Opinion
Docket No. 000023-2014
03-27-2015
Re: American Imaging Systems, Inc. and John Fox v. Director, Division of Taxation
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE TAX COURT COMMITTEE ON OPINIONS
Arthur D. Grossman, Esq.
Mandelbaum Salsburg, P.C.
3 Becker Farm Road, Suite 105
Roseland, N.J. 07068
Richard D. Del Monaco
Deputy Attorney General
Division of Law
R.J. Hughes Justice Complex
P.O. Box 106
25 Market Street
Trenton, New Jersey 08625-0106
Dear Counsel:
This letter constitutes the court's opinion with respect to the Director, Division of Taxation's motion to dismiss plaintiff's complaint with prejudice for lack of subject-matter jurisdiction pursuant to R. 4:6-2(a). For the reasons explained more fully below, the Director's motion is granted.
I. Procedural History and Findings of Fact
The court makes the following finds of fact based on the moving papers and certifications submitted herein.
The facts of this matter are neither complicated nor in dispute.
Under date of February 1, 2012, the Division of Taxation ("Division") sent a Notice of Finding of Responsible Person Status and Demand for Payment to the individual plaintiff, John Fox, ("Fox"), at 705 Chalet Drive, Woodbridge, New Jersey by certified mail, return receipt requested. The notice also set forth Fox' right to protest and appeal the Director's determination. The return receipt card signed by John Fox was received in the Division's offices on February 14, 2012. The actual date of receipt by John Fox was not noted on the return receipt card.
Under date of February 17, 2012 the Division issued a Notice of Assessment Related to Final Audit Determination to the corporate taxpayer, American Imaging Systems, Inc. (the "corporation"). That notice was also sent by certified mail, return receipt requested and was addressed to the corporation at 795 Chalet Drive, Woodbridge, New Jersey. The notice advised the corporation that the Division had determined that it was liable for Sales and Use Taxes of $92,723.65, inclusive of penalties and interest calculated through March 20, 2012. The notice also set forth the corporation's right to protest the assessment and to file an appeal in tax court.
The return receipt card was signed by John Fox and was scanned into the Division's electronic tracking system on May 18, 2012. The date the notice was delivered to Mr. Fox was not indicated on the return receipt card. The date the return receipt was delivered to the Director was also not noted on the return receipt card, however, it is clear that both the delivery of the notice to plaintiff and the return receipt to the Director was accomplished prior to May 18, 2012 when the return receipt card was scanned into the Division's electronic tracking system.
Under date of October 29, 2013, an attorney representing both the corporation and Fox corresponded with the Division, contesting the imposition of the sales tax. The correspondence stated that the plaintiffs were in "substantial disagreement with the assessment" and requested a re-determination. In partial support of the request, the attorney alleged that at the time of the audit: 1) neither taxpayer was represented by counsel or an accountant; 2) Fox was undergoing "significant emotional turmoil in his personal life" for which he subsequently obtained professional counseling to help him resolve his emotional issues; and 3) there were a number of transactions which were exempt from the imposition of the sales tax, documentation for which had not been supplied by Fox during the audit. The plaintiffs' representative requested an informal conference at which time such documentation could be provided.
In a letter dated November 8, 2013, the Division notified both Fox and the corporation that the time for the corporation to file a protest of the Notice of Assessment Related To Final Audit Determination had expired on May 17, 2012. Since a valid protest had not been filed by that date, the request for a hearing was denied. A copy of the correspondence which was addressed directly to the plaintiffs was also sent to their attorney.
Under date of November 15, 2013, the attorney for the plaintiffs submitted three "letters" to the Division which he characterized as "confirming [Fox'] state of depression and anxiety during the period of early 2012" and which he maintained "impaired [Fox'] ability to respond to the notice of assessment." The attorney requested that reconsideration be given to the "taxpayer's failure to respond within the ninety (90) day period."
The referenced letters were not submitted to the court.
