This bill amends the New Jersey Gross Income Tax Act by eliminating the five-year statute of limitations on tax assessments related to erroneous refunds that are induced by fraud. Under current law, the Division of Taxation must assess additional taxes within three years after a taxpayer files a return, but this period can be extended to five years if the refund was induced by fraud or misrepresentation of a material fact. The bill clarifies that any assessment for a deficiency arising from an erroneous refund can be made at any time if it is determined that the refund was induced by the filing of a false or fraudulent return with the intent to evade tax. It also specifies 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 legal language and eliminating potential confusion regarding the definitions of fraud. 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 preceding the enactment of the bill. This change aims to resolve inconsistencies in the treatment of fraudulent tax returns and ensure that the Division of Taxation can effectively address cases of tax evasion.