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. 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 fraudulent return was filed with the intent to evade tax. The bill clarifies that the definition of fraud does not include inadvertent mistakes, reliance on incorrect advice, or negligence.

Additionally, the bill removes the term "misrepresentation of a material fact" from the statute and specifies that the fraudulent return must be intentional. The changes will take effect immediately and will apply retroactively to any assessments of deficiencies arising from erroneous refunds made within the five years prior to the bill's enactment. This legislative change aims to streamline the assessment process and eliminate confusion regarding the treatment of fraudulent tax returns.