That request was denied in correspondence dated November 25, 2013. Both the November 8, 2013 and November 25, 2013 letters advised plaintiffs that the taxpayer could contest the Division's decision that the request for hearing was untimely, by filing a complaint in the Tax Court within ninety days of the November 8, 2013 letter. In addition, the November 25, 2013 letter stated: "This office asserts that the Tax Court is the best forum for determining whether or not your past medical condition should permit your corporation to seek redress of the instant audit assessment. The November 8, 2013 letter issued by this office afforded you ninety (90) days from that date in which to lodge a complaint with the Tax Court of New Jersey. As of this writing, you still have ample time to exercise that option; the ninetieth day would fall on Thursday, February 6, 2013 (sic)."
This letter was later reissued under the same date to correct the date by which the complaint should be filed to February 6, 2014.
The taxpayer filed the instant complaint in the tax court on January 23, 2014 contesting the "sales tax assessments made in a Final Determination dated November 25, 2013." Attached to the complaint was the February 1, 2012 Notice of Finding of Responsible Person Status and Demand for Payment and the Director's re-issued letter of November 25, 2013 denying reconsideration of the Director's November 8, 2013 decision determining that the October 29, 2013 request for hearing was untimely.
The Director filed the instant motion to dismiss the plaintiffs' complaint with prejudice pursuant to R. 4:6-2(a), for lack of subject matter jurisdiction. Plaintiffs filed opposition to the within motion contending that the complaint was filed within 90 days of the Director's November 8, 2013 letter and was, therefore, timely.
II. Conclusions of Law
N.J.S.A. 54:32B-21(a) of the Sales and Use Tax Act specifies that: "[a]ny aggrieved taxpayer may, within 90 days after any decision, order, finding, assessment or action of the Director 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." Furthermore, N.J.S.A. 54:32B-21(b) directs that "[t]he 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 the liability of the taxpayer for the taxes imposed by this act."
The State Tax Uniform Procedure Law, at N.J.S.A. 54:49-18(a) provides "If any taxpayer shall be aggrieved by any finding or assessment of the director, he may, within 90 days after the giving of the notice of assessment or finding, file a protest in writing signed by himself or his duly authorized agent, certified to be true, which shall set forth the reason therefor, and may request a hearing. Thereafter the director shall grant a hearing to the taxpayer, if the same shall be requested, and shall make a final determination confirming, modifying or vacating any such finding or assessment."
Finally, N.J.S.A. 54:51A-14(a) of the State Uniform Tax Procedure Law governing appeals to the Tax Court requires that "all complaints be filed within 90 days after the date of the action sought to be reviewed."
The 90-day filing limitation is repeated in R. 8:4-1(b) which clearly states 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." The ninety day time period is calculated from the "date of service of the decision or notice of the action taken" R. 8:4-2(a). The statutory time periods incorporated in the New Jersey Court Rules are jurisdictional. McMahon v. City of Newark, 195 N.J. 526, 530 (2008). They are not within the "relaxation power of the Tax Court." Pressler & Verneiro, Current N.J. Court Rules, Comment 1 on R. 8:4-1 (GANN) (2015) (citations omitted).
A "failure to file a timely appeal is a fatal jurisdictional defect" and if a plaintiff fails to file within the prescribed time frame, that plaintiff is proscribed from an appeal in the Tax Court and any consideration of its case on the merits. F.M.C. Stores v. Borough of Morris Plains, 100 N.J. 418, 425 (1985). The burden of timely filing falls squarely and solely upon the taxpayer. Slater v. Director, Div. of Taxation, 26 N.J. Tax 332, 334 (Tax 2012) citing Dougan v. Director, Div. of Taxation, 17 N.J. Tax 110 (App. Div. 1997).
The Supreme Court has noted that "[s]trict adherence to statutory time limitations is essential in tax matters, borne of the exigencies of taxation and the administration of . . . government." F.M.C. Stores, supra, 100 N.J. at 425. Such time limitations "in tax statutes are strictly construed in order to provide finality and predictability of revenue to state and local government." Bonanno v. Director, Div. of Taxation, 12 N.J. Tax 552, 556 (Tax 1992) (citing Pantasote, Inc. v. Director, Div. of Taxation, 8 N.J. Tax 160, 164-166 (Tax 1988)).
