new jersey state taxnews · a quarterly newsletter issn 1073-6808 inside reck v. director ......

New Jersey State TaxnewsVolume 32, Number 1

Spring 2003

A Quarterly Newsletter ISSN 1073-6808

insidereck v. director ...........................1

litter control fee .........................1

estate tax filing requirements .....2

new hazardous substances list .....3

tax assessor certificates ................3

sidney glaser, director ................3

interest rate 7.25% ...................4

tax assessors� calendar ..................4

criminal enforcement ..................5

enforcement summary stats ..........5

tax briefs ....................................7

in our courts ...............................9

in our legislature ......................15

tax calendar .............................16

from the director�s desk ..............18

Customer Service Ctr .. 609-292-6400Automated Tax Info 1-800-323-4400...................................... 609-826-4400

NJ SAVER Hotline ..... 609-826-4282Property Tax Reimbursement

Hotline .................. 1-800-882-6597Speaker Programs ....... 609-984-4101NJ TaxFax ................... 609-826-4500Alcoholic Bev. Tax ...... 609-984-4121Corp. Liens, Mergers, Withdrawals & Dissolutions ......... 609-292-5323Director’s Office ......... 609-292-5185Inheritance Tax ........... 609-292-5033Local Property Tax ..... 609-292-7221Motor Fuels Tax Refunds .................... 609-292-7018Public Utility Tax ........ 609-633-2576

importantphone

numbersIn the center of this issue:

• Index for 2002 (Vol. 31)

• List of 2002 Tax Legislation

• Division Organization Chart

inside
Deductibility ofKeoghs: Reck v.DirectorOn December 19, 2002, the SupremeCourt of New Jersey rendered itsopinion in the matter of Reck v. Di-rector, Division of Taxation. It up-held the Division’s long-standingposition that payments made by part-nerships to Keogh plans are not de-ductible in determining a partner’sdistributive share of partnership in-come for gross income tax purposes.
The Supreme Court stated that thejudgment was affirmed substantiallyfor the reasons set forth in the Ap-pellate Division’s opinion reportedat 345 N.J. Super. 443 (2001) whichoverturned the Tax Court’s opinionin Reck v. Director, Division of Taxa-tion, 18 N.J. Tax 598 (Tax 2000).

The Appellate Division in its opin-ion stated that only payments madeby a partnership that qualify undersection 401(k) of the Internal Rev-enue Code are deductible in deter-mining a partner’s distributive shareof partnership income. Keogh plansare not within the meaning ofN.J.S.A. 54A:6-21, contributions tocertain employee trusts, which pro-vides that “Gross income shall notinclude amounts contributed by anemployer on behalf of and at theelection of an employee to a trustwhich is part of a qualified cash ordeferred arrangement which meetsthe requirements of section 401(k)of the 1954 Internal Revenue Code,as amended.”

To view the SupremeCourt opinion, visit http://lawlibrary.rutgers.edu/courts/supreme/a-93-01.opn.html. To viewthe Appellate Division opinion visithttp://lawlibrary.rutgers.edu/courts/appellate/a5379-99.opn.html !

Litter Control FeeThe Clean Communities and Recy-cling Grant Act was recently signedinto law in New Jersey as P.L. 2002,c.128. This Act imposes a litter con-trol fee on manufacturers, wholesal-ers, distributors, and retailers ontheir sales of litter-generating prod-ucts within or into New Jersey. Thelitter control fee is essentially iden-tical to the litter control tax whichwas imposed in New Jersey from

continued on page 2

Spring 20032

New Jersey State Tax

newsis published quarterly by the:

New Jersey Division of TaxationTechnical ServicesInformation & Publications BranchPO Box 281Trenton, NJ 08695-0281

A subscription to the State Tax News is free.To be placed on the mailing list, or to notifyus of an address change, write to us at theaddress above or send e-mail to:

[email protected]

The State Tax News is also available on theDivision of Taxation’s Web site at:

www.state.nj.us/treasury/taxation/

This publication is designed to keep taxpayers,tax practitioners, and the general publicinformed of developments, problems,questions, and matters of general interestconcerning New Jersey tax law, policy, andprocedure. The articles in this newsletter arenot designed to address complex issues indetail, and they are not a substitute for NewJersey tax laws and/or regulations.

Division of Taxation Director:Robert K. Thompson

News Coordinators for This Issue:

Audit Peggy Cook

Compliance Marita Sciarrotta

Criminal Investigation Rosemary Tuthill

Property Admin. Richard Stier

Technical Services Geoff Marsh

Legislation Ronald DeMarco

Contributors: Carol E. Bell, Gary DalCorso,Eric Friedman, Arthur J. Guenther, BarryFulmer, Susan J. Kane, Denise M. Lambert,Elizabeth Lipari, Frank Malloy, John M.Metzger, Michael J. Roach, Patrick J. Ryan,William J. Wagner.

Staff: J. Donald Byrnes, Maria E. Likakis,Howard D. Luse, Terry A. McWilliams,Joanne M. Monte, Sara E. Murphey.

Editor: Sheri B. Silverstein

Estate Tax FilingRequirementsThe Division has received numerousinquiries regarding waiver and fil-ing requirements under the estate taxlegislation passed in July 2002 (P.L.2002, c.31).

The revised statute applies to estatesof resident decedents dying on orafter January 1, 2002, and providesthat the tax shall remain a lien on allproperty of the decedent until paid.No property owned by the decedenton his date of death may be trans-ferred without the written consent ofthe Director.

Excluded from the waiver require-ment are items such as bank accountsin institutions not conducting busi-ness in New Jersey, stocks of for-eign or alien corporations, realproperty not located in New Jersey,non-New Jersey bonds, cars and per-sonal effects, wages, and mortgages.The new estate tax lien and waiverrequirements are similar to the ex-isting lien and waiver requirementsunder the New Jersey inheritance taxstatutes.

If an estate is not subject to NewJersey estate tax and meets the lienand waiver requirements under New

continued on page 3

1986 through 2000 under N.J.S.A.13:1E-99.1. The litter control tax ter-minated on December 31, 2000.There was no tax or fee on the grossreceipts from sales of litter-generat-ing products for the 2001 calendaryear. The litter control fee is similarto the expired litter control tax andis imposed annually on the previouscalendar year’s gross receipts fromsales of litter-generating products. Itis due and payable on March 15thof each year. The fee rates and lit-ter-generating product categories re-main the same. Revenues from thelitter control fee furnish support tothe Clean Communities Program forlitter pickup and removal, and pro-vide recycling grants to New Jerseycounties and municipalities.

Unlike the prior litter control tax, thenew litter control fee exempts:

1. All retailers with less than$500,000 in annual retail sales oflitter-generating products (theprior tax had a $250,000 retailsales exclusion);

2. Restaurants if more than 50% oftheir food and beverage sales arefor on-premises consumption (butcontinues to include restaurantswith 50% or more of sales of foodand beverages for off-premisesconsumption); and

3. Paper product sales of roll stockproduced by paper product manu-facturers and wood pulp.

The new litter control fee appliesretroactively to the year beginningJanuary 1, 2002. Thus, the 2002 re-turn will include the gross receiptsfrom all sales of litter-generatingproducts back to that date. The re-turn and fee payment were due onor before March 15, 2003. Litter

litter control fee - from page 1
control fee returns and instructionswere sent to all businesses that wereeligible for the litter control tax.
Inquiries regarding the litter controlfee should be directed to theRegulatory Services Branch at609-292-5994, by e-mail [email protected], or inwriting at New Jersey Division ofTaxation, Regulatory ServicesBranch, PO Box 269, Trenton, NJ08695-0269. !

