Like the IRS, NJ tax audits can be a lengthy, stressful process. This is only exacerbated because the state will examine 4 years of returns, as opposed to the 3 years the IRS generally examines.
NJ will utilize various audit techniques in an NJ tax audit depending on the business, the type of tax, and the quality of records you have. If your records are poor or nonexistent, NJ will use an indirect method to determine your tax liability. This essentially means NJ will make a guestimate of the amount of money you made and expenses you incurred and will tax you accordingly.
If you tried to handle the initial audit yourself and were unhappy with the results, there are appeal rights that can challenge the state’s conclusions. It’s imperative appeals are filed properly and timely. If not, your only remedy may be to pay the liability in full and engage in costly battle for NJ to refund your money.
For help with NJ Tax Audits, contact me today.