Opinion
Docket No. 007087-2011
08-06-2013
Re: Edward Alon v. Director, Division of Taxation
Edward Alon, pro se via e-mail and regular mail Michelline Capistrano Foster Deputy Attorney General Richard J. Hughes Justice Complex via e-mail only
NOT FOR PUBLICATION WITHOUT APPROVAL OF
THE TAX COURT COMMITTEE ON OPINIONS
JOSEPH M ANDRESINI
JUDGE
Edward Alon, pro se
via e-mail and regular mail
Michelline Capistrano Foster
Deputy Attorney General
Richard J. Hughes Justice Complex
via e-mail only
Dear Counsel,
This letter serves as the court's opinion with respect to plaintiff's complaint challenging the defendant's Final Determination letter, dated March 2, 2011. Plaintiff contends that defendant wrongfully denied a request for a tax refund from tax years 2003 to 2008. Defendant contends that plaintiff is not entitled to a tax refund for tax year 2003 to 2008 because plaintiff failed to file a tax return for those years, therefore, making his refund requests untimely. For the reasons set forth below, the court dismisses plaintiff's complaint, and affirms defendant's Final Determination.
I. Findings of Fact and Procedural History
Edward Alon ("plaintiff") filed his New Jersey Tax Return for 2002 on August 6, 2004, calculating a refund of $7,644. Plaintiff claims he never received the refund of $7,644 and requested that the refund be applied to future tax liabilities. Following the 2002 tax year, plaintiff did not file a New Jersey tax return for the 2003, 2004, 2005, 2006, 2007 and 2008 tax years by the April 15 deadline of the respective subsequent years. During that time, plaintiff claims that he and his wife, Sandra Alon ("plaintiff's wife"), suffered personal hardships that prevented them from filing timely tax returns. Plaintiff claims the hardships began with his vision loss in 2003, along with the sale of his home in 2005. This allegedly required the storage of tax documents in a different location from the plaintiff's new residence. In March of 2005, plaintiff's wife was diagnosed, and later treated for, breast and ovarian cancer. Despite these alleged hardships, plaintiff continued to make estimated tax payments and never requested an extension to file.
Neither plaintiff nor defendant addressed why the 2002 tax return was filed nearly sixteen months after the April 15, 2003 deadline, and the court will not make a determination as to whether plaintiff was permitted to do so.
Plaintiff purchased a new home in 2008 and proceeded to file his 2003 tax returns in May of 2009, more than five years after they were due. The 2004 and 2005 tax returns were filed in March of 2010, more than five years after they were due. The 2006 and 2007 tax returns were filed in April of 2010, more than three years after they were due. His 2008 tax return was filed in May of 2010, more than one year after it was due. Again, plaintiff never sought an extension to file his returns for any year. Including the alleged $7,644 from the 2002 tax refund, plaintiff claims the state of New Jersey owes him a total of $13,595.
Upon the late filing of plaintiff's tax returns, a request was made on November 1, 2010 for a conference with the Director, Division of Taxation ("Director"). After the Director conducted an audit and participated in a telephone conference with the plaintiff on February 24, 2011, a Final Determination letter was sent on March 2, 2011 to plaintiff notifying him that all liabilities had been paid on the account, and there would be no refund. The Director based its decision on section 54:9-8 of the New Jersey Gross Income Tax Act ("GIT Act").
Plaintiff filed a timely appeal to the Tax Court on or about June 1, 2011 and requested a summary of taxes for tax years 2003 through 2008 from the Director. On or about August 28, 2011 the Director filed a timely answer and responded to plaintiff's letter request with a letter dated April 18, 2012 indicating that the state had collected all of plaintiff's tax liability for those five years and that no refund is available. The matter proceeded to trial.