3Spring 2003

Jersey inheritance tax, the estate mayuse Form L-8 (Self-ExecutingWaiver) and/or Form L-9 (Requestfor Real Property Tax Waiver) torelease the decedent’s assets.

A New Jersey estate tax return mustbe filed where the decedent’s tax-able estate plus adjusted taxable giftsfor Federal estate tax purposes un-der the provisions of the InternalRevenue Code in effect on Decem-ber 31, 2001, exceeds $675,000(Line 5 of the 2001 Federal estatetax return).

Further information is available onthe Division’s Web site atwww.state.nj.us/treasury/taxation/estate.shtml and www.state.nj.us/treasury/taxation/estatetax.shtml !

estate tax filing - from page 2
SPILL TAX
New HazardousSubstances ListThe following notice was sent to allspill compensation and control taxregistrants:

The New Jersey Department of En-vironmental Protection recentlyadopted a new List of HazardousSubstances under the Spill Compen-sation and Control Act which mustbe used for spill compensation andcontrol tax purposes.

The new List of Hazardous Sub-stances is in two versions — sortedalphabetically by substance nameand also sorted by CAS number. TheList of Hazardous Substances alsoincludes all petroleum and petro-leum products as per N.J.A.C. 7:1E-

1.7. Any flammable sub-stance or inert gas on the Listof Hazardous Substances which isdesignated by an asterisk immedi-ately after the substance is not con-sidered a hazardous substancesubject to tax. This List of Hazard-ous Substances must be used for alltaxable transfers and for all majorfacility determinations immediately.All prior Lists of Hazardous Sub-stances should be discarded.

Hazardous substance clarificationsshould be directed to:

BUREAU OF DISCHARGE PREVENTION

DEPT OF ENVIRONMENTAL PROTECTION

4 STATION PLAZA 3RD FLOOR

22 SOUTH CLINTON AVE

TRENTON, NJ 08625

Phone: 609-633-0610

Spill tax inquiries or requests forcopies of the new List of HazardousSubstances may be directed to:

NEW JERSEY DIVISION OF TAXATION

REGULATORY SERVICES BRANCH

PO BOX 269TRENTON, NJ 08695-0269

Phone: 609-292-5994

The List of Hazardous Substancesis also available on the Division ofTaxation’s Web site at:www.state.nj.us/treaury/taxation/faqs.shtml !

LOCAL PROPERTY TAX

Tax AssessorCertificatesThe Tax Assessor Examination isheld in accordance with the Asses-sor Certification and Tenure Act,requiring anyone taking office as atax assessor after July 1, 1971, tohold a tax assessor certificate.

Seventeen persons passed the Sep-tember 28, 2002, C.T.A. exam. Theyare:

continued on page 4

Sidney Glaser, former Director of the Division of Taxation, died on Feb-ruary 8, 2003, at the age of 91. Mr. Glaser, who headed the Division at thetime the State income tax was enacted, began his career with the Divisionof Taxation in 1946 as a legal analyst. He was named Acting Director in1969 and served as Director from 1971 until he retired in 1983.

Current Taxation Director Robert K. Thompson re-membered Sidney Glaser as “the yardstick by whicheach of us that occupies the Director’s chair measuresour careers.”

His extensive knowledge of taxation issues was key tohis success. “He was a walking encyclopedia of Statetaxes,” said former State Treasurer James DiEleuterio.

Mr. Glaser was also known for his honesty. “I remember a time in theearly ’70s when he and Martha had just come home from vacationing(I think China),” recalled Director Thompson. “First day back to work heasked for an ST-18. Hardly any of us knew what an ST-18 was, but halfthe building was looking for a copy of this form. We finally got one to ourDirector who simply wanted to report and pay the use tax on items theypurchased outside the country and brought back to New Jersey. Probablythe first ST-18 we ever processed.”

Mr. Glaser earned his bachelor’s degree at City College of New York,and a law degree from New York University Law School in 1936. !

Sidney Glaser, Director

Spring 20034

Bergen County: Claire Psota,Franklin Lakes Borough.

Cape May County: Michael P.Brady, Middle Township.

Essex County: John W. Kelly,Belleville Township.

Hunterdon County: Anne L.Bircsak, Bethlehem Township.

Mercer County: Vincent J.Pratico, Trenton City; Deborah M.Rishko, Hamilton Township.

Middlesex County: Margaret J.Ackerman, South PlainfieldBorough.

Monmouth County: Scott R.Imbriaco, Neptune Township;Robyn A. Palughi, Wall Township.

Morris County: Jeanne M.Brown, Kinnelon Borough.

Passaic County: Thomas A.Poalillo, Wayne Township.

Somerset County: Kristen N.Peel, Franklin Township.

Sussex County: Kathleen Kieb,Frankford Township; Lynne A.Schweighardt, Vernon Township.

assessor certificates - from pg. 3

Interest 7.25%The interest rate assessed on amountsdue for the period January 1, 2003 –December 31, 2003 will be 7.25%.

The assessed interest rate history islisted below.

Effective InterestDate Rate

1/1/99 10.75%1/1/00 11.50%1/1/01 12.50%7/1/01 10.50%

10/1/01 9.00%1/1/02 8.00%1/1/03 7.25%

Union County: Jason H. Cohen,Springfield Township.

Warren County: Melissa D.Pritchett, Phillipsburg Town.

Commonwealth of Pennsylvania:Melissa Ann Rockwell, DingmansFerry, Pike County.

The next examination is scheduledfor September 20, 2003. The dead-line to file applications for this examis August 21, 2003. Call or write toProperty Administration, PO Box251, Trenton, NJ 08695-0251. Thefiling fee is $10. If you have anyquestions regarding this exam,please contact Mary Ann Miller at609-292-7813. !

LOCAL PROPERTY TAX

Tax Assessors’CalendarApril 1–• Deadline for appeals of assessed

valuations to County Tax Boardsby taxpayers and taxing districtsand for appeals of assessed valu-ations over $750,000 to TaxCourt. Deadline extended to 45days from date the taxing districtcompletes bulk mailing of notifi-cations of assessment, whicheveris later.

• If appeal or complaint is filedApril 1 or during the 19 days nextpreceding April 1, taxpayer ortaxing district has 20 days fromdate of service of appeal petitionor complaint to file cross petitionwith County Tax Board or coun-terclaim with Tax Court, asappropriate.

• Property Tax Deduction Disal-lowance Notice, Form PD4, fornonfiling Post-Tax Year State-ment or income over $10,000 sentby collector.

• County budgets certified toCounty Tax Boards.

• County Boards of Taxation to es-tablish the percentage level of tax-able value of real property.

April 10–• Copy of County Tax Board reso-

lution of real property taxablevalue percentage level mailed toassessors, municipal clerks, andDirector, Division of Taxation.

April 15–• Form SR-3A filed with Property

Administration by County TaxBoard.

May 1–• Assessor shall identify and certify

to County Tax Board residentialproperties.

• County Tax Boards receive certi-fication of REAP aid due to eachlocal unit for that tax year.

• Extended deadline for filing (withthe collector) Annual Post-TaxYear Statement, Form PD5,where taxpayer’s illness or medi-cal problem prevented the re-quired March 1 filing.

May 20–• Table of Aggregates completed

by County Tax Board from asses-sors’ Tax Duplicates and Taxa-tion Director’s certification of2nd class railroad property.

• General tax rates certified byCounty Tax Boards.

May 23–• Tables of Aggregates signed and

transmitted within three days byCounty Tax Boards to Directorsof Taxation and Local Govern-ment Services, State Auditor,municipal clerks, and the clerk ofboard of freeholders.

continued on page 5

5Spring 2003

June 1–• Assessors’ Property Tax Deduc-

tion Disallowance Notices, FormPD4, sent.

