Roger J. Kamien v. Director, Division of Taxation

COMMITTEE ON OPINIONS

March 20, 2015

Ramanjit K. Chawla

Deputy Attorney General

Division of Law

Richard J. Hughes Justice Complex

P.O. Box 106

Trenton, New Jersey 08625-0106

Paul D. Wigg-Maxwell, Esq.

17 Watchung Avenue, Suite 203/204

Chatham, New Jersey 07928

Re: Roger J. and Anita Kamien v. Director, Division of Taxation

Docket No. 015084-2014

Dear Ms. Chawla and Mr. Wigg-Maxwell

This constitutes the court s opinion deciding the Director of the Division of Taxation s motion to dismiss plaintiffs Complaint for want of jurisdiction under R. 4:6-2(a), R. 8:4-1(b), N.J.S.A. 54A:9-10 and N.J.S.A. 54:51A-14. At issue is the Final Determination of the Director, Division of Taxation assessing gross income tax liabilities against plaintiffs for tax years 2009, 2010 and 2011. For the following reasons, the plaintiffs Complaint is dismissed with prejudice and without costs.

I. Procedural History and Factual Findings

Pursuant to R. 1:7-4, the court makes the following findings of fact based on the submissions of the parties and the pleadings.

During 2009, 2010 and 2011 plaintiffs, Roger J. Kamien and Anita Kamien were shareholders in a New Jersey S corporation, known as Music Research and Development Corp. Although it is not entirely clear from the record, Music Research and Development Corp., formerly a Nevada corporation, elected to be treated as a New Jersey S corporation effective January 1, 2009. Music Research and Development Corp. filed New Jersey Corporate Business Tax Returns, form CBT-100S, for the 2009, 2010 and 2011 tax years. The plaintiffs filed New Jersey Nonresident Gross Income Tax Returns, form NJ-1040NR, for the 2009, 2010 and 2011 tax years.

On February 25, 2014, an auditor of the Division of Taxation issued three notices of deficiency to plaintiffs asserting deficiencies in New Jersey Gross Income Tax for the 2009, 2010 and 2011 tax years. The notices informed plaintiffs that a deficiency of: (a) $20,506 was due for tax year 2009; (b) $23,775 was due for tax year 2010; and (c) $59,102 was due for tax year 2011. The notices further advised plaintiffs that failure to file a written letter of petition/protest and request for a conference within ninety (90) days from the date of the letter would result in the deficiencies becoming final assessments of gross income tax.

On or about April 9, 2014, plaintiffs filed a written letter of petition/protest and request for a hearing with the Conference and Appeals Branch of the New Jersey Division of Taxation. An informal administrative conference was conducted on or about June 19, 2014.

On July 17, 2014, the Division issued a Final Determination to plaintiffs addressing the 2009, 2010 and 2011 tax year New Jersey Gross Income Tax liabilities. According to the Final Determination, under the provisions of N.J.S.A. 54:51A-13, et seq., in the event the plaintiffs are not in accord with the above determination, they may file a complaint with the required fee which must be received within (90) ninety days from the date of this notice, directly with the Tax Court of New Jersey The Final Determination was delivered by the United States Postal Service to the New Jersey address of plaintiffs corporation, Music Research and Development Corp. at 21 Herbert Terrace, Livingston, New Jersey, by certified mail return receipt, on July 21, 2014 at 4:24 p.m.

On October 22, 2014, plaintiffs filed a Complaint with the Tax Court challenging the July 17, 2014 Final Determination.

On February 3, 2015, the Director moved to dismiss plaintiffs Complaint for lack of subject matter jurisdiction with respect to the July 17, 2014 Final Determination. The Director argues that because plaintiffs Complaint was filed beyond the ninety day period which would vest jurisdiction with the Tax Court to entertain this matter, plaintiffs Complaint should be dismissed with prejudice as untimely for lack of subject matter jurisdiction under R. 4:6-2(a), R. 8:4-1(b), N.J.S.A. 54A:9-10 and N.J.S.A. 54:51A-14.

II. Conclusions of Law

An assessment by the Director can be challenged by a taxpayer only through the timely filing of a Complaint in the Tax Court. N.J.S.A. 54A:9-10 provides, in part, that

(a) Any aggrieved taxpayer may, within 90 days after any decision, order, finding, assessment or action of the Director of the Division of Taxation made pursuant to the provisions of this act, appeal therefrom to the tax court in accordance with the provisions of the State Tax Uniform Procedure Law., R.S. 54:48-1, et seq

(c) Appeal exclusive remedy of taxpayer. The appeal provided by this section shall be the exclusive remedy available to any taxpayer for review of a decision of the director in respect of the determination of liability of the taxpayer for the taxes imposed by this act

(e) Date of finality of director s decision. A decision of the director shall become final upon the expiration of the period specified in subsection (a) for filing a complaint with the tax court, if no such complaint has been filed within such time

[N.J.S.A. 54A:9-10.]

