conviction can result in the defendant being sentenced to pay a fine, to make restitution, or both. The fine cannot exceed USD 150,000. The court also may impose probation or potential incarceration.