• Repayment of disallowed prop-erty tax deductions previouslygranted required. Nonpaymentsbecome liens.

• Collectors’ Property Tax Deduc-tion Disallowance Notices, FormPD4, for nonfiling Post-Tax YearStatement or income over$10,000 for taxpayers grantedmedical extension sent.

June 3–• Corrected Tax Duplicates sent by

County Tax Board to tax collec-tors for billing purposes.

June 5–• Certification of Property Tax De-

ductions, Form PD65.10, andCertification of Veterans’ Deduc-tions, Form VE-WVE-1, com-pleted and forwarded by collectorto County Tax Board.

2nd Monday in June–• Assessors’ report, description,

and valuation of railroad propertynot used for railroad purposes toDirector, Division of Taxation.

assessors' calendar - from page 4
June 15-• County Tax Board to certify to
Director, Division of Taxation,total number and dollar amountsummary of senior citizen, dis-abled, surviving spouse, and vet-erans’ property tax deductionsallowed and disallowed by eachdistrict. !

CriminalEnforcementCriminal Enforcement over the pastseveral months included:

• On September 27, 2002, BrendaGrungo was sentenced to fouryears in State prison for violationof a term of five years’ probationwhich was imposed on May 17,2000, pursuant to her guilty plearegarding a scheme to evade thepayment of $158,000 in petro-leum products gross receipts taxin the case known as “OperationBoilermaker,” a joint investiga-tion between the Office of Crimi-nal Investigation (OCI) and theDivision of Criminal Justice.

• On October 11, 2002, an officerof a wholesale motor fuel dis-tributor was sentenced to threeyears’ probation pursuant to aguilty plea on April 15, 2002, to

one (1) count of failureto turn over $168,402.44petroleum products gross receiptstax collected. This was a joint in-vestigation between OCI and theNew Jersey State Police-Organized Crime Unit, with sub-stantial assistance from the AuditServices Branch-Excise TaxGroup, and was prosecuted by theState Attorney General’s Office.

• On November 4, 2002, StephenGeorge Lang of Pennsville pleadguilty to two (2) felony counts,including one (1) count of at-tempting to evade State of Dela-ware personal income taxes andone (1) count of filing false state-ments with the Delaware Divisionof Revenue. He was sentenced totwo years’ probation and orderedto make full restitution. Mr. Lang,a New Jersey resident who for-merly worked at Dupont inWilmington, Delaware, had along history of protesting againstthe constitutional authority ofNew Jersey and Delaware taxlaws. This investigation involvedthe States of New Jersey andDelaware working together todevelop a prosecution strategy toreduce duplication of effort whileaccomplishing a mutually benefi-cial result.

continued on page 6

Enforcement Summary StatisticsFourth Quarter 2002

Following is a summary of enforcement actions for the quarter ending December 31, 2002.

• Certificates of Debt: • Jeopardy Seizures 5

Total Number 2,607 • Seizures 47

Total Amount $32,681,648.26 • Auctions 5

• Jeopardy Assessments 380 • Referrals to the Attorney General’s Office 507

For more detailed enforcement information, visit our Web site at:www.state.nj.us/treasury/taxation/

Spring 20036

Pay NJ Taxes ElectronicallyElectronic Check (E-Check)www.state.nj.us/treasury/taxation

Make a payment directlyfrom your bank account

� Personal and Fiduciary Income Tax and Estimated Payments� Sales and Use Tax� Gross Income Tax Withholding and UI/DI Contributions� Domestic Security Fee

Credit Card*1-800-2PAYTAX www.officialpayments.com

� Personal and Fiduciary Income Tax and Estimated Payments� Sales and Use Tax� Gross Income Tax Withholding and UI/DI Contributions� Domestic Security Fee� Deficiency payments

* Fee of 2.5% of tax payment applies.

• On November 6, 2002, in Supe-rior Court, Bergen County, DanielProvenzano of Upper SaddleRiver, New Jersey, plead guiltyto one (1) count of racketeeringand one (1) count of failing to filea gross income tax return for taxyear 1996, with intent to evade$47,306.58 tax on income of$827,000. Mr. Provenzano wascharged with operating a now-defunct printing business as aracketeering enterprise in FortLee, New Jersey, using violenceand criminal means to extort pay-ments from the customers andsuppliers of the business. Thiscase was a joint investigation byOCI and the New Jersey Divisionof Criminal Justice-OrganizedCrime and Racketeering Bureau,and was prosecuted by the StateAttorney General’s Office.

• On November 20, 2002, confir-mation was received that in Su-perior Court, Morris County,Truyen T. Vo of East Hanover,New Jersey, had been sentencedto two years’ probation, concur-rent, on each of four (4) counts offailing to pay over taxes, to whichMr. Vo had previously entered aguilty plea. Mr. Vo was also or-dered to pay to the Division ofTaxation restitution of tax in theamount of $26,048.00, to wit,gross income tax due on unre-ported, illegal income derivedfrom promoting gambling in 1995through 1998. This case was ajoint investigation by OCI and theNew Jersey State Police-Organized Crime Unit, and wasprosecuted by the State AttorneyGeneral’s Office.

• On November 22, 2002, Dr.Samuel Evenstein of Edison en-

criminal enforcement - from pg. 5
tered a guilty plea to a three-countaccusation of failure to pay NewJersey gross income tax. The ac-cusations arose from the failureof Dr. Evenstein to report$845,595 of taxable income forthe years 1997, 1998, and 1999,and his failure to pay $50,645 inNew Jersey gross income tax onsaid income. Dr. Evenstein willmake full restitution of the tax,penalties, and interest at his sen-tencing scheduled for early 2003.This case was a joint investiga-tion with the Division of Crimi-nal Justice, Insurance Fraud Unit.
• On November 22, 2002, PpassimM. Elder of Staten Island, NewYork, was arrested by OCI forpossession of 460 cartons ofunstamped cigarettes. The ciga-

rettes were purchased from Na-tive American cigarette supplierslocated on reservation lands inupstate New York. Further, thesubject was found to be on pro-bation in New York State. TheRahway Municipal Judge set bailat $100,000 cash/bond.

• On December 11, 2002, OCI ar-rested a male subject from NewYork City for transporting 2,520cartons of contraband cigarettesvalued at $130,000. This subjectwas found to be a member of anorganized trafficking group.Charges have been filed for vio-lation of the Cigarette Tax Act.

• On December 23, 2002, in Supe-rior Court, Mercer County, Mark

continued on page 7

7Spring 2003

L. Stahl of Point Pleasant, NewJersey, plead guilty to two (2)counts of misapplication of en-trusted property, to wit,$110,833.24 in State motor fuelstax which had been collected andnot remitted on the sale of dieselfuel at truck stops which Mr. Stahlhad operated in Knowlton Town-ship and Englewood, New Jersey.The case was investigated by OCIand prosecuted by the State At-torney General’s Office.

• One hundred nineteen (119) com-plaints alleging tax evasion wereevaluated from October throughDecember 2002 in the Office ofCriminal Investigation.

• During the same time period,sixty-three (63) charges werefiled in court on twenty (20) casesfor violation of the Cigarette TaxAct. All twenty (20) court casesinvolved contraband cigarettes.Further, twenty-two (22) arrestswere made and one (1) vehiclewas seized. !

criminal enforcement - from page 6

Tax BriefsCorporation Business TaxNew Jersey Economic Develop-ment Authority Grants — The Di-vision responded to a questionregarding the taxability of BusinessEmployment Incentive Program(BEIP) grants made under N.J.S.A.34:1B-124 et seq. The grant is cal-culated pursuant to N.J.S.A. 34:1B-129.

