April 15, 2008
Contact: Bill Murray / (609) 292-5199Senator Diane Allen (R-7), Senator Leonard Lance (R-23)
Senators Leonard Lance and Diane Allen announced today that they will introduce two new taxpayer protection measures at the next Senate quorum. The first measure sponsored by Senator Lance would require the Department of the Treasury to return estate taxes mistakenly collected. The second measure sponsored by Senator Allen would create the Department of the Taxpayer Advocate.
“I am deeply disturbed by published reports indicating that the Department of the Treasury is refusing to return taxes it freely admits it collected in error,” Lance stated. “The Department should stop hiding behind an obscure court ruling and return the money to the rightful owners.”
According to published reports, retroactive application of the estate tax law was ruled invalid by a state court. The court ruled that a lower estates tax threshold did not apply to those who died between January and June of 2002. In July of 2002 the state changed the estates tax threshold from a base of $1 million to $675, 000 and made the change retroactive to January 1, 2002.
The new Department of the Taxpayer Advocate would be modeled on the Federal Taxpayer Advocate. The State Taxpayer Advocate would assist taxpayers with disputes involving individual and business taxpayers and the State Division of Taxation. The Taxpayer Advocate could not overrule courts of law or supersede established rules and procedures.
“The situation that Senator Lance’s bill addresses is a prime example of why we need a Taxpayer Advocate,” Allen continued. “This office will help taxpayers cut through the morass of bureaucratic red tape surrounding the tax code in this state. It is a prudent measure that will directly and immediately help the long suffering taxpayers of this state and should be adopted before we break in June.”
The court ruled that the retroactive application of the estate tax was “manifestly unjust” long after the three year statute of limitation was over.
The bill gives the Taxpayer Advocate the power to issue taxpayer assistance orders to taxpayers who are about to suffer “significant hardship” as defined by the bill. Significant hardship is a serious deprivation resulting from the manner in which the tax laws or associated filings are being administered by the divisions.
A taxpayer assistance order is an instruction to take a specific action or to refrain from a specific action. The bill allows the advocate to issue orders upon application by a taxpayer or upon the advocate’s own initiative, and such an order can only be modified or rescinded by the Taxpayer Advocate, or by the State Treasurer.
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