II. Conclusions of Law
The court must view the plaintiff's case with consideration of the presumptive validity of the Director's determinations. See Campo Jersey, Inc. v. Director, Div. of Taxation, 390 N.J. Super. 366, 383 (App. Div.), certif. denied, 190 N.J. 395 (2007). "New Jersey courts generally defer to the interpretation that an agency gives to a statute that agency is charged with enforcing." Koch v. Director, Div. of Taxation, 157 N.J. 1, 15 (1999); See also Estate of Claire Schnestuhl v. Director, Div. of Taxation, 26 N.J. Tax 289 (2012). The court recognizes the Director's "expertise in the highly specialized and technical area of taxation." G.E. Solid State v. Dir., Div. of Taxation, 132 NJ 298 (1993); Aetna Burglar & Fire Alarm Co. v. Director, Div. of Taxation, 16 N.J. Tax 584, 589 (Tax 1997). Therefore, the Director's denial of plaintiff's refund claims is accorded with a presumption of correctness, and the plaintiff bears the burden of overcoming the presumption of validity. See Quest Diagnostics, Inc. v. Dir. Div. of Taxation, 21 N.J. Tax 484 (Tax 2004); aff'd 387 N.J. Super. 104, certif. den. 188 N.J. 577 (2006); H.J. Bradley, Inc. v. Dir., Div. of Taxation, 4 N.J. Tax 213 (Tax 1982). "However, this deference is 'not total, as the courts remain the 'final authorities' on the issues of statutory construction and are not obliged to 'stamp' their approval of the administrative interpretation.'" Koch, supra, 157 N.J. at 15 (citing New Jersey Guild of Hearing Aid Dispensers v. Long, 75 NJ 544, 575 (1978)).
A taxpayer is entitled to a tax refund or credit when an overpayment on their account occurs. The GIT Act lays out specific deadlines for when the taxpayer would be eligible to receive the credit or refund. If the statute of limitations expires, then the credit or refund shall be considered void. Strict adherence to the statute of limitations is important so there may be finality for both the state and taxpayer.
Title 54A of the GIT Act requires that every taxpayer annually pay their assessed taxes on or before April 15 of the following year. N.J.S.A. § 54A:8-1. If an extension to file a return is required the Director may allow for an extension of the April 15 deadline. N.J.S.A. § 54A:8-1. The Director may extend the filing date by six months or for a longer period if it is deemed necessary. N.J.S.A. § 54A:8-1. The taxpayer must request the extension before the April 15 deadline, or the Director may assess penalties for late filing. N.J.S.A. § 54A:9-6.
Taxpayers who estimate their income tax payments are also required to file a tax return. N.J.S.A. § 54A:8-4. The term "estimated tax" means the amount that an individual estimates to be the individual's income tax, less the amount that the individual estimates to be the sum of any credits allowable against the tax. Id. The deadline to file a tax return by taxpayers who estimate tax payments is also April 15 of the subsequent year. Id.
When an overpayment of one's income tax occurs the taxpayer must file a request for a refund with the Director. N.J.S.A. § 54A:9-7. A taxpayer may request a refund from the Director either by simultaneously filing the request along with the tax return, or by separately filing a refund request. N.J.S.A. § 54A:9-8(a). The Director submits a certificate to the state comptroller to institute a refund, however this certificate is only submitted once a tax return is filed by the April 15 deadline. N.J.S.A. § 54A:9-7. The general limitations on a tax credit or refund are outlined by statute, which states:
(a) General. Claim for credit or refund of an overpayment of income tax shall be filed by the taxpayer within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later, or if no return was filed, within 2 years from the time the tax was paid. If the claim is filed within the 3-year period, the amount of the credit or refund shall not exceed the portion of the tax paid within the 3 years immediately preceding the filing of the claim plus the period of any extension of time for filing the return. If the claim is not filed within the 3-year period, but is filed within the 2-year period, the amount of the credit or refund shall not exceed the portion of the tax paid during the 2 yearsThe statute then states:
immediately preceding the filing of the claim. Except as otherwise provided in this section, if no claim is filed, the amount of a credit or refund shall not exceed the amount which would be allowable if a claim had been filed on the date the credit or refund is allowed.