First, if a BEIP grant is made to a Ccorporation, the grant is deemed acontribution to capital under provi-sions of IRC 118 and 362(c) whichtaken together are tantamount to atax deferral. Under IRC 362(c) a cor-

poration must reduce the basis ofproperty acquired as a contributionto capital to zero. If a BEIP grant ispaid in cash, the basis of the prop-erty acquired with such money dur-ing the 12-month period beginningon the day the cash is received shallbe reduced by the amount of suchgrant. The governmental grant is in-tended to produce indirect benefitsto the general population.

Second, if the grant is received by aconduit-type entity like a partnershipor subchapter S corporation, thegrant is to be “apportioned amongthe persons to whom the income orprofit of the partnership, subchapterS corporation, or other entity is dis-tributed, in the same proportions asthose in which the income or profitis distributed.” The BEIP grant isconsidered to be a “prize and award”and, as such, is taxable under theGross Income Tax Act. N.J.S.A.54A:5-1l.

Domestic Security FeeLeases — The new Domestic Secu-rity Fee legislation provides for theimposition of a $2-per-day fee onmotor vehicle rental companies. Thefee is applicable to motor vehiclesrented without a driver under rentalagreements for a period up to andincluding 28 days. The rental fee isdue from the rental companywhether the renter or any third partypays for the rental or reimburses therental company for the fee.

For purposes of this legislation,“lease agreement” means any agree-ment for a stated term of more than28 days (usually six months orlonger) that requires the party leas-ing from a rental company to pay forState motor vehicle registration,maintain the vehicle for ordinarywear and tear at his own expense,and purchase liability and casualty

insurance for the vehicle.If a company is simply leas-ing motor vehicles and the leaseagreements entered into contain astated term of more than 28 days, thecompany would not be responsiblefor the domestic security fee.

Property Tax Relief ProgramsNJ SAVER Rebate for TrustBeneficiary — The NJ SAVERrebate is designed to afford tax reliefto owners of real property whooccupy that property as theirprincipal residence and pay realestate taxes on that property. In orderto be eligible for the rebate for taxyear 2002, the applicant must haveowned and occupied the home as his/her principal residence as of 12:01a.m., October 1, 2002, and have paidproperty taxes on the property forthat year.

In the case of a trust that owns ahome, however, a beneficiary of thetrust having the right to and resid-ing in the home on October 1, 2002,as of 12:01 a.m., is eligible for therebate. To apply for the rebate, thetrustee or beneficiary must file a pa-per application and attach a legaldocument (such as the deceased’swill, deed, and/or trust agreement)that established the beneficiary’sright to occupy the home. In no casedoes a trust itself qualify for therebate.

Sales and Use TaxVideotaped Depositions —Videographers who produce video-tapes for legal uses must charge salestax on the videotapes produced. TheDivision takes the position that sincethe main object of the transaction isthe videotape, then the transactionmust be taxable as the sale of tan-gible personal property underN.J.S.A. 54:32B-3.

continued on page 8

Spring 20038

For sales tax purposes, a law firm isnot treated as the reseller of certaingoods and services, although the lawfirm does often charge its clients forgoods and services that would betaxable if purchased at retail. A lawfirm is not required to collect salestax on items that the law firm chargesits clients for in conjunction with theprofessional legal services. The lawfirm is treated as the retail purchaserof such services as copying orfaxing, and must pay sales tax onthose services rather than collect taxfrom their clients. This same analy-sis is used in purchasing a video-taped deposition or “Day in the Life”videotape.

A videotape production companymay use a Resale Certificate (FormST-3) when purchasing blank tapes,but must collect sales tax on the saleof the videotape regardless of howbilled. Separately stated charges fora video playback service at hearings,depositions, trials, etc. are not sub-ject to sales tax.

Executive Search Firm and RelatedServices — The following was inreply to a question regarding thesales tax treatment of executivesearch firm services under the NewJersey Sales and Use Tax Act. It wasstated that executive search firmsperform three categories of services.Executive search fees are charged toplace a candidate in a new employ-ment position. Additionally, testingand assessment fees are charged forthe testing of candidates to see ifthey are suitable for a particular po-sition, or to determine anindividual’s strengths and weak-nesses. Moreover, these types offirms charge fees for other consult-ing services.

tax briefs - from page 7
Under the New Jersey Sales and UseTax Act, services are exempt fromsales tax unless they are specificallyenumerated and taxed by the Act it-self. Executive search fees, testingand assessment fees, and other con-sulting fees are not specifically enu-merated under the provisions of theNew Jersey Sales and Use Tax Act.Therefore, executive search fees,testing and assessment fees, andother consulting fees are exemptfrom sales tax.
Beds and Pillows for Medical Pur-poses — Although frequently usedfor therapeutic or rehabilitative pur-poses, beds and pillows specificallydesigned to provide back and necksupport are also commonly used toenhance the comfort of people whodo not have any illness or injury.Therefore, such items do not qualifyfor exemption as durable medicalequipment under N.J.S.A. 54:32B-8.1.

However, in some cases, such equip-ment might qualify for exemption ifspecifically designed for a medicalpurpose and not generally useful toa person who does not have an ill-ness, injury, or disability. Even if thebeds and pillows are customarily andprimarily used to serve a medicalpurpose, the exemption does not ap-ply when such items are sold tomedical service providers who usethem to provide services for theirpatients. For example, if a doctor,physical therapist, nursing home, orhospital purchases the specificallydesigned beds and pillows and theyare used by the patients within medi-cal facilities and not transferred tothe patient for home use, there is noexemption. On the other hand, if theitems are sold to the patients forhome use, the exemption applies.

Storage of Biological Components— The Division received an inquiryconcerning the service of stem cellpreservation which includes a chargefor storing the cells for an indefiniteperiod. The New Jersey Sales andUse Tax Act imposes tax on the stor-age of tangible personal property.N.J.S.A. 54:32B-3(b)(3).

Due to the nature of the property, theDivision has determined that humanstem cells, as well as other humanbody parts, are not considered to be“tangible personal property” for pur-poses of the New Jersey Sales andUse Tax Act. Thus, the storage ofstem cells and similar human bio-logical components is not subject totax.

Tennis Clothing — The New Jer-sey Sales and Use Tax Act providesan exemption for clothing and foot-wear for human use, except furgarments.

The relevant regulation clarifies thatclothing and footwear worn in con-nection with sporting activities thatare not adaptable to regular daily useare subject to tax. N.J.A.C. 18:24-6.4. For example, fishing waders,golf shoes, protective masks, skindiving suits, and ski boots would notbe appropriate everyday attire andare therefore subject to tax. See SkiHaus, Inc. v. Taxation Division Di-rector, 5 N.J. Tax 26 (1982). How-ever, articles of clothing which maybe worn for general use are entitledto the clothing exemption. Since atennis outfit would be adaptable togeneral use, it is exempt from salestax as clothing.

Noncarbonated Beverage FruitDrinks — Prepared food and bever-ages sold for immediate consump-tion by drive-through restaurants,

continued on page 9

9Spring 2003

food service and hot dog carts, andother mobile service facilities aresubject to New Jersey sales tax.Mobile vending operators engagedin the sale of food and drink for con-sumption either on or off the pre-mises are required to collect salestax. N.J.A.C. 18:24-12.3(b). There-fore, prepared noncarbonated fruitdrinks, such as “smoothies,” sold forimmediate consumption by a mobileconcession are subject to New Jer-sey sales tax.