The Tax Court has repeatedly dismissed taxpayer's appeals where the 90-day filing limitation has not been observed. See, e.g., Slater v. Director, Div. of Taxation, supra, 26 N.J. Tax 333-335; Off v. Director, Div. of Taxation, 6 N.J. Tax 157, 164-166 (Tax 1996); People's Express, Inc. v. Director, Div. of Taxation, 10 N.J. Tax 417, 424 (Tax 1989).
Here, the Director sent its finding of responsible person status and demand for payment on February 1, 2012. It was received sometime prior to February 14, 2012 when the return receipt was received back by the Division of Taxation. The Notice of Assessment Related to Final Audit Determination was dated February 17, 2012. While it is unclear when service of this notice was made, it was certainly served prior to May 18, 2012 when the signed return receipt card was scanned into the Division's electronic tracking system.
The only protest received by the Director was the correspondence sent by the plaintiffs' attorney on October 29, 2013, well after any arguable time period to file a protest or a complaint in Tax Court had expired. Thus, the Director correctly determined that the protest was filed out of time and that the assessment for sales tax had been fixed long before protest had been filed.
Plaintiffs' failure to file a protest or complaint within 90 days of the action of the Director is fatal to this court's consideration of plaintiff's complaint. The court notes that the plaintiff opposes the instant motion by pointing to the Director's statement in the letter of November 25, 2013 that an appeal of the determination whether Fox' medical condition "should permit your corporation to seek redress of the instant audit determination" is best left to the Tax Court. Plaintiffs further note that they have timely filed the complaint appealing the November 25, 2013 determination denying the hearing as out of time.
It is true that plaintiffs' complaint was filed within 90 days of the Division's November 8, 2013 denial of plaintiffs' request for a hearing. As indicated, that denial determined that the request for hearing dated October 29, 2013 was out of time. If the Director's determination was correct, this court lacks jurisdiction to consider the merits of the complaint. Harry's Lobster House Corp. v. Director, Div. of Taxation, 23 N.J. Tax 149, 159 (Tax 2006), aff'd o.b., 2007 N.J. Tax Lexis 7 (N.J. June 14, 2007), certif. denied 2997 N.J. Lexis 12159 (N.J. Sept. 5, 2007). As shown above, plaintiffs' October 29, 2013 request for hearing was clearly out of time.
Plaintiffs argue that Fox' medical condition justified an extension of time to file the request for hearing and that their complaint contesting the Division's denial of that position was timely made. Yet, plaintiffs have provided nothing to this court substantiating Fox' alleged medical condition, nor have they provided any law or argument that would support their position that his alleged condition extended the time set forth in the relevant statutes. Neither has the court has found any case law or statutory support for that position. Certainly none was supplied by plaintiff in opposition to the Director's motion.
The court granted plaintiffs the opportunity to submit such facts and argument after the oral argument, but plaintiffs declined to do so and chose to rely on their initial submissions.
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To the contrary, as we have noted above, N.J.S.A. 54:49-18, which applies here, has been strictly construed. The Tax Court lacks jurisdiction to hear the complaint of a taxpayer which was not filed within the applicable 90 day period. See Clairol, Inc. v. Kingsley, 109 N.J. Super. 22, 25, aff'd 57 N.J. 199, 270 (1970); FMC Stores v. Morris Plains, supra, 100 N.J. 423-25; Slater v. Director, Div. of Taxation, supra, 26 N.J. Tax 333; Off v. Director, Div. of Taxation, supra, 16 N.J. Tax 164-66; Peoples Express v. Director, Div. of Taxation, supra, 10 N.J. Tax 424. Once this statute of limitations has expired, the Director is entitled to assume that his determination is final and is not reviewable. Slater v. Director, Div. of Taxation, supra, 26 N.J. Tax 333. There is nothing before this court that would permit (or persuade) it to deviate from the well settled law in this matter.
III. Conclusion
As a result of plaintiffs' failure to file a protest with the Division or a complaint in Tax Court within 90 days of the dates of the Final Determinations issued in this matter the court lacks jurisdiction to consider the merits of this action.
The Director's motion to dismiss the complaint is granted. Judgment dismissing the complaint will be entered accordingly.
Very truly yours,
/s/_________
Kathi F. Fiamingo, J.T.C.