Moreover, N.J.S.A. 54:51A-14 requires that all complaints shall be filed within 90 days after the date of the action sought to be reviewed. The ninety-day period is also recited in R. 8:4-1(b), which provides that "[c]omplaints seeking to review actions of the Director of the Division of Taxation . . . with respect to a tax matter . . . shall be filed within 90 days after the date of the action to be reviewed."

Here, it is undisputed the Director issued a Final Determination to plaintiffs on July 17, 2014. On July 21, 2014, the Final Determination was received and the certified mail receipt was signed for at plaintiffs last known address in New Jersey. The plaintiffs have not submitted to the court any documentation, or opposition to defendant s motion, challenging receipt of the Final Determination on July 21, 2014 or the validity of the address to which the Final Determination was mailed.

The court will begin counting the ninety-day limitations period from July 21, 2014, the date the return receipt was signed. See Liapakis v. State Dept. of Treasury, Div. of Taxation, 363 N.J. Super. 96, 99 (App. Div. 2003), certif. denied 179 N.J. 369 (2004)(concluding that the ninety-day limitations period begins to run on the date the taxpayer signed the certified mail return receipt for his determination letter. ) Ninety days from July 21, 2014 was Sunday, October 19, 2014. Therefore, under R. 1:3-1 plaintiffs are afforded to the next business day, or Monday, October 20, 2014, to file their Complaint. However, plaintiffs Complaint was not filed with the Tax Court until October 22, 2014, two days after the time period lapsed for filing a Complaint. Thus, upon expiration of the ninety day period, without the filing of a Complaint, the tax assessments levied against plaintiffs under the Final Determination becoming finalized and fixed. Thereby depriving the Tax Court of jurisdiction to review the actions of the Director.

As our Supreme Court has observed, the Tax Court is a court of limited jurisdiction and its jurisdiction is defined by statute It is against this comprehensive mosaic of procedural safeguards -- one with which continuing strict and unerring compliance must be observed. McMahon v. City of Newark, 195 N.J. 526, 529 (2008). Thus, this court's jurisdiction to review assessments by the Director is clearly set forth: [A]ll complaints shall be filed within 90 days after the date of the action sought to be reviewed. N.J.S.A. 54:51A-14. It is a well-settled principle that statutes of limitation applicable to suits against the government are conditions attached to the sovereign s consent to be sued and must be strictly construed. H.B. Acquisitions, Inc. v. Director, Division of Taxation, 12 N.J. Tax 60, 65 (Tax 1991). This strict adherence is necessary in order to provide finality and predictability of revenue to state and local government. Bonanno v. Director, Division of Taxation, 12 N.J. Tax 552, 556 (Tax 1992)(citing Pantasote, Inc. v. Director, Division of Taxation, 8 N.J. Tax 160, 164-166 (Tax 1985)). A failure to comply with the applicable limitations period is of particular concern in tax matters, given the exigencies of taxation and the administration of . . . government. Millwork Installation, Inc. v. State Dep't of the Treasury, Div. of Taxation, 25 N.J. Tax 452, 459 (Tax 2010)(quoting F.M.C. Stores Co. v. Borough of Morris Plains, 100 N.J. 418, 424 (1985)). The Director is entitled to assume that an assessment is final, and is not subject to scrutiny by the court, after the applicable limitations period has expired. Commercial Refrigeration & Fixture Co., Inc. v. Director, Division of Taxation, 2 N.J. Tax 415, 419 (Tax 1981). The court s strict adherence to limitation period[s] is mandatory and is justified by the need for predictability of revenues by the State. McCullough Transp. Co. v. Motor Vehicles [8] Division, 113 N.J. Super. 353 (App. Div. 1971). Consequently, the [f]ailure to file a timely appeal is a fatal jurisdictional defect, which serve to bar consideration of the merits of the action. F.M.C. Stores Co., supra, 100 N.J. at 425 (citing Clairol v. Kingsley, 109 N.J. Super. 22 (App. Div. 1970), aff d, 57 N.J. 199 (1970)).
III. Conclusion

Here, the plaintiffs do not deny receipt of the Final Determination on July 21, 2014 and, have not presented the court with any explanation for their failure to challenge the Final Determination in a timely fashion. Instead, plaintiffs only submission to the court is a letter advising that they have decided not to file an opposition to the Director s motion. Plaintiffs Complaint was not timely filed with the court within the ninety-day limitations period following receipt of the Final Determination, as required under N.J.S.A. 54A:9-10 or N.J.S.A. 54:51A-14. Accordingly, following expiration of the ninety-day period the tax assessments identified in the Final Determination became final and fixed.

Therefore, the plaintiffs Complaint in the above-referenced matter is dismissed for want of jurisdiction.

Very truly yours,

Hon. Joshua D. Novin, J.T.C.