Live in PA work in NJ... just received an 'underpayment' notice from the State of NJ saying I owe $1500+ from 2006! I've NEVER paid anything to Jersey... is this an error on their part... I hope? And to add to it... they say it is due within 15 days!

No, it is NOT a joke.

When you work in ANY state, that state will tax the income earned within their borders.

Now, Pennsylvania WILL give you a credit fornthe taxes you have to pay NJ, so you need to pay NJ, then amend your PA return to claim the credit.

Call NJ and explain that you did not know taxes were due, and ask for some time to pay. Then prepare a NJ tax return and the PA amendment. You will need to send the NJ return with the PA amendment to show PA that you are paying NJ taxes. With luck, they will process the amendment and send you a refund in about six weeks, then you can use the refund to partially pay NJ.

Ask NJ to waive any penalties.

Doesn't your employer withhold NJ state tax from your wages? Granted those are only estimated payments but it certainly shouldn't create a $1500 deficit. Check your pay stubs and speak with whoever handles payroll at your company. Also, did you file a NJ tax return for 2006? By law you are required to do so. I'm not sure what the procedure is for filing a late return as the due date is April 15. Your employer should be able to help steer you straight.

Clanci's recommendations have merit.