New business taxes pushed back to Oct. 30, prompting confusion

New Jersey businesses will not have to pay taxes that would go toward refilling the COVID-drained state unemployment fund for several months, but employers are complaining they’ve been left in the dark about how the tax increases will go forward.

Under a law Gov. Phil Murphy signed in January, businesses were set to begin paying higher payroll taxes on July 1 to replenish the fund, spacing the increases over a three-year period.

Generally with payroll taxes, the worker and employer chip in for the amount paid to the state. Had the law not gone into effect, they would have paid a much steeper rate. Now, according to the New Jersey Department of Labor and Workforce Development, those increases are not set to go into effect until Oct. 30, said Angela Delli-Santi, a spokesperson for the state department.

“The impact on employers will not be felt immediately, but rather, with the tax payment due Oct. 30, which will cover July-September,” she said in an email, with rate notices to be sent out to employers in the near future.

“Employers pay taxes quarterly,” she continued. “The quarter covering July-Sept is due in October.”

Proponents argue that the law Murphy signed would help avoid shell shock for businesses just as they try to rebound from the COVID-19 pandemic.

But business groups contend that the tax increases could have been avoided completely, had Murphy and state lawmakers agreed to inject any of the billions of dollars in spare cash as part of this year’s $46.4 billion state spending plan, which also went into effect July 1, into the fund.

“We still have not heard anything from [NJDOL], and their website still says we are using column B, instead of column C that current law says we are supposed to move to,” said Christopher Emigholz, vice president of government affairs with the New Jersey Business & Industry Association.

“We have also heard from some of our large payroll provider members, that you would think would be the first to know, who have also not heard anything from [NJDOL] on this,” he continued, saying that the July 1 to Oct. 30 movement was news to him.

State Sen. Steven Oroho, R-24th District, complained in a July 2 statement that “the Murphy administration still hasn’t notified employers of the new payroll tax rate increase and how to comply.”

“It’s possible that Gov. Murphy is just late in providing employers with guidance and still plans on raising the tax,” the senator continued.