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New Jersey Division of RevenueA Corp Tax and Partnership Data
Capture Adventure
New Jersey Division of RevenueNew Jersey Division of RevenueA Corp Tax and Partnership DataA Corp Tax and Partnership Data
Capture AdventureCapture Adventure
James E. McGreevey Governor
John E McCormac, CPA State Treasurer
John E. Tully, CPA
Director, Division of Revenue
James E. McGreeveyJames E. McGreevey GovernorGovernor
John E McCormac, CPA John E McCormac, CPA State Treasurer State Treasurer
John E. Tully, CPAJohn E. Tully, CPA
Director, Division of RevenueDirector, Division of Revenue
Steve CsogiChief TechnologyServicesIrwin NadelAssistant Chief AlternateFiling
FTA TechnologyFTA TechnologyConference 2003Conference 2003
August 13, 2003August 13, 2003
State of New JerseyState of New Jersey
Department of theDepartment of theTreasuryTreasury
Division of RevenueDivision of Revenue
08/06/03 – Page 2
TopicsTopics
q Legislative Requirementsq Processing Before / After Changesq What we had to do - CBTq What we had to do - Partnershipsq What Went Right….What Went Wrongq 1065 E-File Summaryq E-Filing Advantagesq E-Pay Optionsq Questionsq Contacts – Web Sites
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08/06/03 – Page 3
Legislative RequirementsLegislative Requirements
q NJ-1065 Partnership Mandate
ÿUnder New New Jersey Public Laws 2001, Chapter136, the Director of the Division of Taxation mandatedthat all partnerships with 10 or more partners must filetheir NJ_1065 partnership return electronicallybeginning tax year 2002.
qCorporation Business Tax Mandate
ÿUnder New Jersey Public Laws 2002, Chapter 40, a StudyCommission was created to review the CorporationBusiness Tax and to make recommendations to modernizeit. To achieve this goal, additional data elements needed tobe captured.
08/06/03 – Page 4
Processing Before LegislationProcessing Before Legislation
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
PartnershipsCorporation TaxIncome Tax
General Processing Approach
Annual Volumes:
ß Income Tax – 4,000,000
ß Corporation Tax – 450,000
ß Partnerships – 100,000
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08/06/03 – Page 5
Processing ExpectationsProcessing Expectations
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Partnerships
Corporation Tax
Income Tax
What we were expected to do!
Reduce processing time by up to 3months!
08/06/03 – Page 6
What We Had To Do - CBTWhat We Had To Do - CBTForms DesignForms Design
q Create 2 returns, splitting the fiscal year in half
q Eliminate card size annual report (CAR-100)
q Modify Tentative Tax Return to collect increased taxes
q Develop CBT specifications for Software Developers
q Develop new page size CAR-100 to process with CBTreturn
q Revise 2D Barcode specifications for enhanced CBTdata
q Create 2D Barcode specifications for CAR-100
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08/06/03 – Page 7
What We Had To Do - CBTWhat We Had To Do - CBTDate Capture RequirementsDate Capture Requirements
q HOW TO CAPTURE THE DATAÿ Utilize existing architecture / processes
¸ Prep returns for first 4 / 5 pages
¸ Scan documents
¸ Determine Page Number by 1D Bar Code
¸ Read 2D Bar Code
¸ Non 2D returns flow to Key From Image (KFI) function
ÿ 3 Software Developers submitted 2D Bar Codes for testing
¸ All failed, unable to read at 200 DPI¸ All returns flow to the KFI application
08/06/03 – Page 8
What We Had To Do What We Had To Do –– Partnerships PartnershipsDeveloping the ProcessDeveloping the Process
q Initially New Jersey attempted to partner with theIRS. At the time, however, the IRS was not in aposition to enter into such a partnership.
Back to the drawing board……
qIdentify an acceptable E-File solution
ÿDirect E-Filing through Software Developers
ÿCreating a Web Based application
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08/06/03 – Page 9
What We Had To Do - PartnershipWhat We Had To Do - Partnership The Web Based Application The Web Based Application
q Create an application to accommodate taxpractitioners and individual filers whose softwareproduct was unable to meet the NJ-1065 E-FileMandate.
q Only capture data, not meant to perform calculationsq Advantages of the Application:
ÿ Provided filers with the ability to meet E-File mandate.ÿ Ability to pay on-line using:
¸ E-Check¸ Credit Card
q Short coming of the Applicationÿ Limited to a maximum of 50 partners.
08/06/03 – Page 10
What We Had To Do What We Had To Do ––PartnershipPartnershipSoftware DevelopersSoftware Developers
q FINDING AN ACCEPTABLE SOLUTIONÿ The Dilemma: What communication link would
accommodate New Jersey’s infrastructure while at the sametime limiting problems for software developers?