Trash Removal/Shredding Service— The Division received an inquiryfrom a trash removal and shreddingservice. The trash removal/shred-ding service is performed on a regu-lar contractual basis for a term of 30days or more. The operation consistsof picking up, physically removingcontained waste from the premises,shredding, and disposing of waste.

Trash removal services “performedon a regular contractual basis for aterm not less than 30 days” are notsubject to sales tax. N.J.S.A. 54:32B-3(b)(4). Removal “includes only theoperation of picking up and physi-cally removing contained waste fromthe premises, and does not includeactivities related to maintaining orservicing property or any processingof the waste product.” N.J.A.C.18:24-13.2(b). Shredding is consid-ered the processing of tangible per-sonal property and is not considered

tax briefs - from page 8

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part of the trash removal service. Ashredding service is subject to salestax pursuant to N.J.S.A. 54:32B-3(b)(1).

In this case, the charges for the trashremoval service are not subject tosales tax as long as separately statedon the invoice. However, if thecharges for trash removal and shred-ding are not separately identified,then sales tax must be charged onthe entire bill. !

t

In Our CourtsAdministrationTime Period to Protest, Request aRevision, or File Refund Claim –Dennis Boggi Enterprises, Inc. v.Director, Division of Taxation, de-cided January 3, 2003; Tax CourtNo. 003859-2002.

After conducting an audit, the Divi-sion issued its notice of assessmentrelated to final audit determinationon January 22, 2001, for the salesand use tax period beginning Janu-ary 1993 and ending December1999. Although plaintiff claimedthat its accountant filed a protest onJanuary 31, 2001, the Division hadno record of this protest being re-ceived and plaintiff’s accountant’smailing records indicated that thenotice was mailed on February 6,2001. The Division acknowledgedthat it received a protest letter datedMay 17, 2001, that stated that the

ips!l

accountant intended to pro-test the assessment and in-quired as to why a hearing date wasnot yet set. On September 3, 2001,plaintiff executed an installmentpayment agreement that was laterterminated because plaintiff did notcomply with it. On November 26,2001, plaintiff filed a claim for revi-sion of the audit assessment that wasdenied on April 29, 2002, becausethe paperwork did not represent aclaim for refund. Plaintiff appealedthat denial claiming that there arethree methods to protest an assess-ment: (1) appeal it; (2) pay the taxand file a refund claim; and (3) re-quest a revision of the assessment.

Pursuant to the statutes, a taxpayeris permitted to either apply to the Di-vision for a hearing or appeal to TaxCourt within 90 days after the dateof the determination notice to chal-lenge the assessment. The Courtfound that although plaintiff’saccountant’s mailing records indi-cated that the protest was mailed onFebruary 6, 2001, there was no reli-able, corroborated evidence of thisfact. On the other hand, the Divisionsubmitted an affidavit that no pro-test was received within the statu-tory period. Therefore, the Courtruled that the May 17, 2001, letterwas the initial protest and that thisdate was beyond the statutory timeto request a hearing.

Plaintiff’s claim that it is entitled toa refund or revision is governed byN.J.S.A. 54:32B-20(b), which statesthat a person is not entitled to a re-vision, refund, or credit where eitherthe person had the opportunity for ahearing or had a hearing unless theperson meets the requirements ofN.J.S.A. 54:49-14 as follows: (1) theassessment was neither protested norappealed; (2) the assessment was

continued on page 10

Spring 200310

paid in full within one year of theexpiration of the period to protest;(3) the refund claim is filed within450 days of the expiration of theperiod to protest; and (4) the amountof the refund claim does not exceedthe assessment paid. The Courtfound that because plaintiff neverpaid the tax assessment it would notbe entitled to file for a refund claim.The Court ruled that a claim for re-vision is effectively either a claimfor refund or an untimely protest ofthe audit assessment and that plain-tiff is not entitled to an additionalopportunity to appeal where plain-tiff has not paid the tax and previ-ously had an opportunity to appealthe audit assessment. It was alsonoted by the Court that N.J.S.A.54:49-14 applies only to returns filedon or after January 1, 1999.

Calculation of 90-Day Time Pe-riod to File Complaint – SomnukSuecharon t/a Sammy’s Bagel &Deli v. Director, Division of Taxa-tion, decided November 4, 2002;Tax Court No. 002857-2001.

On February 15, 2002, the Divisionissued by certified mail its Final De-termination to plaintiff which statedthat plaintiff had 90 days from thedate of the Final Determination toappeal to the Tax Court in accor-dance with N.J.S.A. 54:51A-13 etseq. Plaintiff alleges that the Divi-sion informed its accountant, pursu-ant to the accountant’s telephonecall, that plaintiff must file on orbefore May 17, 2002. Plaintiff for-warded its complaint on May 16,2002, and it was filed with the TaxCourt on its May 17, 2002, receiveddate, 91 days after the date of theFinal Determination. The Divisionmoved to dismiss the complaint asbeing untimely filed.

in our courts - from page 9
The Court found that there was nomerit in plaintiff’s argument that theDivision was estopped from disput-ing the timeliness of the appeal be-cause a representative of theDivision allegedly advised plain-tiff’s accountant that the filing dead-line was May 17, 2002. Furthermore,the Court stated that plaintiff ischarged with knowledge of the law.
The Court ruled that the calculationof the 90-day period is pursuant tothe rules of court. One of the rulesof court permits three days to beadded to the period to file the com-plaint when service of the notice ismade by ordinary mail. Finding thatthere were good reasons to apply thesame rule to notices sent by certi-fied mail in order to secure a just de-termination, the Court held that thecomplaint was timely filed. The TaxCourt acknowledged that its deter-mination in this case is inconsistentwith another Tax Court case, Heico,where the Court determined that therules of court did not apply to thisissue. (See New Jersey State TaxNews, Volume 31, Numbers 2/3,Summer/Fall 2002, page 27.)

The Director, Division of Taxation,has filed an interlocutory appeal withthe Superior Court, AppellateDivision.

Corporation Business TaxReceipts Earned in New Jersey –Mayer & Schweitzer v. Director,Division of Taxation, decided Sep-tember 18, 2002; Tax Court No.001800-2000.

Plaintiff is a New Jersey corporationthat purchased securities with itscapital for its own inventory that isheld in a trust account with a trustcompany in New York. Plaintiff isengaged in the business of sellingthose securities for profit and did not

charge commission on the sales. Theplaintiff operated offices in NewJersey, Florida, Illinois, and Colo-rado. The New Jersey offices housedtraders, sales, administration, opera-tions, systems, and compliance per-sonnel. The Florida and Illinois of-fices contained traders, sales, andservice personnel, and the Coloradooffice operated with sales and ser-vice personnel. The traders were notlimited in geographic scope andtherefore dealt with customers in the22 states where plaintiff was regis-tered or licensed and other stateswhere license or registration was notrequired. However, the majority ofthe securities were purchased andsold from the New Jersey office.Most customer orders were elec-tronically executed and processedthrough the New Jersey office wherethe data processing system was lo-cated. After a sale was consum-mated, the trust company electroni-cally transferred the stock fromplaintiff’s account into the custom-ers’ accounts throughout the UnitedStates, but physical transfer of thesecurities was rare. Title passed tothe purchaser in the state in whichthe purchaser was located. Plaintiff’scustomers were mainly other brokerdealers and institutional customerswho needed the securities to performtransactions for their own customers.

