The Bridge Between State and Federal Tax

Michael DeBlis
8 min readJul 19, 2019

Mistakes happen, and taxes are not exempt. From time to time, taxpayers make typos, misinterpret information, or simply misread instructions. When this happens, the IRS generally sends some sort of notice indicating the extent of an issue, alerting the taxpayer as to the problem and proposing an alternate settlement, whether resulting in additional money owed by the taxpayer — or a larger refund from the IRS. When this happens, it is not necessary for taxpayers to file an amended federal return, but the same isn’t always true on the state side. In New Jersey, taxpayers must pay close attention to the rules to ensure proper reporting is maintained on the state level.

If the Taxpayer Doesn’t Succeed, the IRS Surely Will

As a baseline, all changes enacted on a federal level, like an updated gross income amount or any new details included in an amended return, need to be communicated to the state of New Jersey as well. However, if you don’t do this on your own, the IRS surely will. The federal government and New Jersey are both part of the Governmental Liaison Data Exchange Program, or GLEDP, a partnership between federal, state, and local taxing authorities that assists with voluntary tax law compliance. Items shared include employment tax information, audit results, and the details shared on federal personal and business income tax returns.

The IRS executed an MOU, or memorandum of understanding, with the state of New Jersey, a reciprocal agreement that means that New Jersey shares information with the IRS while the IRS also shares information with New Jersey. Information can be shared relatively freely, but only if used for tax purposes; sharing personal data just for the fun of it does not fall under the purview of the IRS. For this reason, New Jersey will find out when federal income changes. However, taxpayers must still notify the state, and filing an amended return is often suggested to avoid penalties that may accrue for failing to do so.

Notice of Change in New Jersey

If the IRS comes knocking, a federal examination isn’t the only thing taxpayers have to worry about. The state of New Jersey is also interested in what, if anything, may arise over the course of an audit. Once things wrap up, it’s…

Michael DeBlis

Michael is an attorney specializing in entertainment law and a professionally-trained actor. He is a partner in the law firm of DeBlis Law.