[N.J.S.A. § 54A:9-8(a)].
(d) Failure to file claim within prescribed period. No credit or refund shall be allowed or made...after the expiration of the applicable period of limitation specified in this act, unless a claim for credit or refund is filed by the taxpayer within such period. Any later credit shall be void and any later refund erroneous. No period of limitations specified in any other law shall apply to the recovery by a taxpayer of moneys paid in respect of taxes under this act.
[N.J.S.A. § 54A:9-8(d)].
Strict adherence to statutory limitations is vital to tax matters on the state and municipal levels. Statutes of limitations in tax are strictly construed in order to provide finality and predictability of revenue to the state. F.M.C. Stores Co. v. Borough or Morris Plains, 100 N.J. 418, 424 (1985). It is apparent that the objective of the Legislature in establishing filing deadlines and statutes of limitations was to create a certain procedural orderliness that would be not only fair to the taxpayer, but also administratively convenient to the Director, the county boards of taxation and the tax assessors. Horrobin v. Director, 172 N.J. Super. 173, 181 (Tax 1979). The authority of the Director to extend deadlines shows the Legislature's intent of flexibility; however, once the Director makes a final determination as to the filing deadline, a taxpayer must comply. Id.
When requesting an extension to file a tax return the taxpayer must provide the Director with a reason that constitutes good cause. N.J.S.A. § 54A:8-1. The Director looks to the taxpayer's circumstances in deciding whether an extension is appropriate. While no specific standard for a taxpayer's circumstances is required, the Tax Court of New Jersey has ruled that physical incapacitation through the filing deadline may constitute good cause for an extension. See Hovland v. Director, 6 N.J. Tax 473, 480-81 (Tax 1984), aff'd, 204 N.J. Super. 595 (App. Div. 1985), certif. denied, 102 N.J. 400 (1986). Conversely, the court has found that a taxpayer's lack of requisite information is an insufficient reason to extend a deadline, particularly when the information is readily attainable. See Horrobin, supra, 172 N.J. Super. at 185.
Consequently, plaintiff was required to file a tax return for each year from 2003 to 2008 by the subsequent April 15 deadline. Plaintiff did not ask for, nor did he receive, an extension for his hardships or any other reason. Therefore, plaintiff was required to comply with the April due date. Plaintiff was still required to file a tax return each year even though he estimated his tax payments.
If he did file a tax return, plaintiff would have had three years from filing to ask for his tax refund, and the Director would have then submitted the refund to New Jersey's comptroller. Since no request for an extension was made, plaintiff's 2003 tax refund request was required by 2006, the 2004 refund request by 2007, the 2005 refund request by 2008, the 2006 refund request by 2009, the 2007 refund request by 2010, and the 2008 refund request by 2011. See N.J.S.A. § 54A:9-8(a) (a claim for a refund must be made within 3 years of filing one's tax returns); see also N.J.S.A. § 54A:8-1 (requiring every taxpayer to file by April 15th unless an extension is permitted). Plaintiff failed to timely file his returns and consequently failed to make timely refund requests.
In addition, plaintiff's alleged hardships do not excuse him from having to file a tax return for the years 2003 to 2008. It was within his rights as a taxpayer to request an extension of the April 15 deadline of each year, therefore extending his statutory period of claiming a refund. The record is undisputed, Plaintiff failed to employ this right. Plaintiff's alleged physical condition did not cause physical incapacitation. Furthermore, the required tax documents were admittedly stored in a location readily accessible to plaintiff. As stated earlier, statutory deadlines and extensions must be strictly enforced when dealing with tax collection in New Jersey. F.M.C. Stores Co., supra, 100 N.J. at 424. When an extension is requested the taxpayer's circumstances must constitute good cause in order to be approved. Hovland, supra, 6 N.J. Tax at 480. The finality of payments creates dependability in the process and brings closure to both taxpayers and collectors. Horrobin, supra, 172 N.J. Super. at 181.