The New Jersey Corporation Busi-ness Tax (CBT) allowed multi-statebusinesses to apportion incomeamong states in which they conductbusiness in determining the amountof tax owed to New Jersey. On its1992–1995 CBT returns, plaintiffcalculated its New Jersey receipts,for purposes of the numerator of theN.J.S.A. 54:10A-6(B) receipts frac-tion, by including the trading prof-its from trades performed by its New


New Jersey State Tax News2002 (Volume 31)

INDEXNo. Page No. Page

2002 New Jersey State Tax News INDEX1

AMNESTYAmnesty Program a Huge Success 2/3 1Massachusetts Amnesty 2/3 10Massachusetts Amnesty Extended 4 3Tax Amnesty 2002 (New Jersey) 1 2

1 24Tax Amnesty (Legislature) 1 19Tax Amnesty in Connecticut 2/3 10Tax Amnesty in Missouri, Kentucky 2/3 11

CAPE MAY COUNTY TOURISM SALES TAXCape May County Businesses 1 5Tourism Development District Levies

(Legislature) 2/3 34

CIGARETTE TAXApplication of Cigarette Tax Stamp

(Legislature) 1 16Cigarette Tax (Rate Increases) 2/3 1Rate Increases (Legislature) 2/3 34

CORPORATION BUSINESS TAXAir Carrier AMA Credit 2/3 5Alternative Minimum Assessment (AMA) 2/3 4Business Tax Reform Act 2/3 1Business Tax Reform Act (Legislature) 2/3 34Business Tax Reform Summary 2/3 3CBT-100S (2001) Correction 1 4CBT Rate Reduction for Small Business 2/3 5CBT Returns, Two Versions for 2002 2/3 7Certification of Inactivity With

Form CBT-100 2/3 24Commercial Recording Fees (Increased) 2/3 2Depreciation Allowance, Federal, Special 2/3 9Depreciation Allowance, Federal, Special

(“Bonus”), Decoupling From 2/3 5Dividends Received From Another

Corporation, Disallowance of theDeduction for 2/3 4

Estimated Tax PaymentsFourth Quarter Payment Acceleratedfor Certain Taxpayers 2/3 4Fourth Quarter Payment Must be 25%of Total Liability 2/3 5

Extending Reach of the CBT toConstitutional Limits 2/3 3

Income Taxes Paid to Foreign Nations,Disallowance of the Deduction for 2/3 4

Intangible Expenses Paid to a Related Party,Disallowance of the Deduction of 2/3 3

Inter-Affiliate Transactions, Disclosure of 2/3 5Interest Paid to a Related Third Party,

Disallowance of the Deduction of 2/3 3Investment Company Income, Tax on

Increased 2/3 4Investment Tax Credit, New Jobs 2/3 5LLC Electing Disregarded Entity Status 2/3 25Manufacturing Equipment and Employment

Investment Tax Credit (Legislature) 1 17Minimum Tax Increased 2/3 5Net Operating Loss Rule, Codification of 2/3 4Net Operating Loss, Suspension

Hold-Harmless 2/3 5Net Operating Loss, Two-Year Suspension 2/3 4Net Operating Losses, Pre-Merger (Courts) 2/3 31New Jobs Investment Tax Credit 2/3 5Nonoperational Income Fully Taxed 2/3 4Nonprofit Corporations (Courts) 2/3 31Partnerships, Payments to be Made by Certain 1 4Pass-Through Entities

Payment on Behalf of Owners 2/3 4Pre-Merger Net Operating Losses

(Courts) 2/3 31Rate Reduction for Small Business 2/3 5Regular Place of Business (Courts) 2/3 31Research and Development Expense

Deduction, Clarification of 2/3 4Revenue Measures 2/3 4Savings Institutions, Tax on Eliminated 2/3 4Subchapter S Corporation Phase-Out Freeze 2/3 4Tax Credit for Wastewater Treatment

Equipment (Legislature) 1 16Taxability of BEIP Grants 2/3 25Throwout Rule, Limited (Established) 2/3 3Why CBT Changes Were Needed 2/3 5

DOMESTIC SECURITY FEEDomestic Security Fee 2/3 2Fees and Penalties (Legislature) 2/3 35Rental of Ice Cream Trucks 4 10Rental of Utility Trailers 4 10

INDEX (continued)

No. Page No. Page


GENERALCommercial Recording Fees (Increased) 2/3 2Division Organization Chart 1 insertElectronic Filing of Returns 4 20Index for State Tax News 2001 (Vol. 30) 1 insertLegislation: Synopsis of 2001 Tax Laws 1 insertNew Jersey State Tax News –

June Marks 30th Year in Print 2/3 10NJ TaxTalk Service Updated 2/3 17Package NJX for 2002 2/3 16

2002 Order Form 2/3 39Practitioner Institutes 2/3 14

Schedule and Registration Form for 2/3 15Small Business Workshops 2/3 14

Schedule for Fall 2002 2/3 16State Treasurer Named 1 1What’s New for Tax Year 2002 4 1

GROSS INCOME TAX457 Plan Distributions, Treatment of 2/3 11529 Plans, Foreign Sponsored 2/3 25“Catch-Up” Contributions to Retirement Plans 2/3 25Checkoff for Literacy Volunteers

of America – New Jersey (Legislature) 1 17Checkoff for New Jersey Prostate Cancer

Research Fund (Legislature) 1 17Combat Military Pay 1 11Credit for S Corp Shareholders 2/3 11Deemed Sale Election on Capital Gains 1 5Depreciation Allowance, Federal, Special 2/3 9Employee or Independent Contractor (Courts) 1 14Exemption for Victims Who Died in 9/11/01

Terrorist Attacks (Legislature) 4 17Interest Deduction: Acquisition

Indebtedness to Purchase S CorporationStock (Courts) 1 14

IRA Yearly Maximum Contribution 2/3 25Keogh Plan Contributions (Courts) 1 14Military Pay, Combat 1 11Military Withholding, Forms DD-2058-1

and 2058-2 2/3 26NJ-2210 (2001) Correction 1 8Partnership Versus Rental Income (Courts) 4 12Partnership’s Discharge of Indebtedness

Income (Courts) 1 15Reck v. Director (Courts) 4 1

Retirement Plans457 Plan Distributions, Treatment of 2/3 11“Catch-Up” Contributions to 2/3 25Contributions 1 4IRA Yearly Maximum Contribution 2/3 25Keogh Plan Contributions (Courts) 1 14

S Corp Shareholders, Credit for (Taxes ofAnother State) 2/3 11

S Corporation’s Sale of Assets andSubsequent Liquidation, Reporting of(Courts) 4 14

Setoff 4 11Stock Purchase Plans, Employee,

Withholding on 4 11Withholding on Employee Stock Purchase Plans 4 11

HOMESTEAD REBATENo Property Taxes Due — No Rebate 2/3 13

INHERITANCE/ESTATE TAXEstate Tax (Preserved) 2/3 2Estate Tax Changes 2/3 9Estate Tax Computation Changed (Legislature) 2/3 35Filing Extension 2/3 12Property Transfers 4 3Safe Deposit Box Release 1 6

INSURANCE PREMIUMS TAXRetaliatory Tax (Courts) 2/3 32

LITTER CONTROL FEEClean Communities and Recycling Grant Act

(Legislature) 4 17

LITTER CONTROL TAXLitter-Generating Products (Courts) 4 15Photocopy Businesses, Subjectivity to Tax of 2/3 26

LOCAL PROPERTY TAXAdvertising Signs, Outdoor, Steel - Not

Considered Real Property (Legislature) 1 18Appeal, Informal (Form SR-6) 2/3 19Category 07, Nonusable Sales 4 7County Tax Board Membership (Legislature) 2/3 35

INDEX (continued)

No. Page No. Page


Exemption for Property of Firefighters’Organizations (Legislature) 1 18

Exemption Status (Courts) 4 16Farmland Acreage 4 6Financing for Local Development Projects

(Legislature) 1 17Firefighters’ Organizations,

Exemption for Property of (Legislature) 1 18Informal Appeal Form SR-6 2/3 19Local Development Projects, Financing for

