This bill amends the New Jersey Gross Income Tax Act by eliminating the statute of limitations on income tax assessments related to erroneous refunds that are induced by fraud. Currently, the law allows the Division of Taxation to assess additional taxes within three years of a tax return being filed, but this period can be extended to five years if the refund was induced by fraud or misrepresentation of a material fact. The bill seeks to resolve the inconsistency in how fraud is treated in these situations by allowing the Division to assess taxes at any time if it is determined that a false or fraudulent return was filed with the intent to evade tax. The bill clarifies that inadvertence, reliance on incorrect technical advice, honest differences of opinion, negligence, or carelessness do not constitute fraud.

Additionally, the bill removes the term "misrepresentation of a material fact" from the statute, thereby streamlining the language and focusing solely on the filing of false or fraudulent returns. The provisions of the bill will take effect immediately and will apply retroactively to assessments of deficiencies arising from erroneous refunds made within the five years prior to the enactment of the bill. This change aims to provide clarity and consistency in the enforcement of tax assessments related to fraudulent activities.