Some accountants say it's because the state is wrongly classifying tax-exempt pension payments as taxable income.
The problem is that only senior citizens and disabled residents who make too much money are not eligible for the "senior freeze" program, which has average payments of over $1,000.
The state says an audit flagged 7,000 tax filers this year who benefited from the reimbursement program. That's nearly six times as many as last year.
A Treasury Department spokesman told New Jersey Press Media people won't have to repay if they have proper paperwork.
But Carol Peterson of Berkeley Township says finding the documents can be difficult and stressful for older people.
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