(Legislature) 1 17Nonusable Sales, Category 07 4 7Palisades Interstate Park Commission Land

Exempt From Roll-Back Taxes(Legislature) 1 17

PAMS Update 2/3 16Roll-Back Taxes, Palisades Interstate

Park Commission Land Exempt from(Legislature) 1 17

Steel Outdoor Advertising Signs(Legislature) 1 18

Tax Assessor Certificates 1 8Tax Assessor Certificates 2/3 19Tax Assessors’ Calendar 1 7Tax Assessors’ Calendar 2/3 20Tax Assessors’ Calendar 4 7

MISCELLANEOUSCamden Revitalization 2/3 3Camden Revitalization (Legislature) 2/3 35Camden Revitalization (Legislature) 4 17Casinos (Legislature) 2/3 35Cost of Collection 1 6Criminal Enforcement 1 8Criminal Enforcement 2/3 21Criminal Enforcement 4 8Enforcement Summary—Fourth Quarter 2001 1 9—First Quarter 2002 2/3 24—Second Quarter 2002 2/3 24—Third Quarter 2002 4 10Fees and Penalties—Commercial Recording Fees 2/3 2—Domestic Security Fee 2/3 2—Penalty for Stopped or Returned Checks 2/3 2—Return Processing Fee, Pass-Through

Entities (Partnerships, LLCs, etc.) 2/3 44 3

Fees and Penalties (Legislature) 2/3 35Interest 8% for 2002 1 5Interest 7.25% for 2003 4 4Motion for Reconsideration (Courts) 2/3 28Municipal Landfill Site Closure, Remediation,

and Redevelopment Act Amended(Legislature) 1 18

Neighborhood Revitalization State TaxCredit Act (Legislature) 1 19

New Jersey Wine Promotion Account(Legislature) 1 18

Open Public Records Act (Legislature) 1 18Partnership Fee: Prepayment of Filing Fee

Not Required With “Final Return” 4 3Pass-Through Entities, Return Processing Fee 2/3 4Responsible Person (Courts) 2/3 28Timeliness of the Complaint

and Summary Judgment (Courts) 1 14Time Period to File Complaint (Courts) 2/3 27

2/3 292/3 30

Unclaimed Property 2/3 3Unclaimed Property Act Modified 2/3 8Unclaimed Property (Legislature) 2/3 36Untimely Filing of Petition (Courts) 1 14

PROPERTY TAX RELIEF PROGRAMSNJ SAVER Rebate: Eligible Resident

(Courts) 2/3 33NJ SAVER Rebate Partnership Property 1 12No Property Taxes Due — No Rebate 2/3 13Property Tax Relief Goes to Residents 2/3 40

PUBLIC UTILITY TAXESTransitional Energy Facility Assessment

Phase-Out Changed (Legislature) 1 19

SALES AND USE TAXAdvertising and Promotional Material,

Excess, Out-of-State Disposal of 4 12Advertising Material, Charges for Storing 2/3 12Cable Television Programming

Tapes or Discs 2/3 26Cancellation Fees (Hotel) 1 12Cape May County Businesses 1 5Casino Contractor Registration 1 12Charges for Storing Advertising Material 2/3 12

INDEX (continued)

No. Page No. Page


Delaware Retail Gross Receipts Tax 4 11Deposits, Forfeited (Hotel) 1 12Early Departure Fees (Hotel) 1 12Exemption for Wastewater Treatment

Equipment (Legislature) 1 19Hotel Fees, Miscellaneous 1 12Hurricane Floyd Victims, Refund Program for

Extended (Legislature) 1 20Late Checkout Fees (Hotel) 1 12Limousines, Sales of 4 12Mobile Telecommunications Services

(Legislature) 2/3 36Nexus 2/3 27Out-of-State Disposal of Excess

Advertising and Promotional Material 4 12Point-of-Purchase Displays, Prototypes of

(Courts) 4 17Recalibration Services for

Manufacturing Equipment 2/3 27Resale Certificates, Use of 1 12“Reward Points” (Hotel) 1 12Scope of the Agreement (Courts) 2/3 33Streamlined Sales Tax Project (Legislature) 1 20Streamlined Sales Tax Project Update 2/3 6

Urban Enterprise Zone Benefits Extended(Legislature) 1 19

Wastewater Treatment Equipment,Exemption for (Legislature) 1 19

SPILL COMPENSATION & CONTROL TAXCap Limitations Altered (Legislature) 1 20Substances on the List of Hazardous Substances

with Asterisks 1 13

TOBACCO PRODUCTS TAXTax Computation (Legislature) 1 20

URBAN ENTERPRISE ZONESBenefits Extended (Legislature) 1 19Cape May County Businesses 1 5Population Requirements for

New Joint Zone (Legislature) 2/3 36

UNIFORM PROCEDURE LAWInspection of Certain Tax Records

(Legislature) 1 20

2002 TAX LAWS

2002 New Jersey Tax Laws5

CH. DATE SYNOPSIS TAX* BILL

6 3/18/02 Establishes a 60-day tax amnesty period for outstanding tax liabilities due between January 1, 1996, and December 31, 2001.

ALL SCS for

S-16, S-404

31 7/1/02 Changes the computation of the estate tax for resident decedents who died after December 31, 2001, and also makes the property of New Jersey estates subject to State tax liens.

TIT/ET ACS for A-2302

33 7/1/02 Increases the cigarette tax rate to $0.075 per cigarette or $1.50 per pack.

CIG A-2504(1R)

34 7/1/02 Establishes, increases, and modifies fees and penalties that are imposed by and on behalf of the State.

MIS ACS for A-2506(1R)

35 7/1/02 Reduces the amount of time that private financial organiza-tions and businesses may hold property before transferring it to the State as unclaimed or abandoned property.

MIS A-2507(1R)

40 7/2/02 Changes the system of taxation for corporations and other business entities.

CBT GIT

A-2501(1R)

43 7/22/02 Establishes the “Municipal Rehabilitation and Economic Recovery Act,” which attempts to rehabilitate and restore the economic vitality of Camden.

MIS SCS for

S-428(1R)

45 7/30/02 Amends the Sales and Use Tax Act to comply with the Federal “Mobile Telecommunications Sourcing Act.”

S&U A-2513

51 8/3/02 Requires counties with a population of more than 510,000 to have county tax boards of five members, no more than three of whom belong to the same political party.

LPT S-1103(2R)

65 8/14/02 Makes changes to the Casino Control Act and the Casino Reinvestment Act.

MIS S-1656(1R)

68 8/14/02 Modifies the population criteria for designation as a joint urban enterprise zone.

MIS A-2187

72 8/14/02

Authorizes new tourism development district levies, including a 1.85% assessment on hotel room rentals; revises permitted uses for current tourism levies; and allows broader tourism marketing efforts.

CMC ACS for A-2312

2002 TAX LAWS (continued)

2002 New Jersey Tax Laws6

108 12/4/02 Amends the “Municipal Rehabilitation and Economic Recovery Act” (P.L. 2002, c.43).