Plaintiff is correct that a taxpayer has three years from filing a tax return to receive a refund. However, the statute clearly states the filing deadline in New Jersey is April 15, or the extension granted by the Director. N.J.S.A. § 54A:8-1. If a taxpayer did not file by April 15, the Director does not have the necessary tax forms required to send to the state comptroller for the taxpayer's refund. N.J.S.A. § 54A:9-7. In this case, plaintiff was required to file a tax return after he estimated payments each year from 2003 to 2008. Plaintiff failed to file the respective years' returns timely, and consequentially, the Director did not have the necessary paperwork required to send to the state comptroller. Therefore, the failure to file a tax refund by the statutory deadline of each respective year from 2003 to 2008, prevents plaintiff from recovering a refund.
Even if the court were to assume the late filing of plaintiff's tax returns for tax years 2003 through 2008 were timely, plaintiff would still not be entitled to a tax refund. The law is well settled that "if the claim is filed within the 3-year period, the amount of the credit or refund shall not exceed the portion of the tax paid within the 3 years immediately preceding the filing of the claim plus the period of any extension of time for filing the return." N.J.S.A. § 54A:9-8(a). Accepting all of Plaintiff's tax returns as filed timely, he failed to make any payments in the three years immediately preceding the time of filing, and is therefore not entitled to any refund.
For example, if plaintiff's filing of his tax return for tax year 2003 in 2009 was accepted as timely, the statute only permits a refund for the amount of taxes paid in the 3 years immediately preceding the filing of the claim. N.J.S.A. § 54A:9-8(a). Plaintiff's 2003 tax year payments were estimated throughout tax year 2003. Plaintiff would only be entitled to a refund for tax year 2003 payments made during the years of 2006-2009 (three years immediately preceding the filing). Plaintiff's payments were not made within the three years immediately preceding the filing (assuming the 2009 filing was timely). The estimated payments for the 2003 tax year were clearly not made between 2006-2009. Therefore, the Director correctly relied on the assumption that the liability was final and no longer amendable, thereby categorizing the taxes collected for tax year 2003 as state revenue. This example applies to all of the tax years at issue, 2003-2008.
Plaintiff cannot attempt to claim a refund or credit for overpaid taxes in a year other than the tax year the claim is made for. See N.J.S.A. § 54A:9-8.
--------
The GIT Act also allows for a claim for refund even if no tax return is filed. N.J.S.A. § 54A:9-8(a). If no tax return is filed, the taxpayer has two years from the time the tax was paid to file a claim for a refund with the Director. Id. To reiterate, plaintiff's payments were estimated and made within the respective tax years at issue. Assuming those estimated payments were made as late as possible, they would still only be deemed paid on January 15 of the succeeding tax year in question. See N.J.S.A. § 54A:8-5. All claims for refund were, therefore, made outside the two year period in which any tax was paid for the respective year. Consequently, Plaintiff is not entitled to any refunds.
The Director heavily relies on the filing of tax refund claims to account for state revenue, and if the statutory period expires and no refund claim is made for that tax year, then the Director can assume the liability is final and no longer amendable. Pantasote Inc. v. Director 8 N.J. Tax 160, 164 (Tax 1985). Plaintiff's tax returns were filed out of time, as well as his claims for refund. Even assuming his returns were timely filed, any refund would still be denied. The Director was safe to assume the tax liability in this case was final and no longer amendable.
III. Conclusion
The court finds the Director properly denied plaintiff's request for a tax refund for the years 2003 through 2008. For the aforementioned reasons, the court dismisses plaintiff's complaint, and affirms the Director's Final Determination.
Very truly yours,
____________________
Hon. Joseph M. Andresini, J.T.C.