ÿSolution: the N.J. Portal¸AdvantagesßWeb basedß Provides Software Developers with the ability to transmit filesthrough:
•An Automated Process•Manual interaction
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08/06/03 – Page 11
What We Had To Do - PartnershipWhat We Had To Do - Partnership New Jersey Portal New Jersey Portal
q Advantage for Developers\Transmittersÿ The Portal provided a convenient means of transmitting
records to New Jersey.
q Advantage for New Jerseyÿ The Portal provided a low cost means of accepting data file
transmissions that could easily be accommodated bySoftware Developers and transmitters.
q Requirements to use the Portalÿ Creation of a Logon ID
ÿ Apply to the N.J. Division of Revenue for a Digital Certificate
08/06/03 – Page 12
What We Had To Do What We Had To Do –– Partnership Partnership Transmitting Data Files Transmitting Data Files
q Methodology used to transmit data files:ÿ Manual Transmission
¸ Manual logon to the Portal
¸ Manual request to send a File
ÿ Automated Transmission
¸ Load Java Servlets to developer\transmitters system.
¸ Use of a scheduler and pre-loaded Java Servlets tolaunch the data file.
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08/06/03 – Page 13
What We Had To Do - PartnershipWhat We Had To Do - PartnershipCommunicationsCommunications
q Included open communication between softwaredevelopers, the NACTP, and New Jersey.
q To accommodate the developer community, NewJersey aborted its initial record layout and adoptedthe IRS formats.¸ This included:
• IRS Partnership Record Layout
• Acknowledgement Record Layout
08/06/03 – Page 14
What We Had To Do - PartnershipWhat We Had To Do - PartnershipTechnical DocumentationTechnical Documentation
q New Jersey used the same form of documentation asthe NJ-1040
q The documentation included:ÿ NJ-1065 Record Layout
ÿ Software Developers Handbook (The handbook included theAcknowledgement Record Layout).
ÿ Test Scenarios
ÿ Forms (in Adobe format) pre-filled with the correspondingField Number.
ÿ Error Code Listing
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08/06/03 – Page 15
What We Had To Do - PartnershipWhat We Had To Do - Partnership
NJ-1065 E-File Testing NJ-1065 E-File Testing
q Broken down into two components:ÿ Ability to transmit data files
ÿ Software Testing
¸ Software testing followed the same format as the NJ-1040.
• Comparison of test scenario data elements
08/06/03 – Page 16
What Went Right What Went Right …… What Went Wrong What Went Wrong
q Corporation Business Taxÿ 5 Software Developers attempted 2D Bar Codes
ÿ 140,000 CBT returns scanned in 6 weeks.
ÿ None of the 2D Bar Codes could be read
ÿ All 3rd Party forms not submitted for testing
ÿ 1 D Bar Codes missing
ÿ Form layouts distorted for data capture
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08/06/03 – Page 17
What Went Right What Went Right …… What Went Wrong What Went Wrong
q Partnership E-File
ÿ Modifying the Fed’s record layouts to accommodateNew Jersey.
ÿ The overall success of the project was due in largepart to the open line of communication maintainedbetween the Software Developer community and theNJ Division of Revenue.
ÿ The open line of communication proved to be of greatbenefit to both the NJ Division of Revenue and theSoftware Developer community:¸ Problems were immediately identified and resolved.
08/06/03 – Page 18
1065 E-File Summary1065 E-File Summary
q E-File Requirementsÿ Partnerships with 10 or more Partnersÿ No Exemptions from the E-File Mandateÿ Filers are not Required to Register, only transmitters/software developers
q How to E-Fileÿ DOR/Taxation developed Web Site
¸ http://www.state.nj.us/treasury/taxation/ Then click on “File Online”ÿ Approved Software
¸ Approved Software Packages will Transmit your 1065 Data to theDivision of Revenue
ÿ 5 Software Vendors Approvedÿ 7 Software Vendors Currently Being Reviewed
¸ http://www.state.nj.us/treasury/revenue/partnerships.htmq E-File Numbers
ÿ 4,811 Returns Filed via software for over 300,000 partnersÿ 232 Filed via Web Site
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08/06/03 – Page 19
E-Filing AdvantagesE-Filing Advantages
q Acknowledgement of Filed Returnÿ Software Acknowledgementÿ Web Confirmation Number
q Greater Accuracyÿ Software helps prevent mistakes
ÿ Data Carried over from previous filings
q E-Pay Balance Dueÿ EFT
ÿ Credit Card
ÿ E-check
q Pennies vs. Dollars Cost to Process
08/06/03 – Page 20
E-Pay OptionsE-Pay Options
q Electronic Funds Transferÿ Required if previous years total of all taxes paid exceeds $20K
ÿ Must Register with DORÿ Telephone – Web – ACH Credit Options
q E-Checkÿ Registration not Required
ÿ Monies Debited from Account Requested
q Credit Cardsÿ Courtesy Fee – Sliding Scale
q Automated Debitÿ 1040 Software
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08/06/03 – Page 21
ContactsContacts
qSteve Csogi
qIrwin Nadel
q Division of Revenue’s Web Site
qwww.state.nj.us/treasury/revenue
qDivision of Taxation’s Web Site
qwww.state.nj.us/treasury/taxation
08/06/03 – Page 22
QuestionsQuestions
?Stool 13
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