TRENTON, NJ – The indictment of a former pro football player a week ago on charges of sending a failed electronic funds payment to cover his taxes underscores that the State Department of the Treasury is serious about enforcing a new law that can result in prison time for such conduct.
A grand jury in Mercer County indicted former pro football player Plaxico Burress in late April on charges of failing to pay State income tax because of a bounced electronic payment. Burress, a former member of the New York Giants and New York Jets, is the first person to be charged under the new law, which treats a failed electronic funds transfer (EFT) the same as a bounced check.
Prior to last fall, the criminal penalties that could be levied against taxpayers for passing bad checks were more severe than those that could be assessed against people who sent e-payments that failed to clear. In 2014, the Legislature recognized that, as a result of the growing use of electronic banking transactions, the problem of failed EFTs had become a serious issue.
On Sept. 10, 2014, Governor Chris Christie signed into law a bill that rectified the longstanding inequity. The new law ensures that bad checks and failed e-payments are treated the same, with criminal penalties extended to the latter.
A failed electronic payment occurs when a taxpayer filing online designates a financial institution from which to draw payment, and the account either does not exist or there are insufficient funds in that account. Failed payments can occur for other reasons, such as if the taxpayer incorrectly types a checking account or bank routing number.
If that happens, the State will notify the taxpayer. All the taxpayer has to do is to make sure there are sufficient funds in the account when the payment goes through a second time. However, if the taxpayer ignores notices about the failed payment from either the Division of Taxation or Division of Revenue and Enterprise Services, then the matter will be turned over to Taxation’s Office of Criminal Investigation (OCI). Taxpayers who fail to respond to those notices do so at their own peril and could face criminal charges resulting in five years of prison time for each charge against them.
Burress filed his 2013 income tax return with the Division of Taxation on Oct. 20, 2014, owing $47,903 in taxes. He submitted an EFT for the taxes due, but the payment failed to clear. After he failed to respond to letters requesting that he submit full payment, the matter was referred to the OCI.
The OCI also sent letters notifying him of the failed EFT and, when he did not respond, notified his tax preparer for 2013 to request that he contact Burress about the seriousness of the situation. Because Burress did not respond, OCI filed a criminal complaint charging him with one count of issuing a bad EFT and one count of willful failure to pay tax.
The grand jury returned an indictment charging Burress with one count of issuing a bad check or EFT and one count of willful failure to pay State tax, both of which are third-degree crimes. Both counts carry a combined maximum penalty of 10 years in prison and a fine of $30,000.
OCI Supervising Investigator Donald Krulewicz led the investigation, and Senior Assistant Prosecutor James Scott, chief of the Mercer County Prosecutor’s Economic Crime Unit, presented the case to the grand jury.