I'm co-partner and president of a two-partner LLC in New Jersey. I have a question related to the TEFTA and statute-of- liability issue that you so helpfully addressed in your previous answer to Brandon Marx' question. Your reply was so clarifying that I'd like to try asking you a follow-up question before posting the question more generally. I hope this is okay.
On November 26 2013, I received the first and only notice from NJ State of an error that the LLC's accountant inadvertently made in the partner filing for its 2004 tax year. The amount owed, including penalties and taxes, is just under $1000 (a substantial amount for us at this point.) The error seems quite understandable, arising from what could be called an ambiguity or obscure rule regarding partnership taxation, and it was made by a NJ CPA who'd done our taxes since our formation in 1998. But this accountant is now out of the picture and at any rate always struggled with serious procrastination issues, so we no longer have the option of asking him for help. Since 2006, we've done our taxes ourselves without incident, since the LLC is low-activity and we may close it pretty soon. (The accountant reviewed our prep of the 2006 return, and from then on we've done our own prep, since subsequent years were quite similar. Cringe?)
Here's the gist of the question. Clearly, by the Federal definition, we're a non-TEFRA entity. We have two partners and the highest number we've ever had is three. We've never elected TEFRA status. But I'm unsure how to determine if NJ State's law agrees with this assessment. So my question is, how can I view NJ State's rules regarding non-TEFRA entities and the statute of limitations on taxes and penalties for partnerships? The issue is complicated by the fact that, when I asked this question of the tax-practitioner line of NJ State office that specializes in business accounting, the phone rep replied, "What is TEFRA?" and didn't have any information about NJ's statute of limitations for partnership tax-liability.
I hope this question isn't annoying in its length. Part of the reason I feel driven to ask it here is that, if I'm forced to seek help from a *new* accounting firm, that step could easily cost at least as much as the penalty. Since we're a very small entity that's winding down, this would be very hard for us.
I'd also be grateful for any general advice you have about how to present our argument regarding non-TEFRA status to the state of NJ.
I imagine you're very busy. I don't know if you can help shed any light on our situation. But I'd be grateful for any insight or advice you can give us. Thank you for reading this.