I live in NJ and work in NY and I recently receive a letter for NJ State auditor saying that I should've added Sec 132 (transit/parking expenses) amount reported on my W-2 to my NJ state wages and as a result I owe them a certain amount in taxes. I always thought that Sec 132 lowers tax base for both federal and state returns. Why are they so interested in this particular item and not other things like Sec 125?
Sec. 132 refers to 26 USC § 132. Title 26 of the USC (United States Code) is what is commonly referred to as the "US Tax Code". Note the US - this is the United States federal law, not the New Jersey law.
State tax law doesn't have to be the exact copy of the Federal law, and in most cases it is in fact not. In your case, New Jersey doesn't conform to the Federal benefit in that that for State taxes this benefit doesn't exist. As the result, your wages for State Tax purposes are not the same as your wages for Federal tax purposes.