MIS S-1878

128 12/20/02 Revises the Clean Communities Program and imposes a litter control fee on sales of litter-generating products. LIT

ACS for A-2069 & A-2110

*Legend for 2002 Tax Laws ABT = Alcoholic Beverage Tax LPT = Local Property Tax

ACC = Atlantic City Casino Control Commission MFT = Motor Fuels Tax

ALL = All Taxes Administered by the Division MIS = Miscellaneous

CBT = Corporation Business Tax PUT = Public Utility Taxes

CIG = Cigarette Tax SCC = Spill Compensation & Control Tax

CMC = Cape May County Tourism Sales Tax S&U = Sales and Use Tax

FBT = Financial Business Tax TPT = Tobacco Products Tax

GIT = Gross Income Tax TIT/ET = Transfer Inheritance & Estate Tax

IPT = Insurance Premiums Tax PPT = Petroleum Products Gross Receipts Tax

LIT = Litter Control Fee

11Spring 2003

Office of Criminal InvestigationSusan Kane(609) 633-7570

ORGANIZATION CHART

NEW JERSEY DIVISION OF TAXATION

Revenue and Economic AnalysisRichard Kaluzny(609) 292-7167

Robert K. ThompsonDirector

(609) 292-5185

Chief of StaffMark Wintermute(609) 292-5185

Deputy DirectorHarold Fox

(609) 292-5185

Management ServicesPatricia Kollien, Chief(609) 292-7371

Counsel to the DirectorMaureen Adams(609) 292-7391

AUDIT Richard Schrader, Assistant Director .............(609) 292-0978

COMPLIANCE David Gavin, Assistant Director (609) 292-6611

Audit Services Robert Shickora, Chief ..............................(609) 292-7288

Field Investigation Cheryl Fulmer, Chief ................................ (609) 292-7332

Field Audit Lawrence Gauges, Chief ...........................(609) 292-7152

Special Procedures Ronald Stubbs, Chief ................................ (609) 292-7390

Out-of-State Audit Craig Rook, Chief .....................................(847) 298-9550

Compliance Services Linda Eagleton, Chief ............................... (609) 633-8450

Office Audit Lee Evans, Chief .......................................(609) 292-5927

Taxpayer Accounting Michael A. Giacobbe, Chief ..................... (609) 633-6890

Individual Tax Audit Michael Roach, Chief ................................(609) 292-2163

Special Projects Thomas MacDonald, Chief ....................... (609) 777-1709

PROPERTY ADMINISTRATION Stephen Sylvester, Assistant Director............ (609) 292-8822

LPT Field George Lorbeck, Chief ............................. (609) 292-7929Local Assessment Compliance James Coll, Chief ..................................... (609) 984-3267LPT Policy & Planning Patricia Wright, Chief ............................... (609) 292-7974Unclaimed Property Operations Steven Harris, Chief ................................. (609) 292-9200

TECHNICAL SERVICES Karen Wood, Assistant Director.....................(609) 633-6923

Regulatory Services Nicholas Catalano, Chief ...........................(609) 292-5995Customer Service Edward Scheingold, Chief .........................(609) 777-5615Conference & Appeals William Bryan, Chief ................................(609) 588-3933Information & Publications Sheri Silverstein, Chief .............................(609) 633-8426

TECHNICAL SUPPORT John D’Errico, Assistant Director ................. (609) 292-5045

Business Tax Systems & MIS Support John Loyer, Chief ...................................... (609) 292-5045

Individual Tax Systems & IT Support Dennis Shilling, Chief ............................... (609) 292-5045

Spring 200312

Jersey employees. Plaintiff filedamended returns that included onlysales to customers located withinNew Jersey in the New Jersey re-ceipts calculation and therefore re-sulted in refunds due plaintiff. TheDivision denied the refunds by notaccepting the basis for amending thereturns.

In deciding whether the receiptswere attributable to New Jersey, theCourt looked to N.J.A.C. 18:7-8.12,which essentially stated that intan-gible income is included in New Jer-sey receipts where the taxable situsof the intangible asset is in New Jer-sey. The taxable situs of an intan-gible is defined as the commercialdomicile of the owner unless the in-tangible has been integrated withbusiness carried on in another state.The Court noted that the Legislaturehad not defined the term “integratedwith” so that its parameters neededto be determined on a case-by-casebasis.

The Court held that plaintiff’s salesare allocated to the state of thecustomer’s location. The Court de-termined that plaintiff was carryingout its business throughout theUnited States and that its businessinvolved the exploitation of out-of-State markets. Therefore, the secu-rity sales were ruled to be “integratedwith” business carried on in otherstates. The Court reasoned that itsdecision is consistent with the stat-ute and regulation, principles offairly apportioning income to statesin which the corporation does busi-ness, as well as prescribed by thecurrent N.J.S.A. 54:10A-6(B) as itwas amended in 2002.

Timeliness of Refund Claim –Lenox, Incorporated v. Director,Division of Taxation, decided

April 20, 2001; Tax Court Nos.007049-98 and 007050-98.
Plaintiff filed timely Federal incometax returns and New Jersey Corpo-ration Business Tax (CBT) returnsfor fiscal years ending (FYE)April 30, 1985, 1986, and 1987.

On January 17, 1989, plaintiff filedamended Federal returns (Form1120X) with the Internal RevenueService (IRS) to claim abandonmentlosses for FYE April 30, 1985 and1986. On March 1, 1989, plaintiffforwarded copies of these 1120Xforms to the Division. The Divisioncompleted their audit on July 21,1989, and allowed the full amountof abandonment losses. The IRScompleted its audit of the FYEApril 30, 1984, and 1985 returns inJuly 1990 and issued a revenueagent’s report (RAR) on July 27,1990. The IRS recommended the fullamount of the claimed FYE April 30,1985, abandonment loss and furtherstated that plaintiff was also entitledto an additional loss due to adjust-ments from the reallocation of ba-sis. Plaintiff consented to the RAR.By letter dated October 26, 1990, theIRS advised plaintiff that it acceptedthe FYE April 30, 1984, and 1985returns with the July 27, 1990, RARadjustments. Plaintiff claimed that itreceived this letter on October 31,1990.

On July 30, 1990, plaintiff filed asecond 1120X form for FYEApril 30, 1986, and initial forms forFYE April 30, 1987, and 1988 withthe IRS. These amended returns in-corporated the adjustments from theJuly 27, 1990, RAR because theyflowed through to these followingyears. The IRS revenue agent ac-cepted these adjustments with somechanges and the IRS accepted thisreport on November 19, 1992.

On January 23, 1991, plaintiff sentthe Division certified mail that con-tained the CBT Form IRA-100,which reports IRS changes to Fed-eral taxable income, for FYEApril 30, 1984 and 1985, worksheetsreflecting the calculation of “cor-rected taxable income” for FYEApril 30, 1986 and 1987, andamended CBT returns for FYEApril 30, 1988 and 1989. The Divi-sion received the certified mail onJanuary 25, 1991.

In 1992, the Division refunded toplaintiff amounts attributable to FYEApril 30, 1985, 1986, and 1987. In1996, the Division issued plaintiff aNotice of Erroneous Refund request-ing that the refund be returned dueto the untimely filing of the refundclaims and reports of changes madeby the IRS.

In determining whether CBT refundclaims were timely filed for periodsprior to July 1, 1993, the applicablestatute and regulations differentiatedbetween refund claims and refundclaims pursuant to IRS changes. Ingeneral, N.J.S.A. 54:49-14 restrictedrefund claims to a two-year statuteof limitation period commencingfrom the date of payment of theoriginal or additional assessed tax.An exception to the general rule in-volved a refund due to IRS changes.In this situation, N.J.A.C. 18:7-13.8(d) stated that the refund claim’stwo-year limitation period com-menced on the date the IRA-100 wastimely filed with the Division. Inorder for the IRA-100 to be timelyfiled, N.J.S.A. 54:10A-13 requiredthat the IRA-100 be received by theDivision within ninety days after theIRS final determination of change orcorrection.


13Spring 2003

The Court determined that plaintiff’sclaimed abandonment losses forFYE April 30, 1985 and 1986, werenot IRS changes to the extent thelosses were allowed in connectionwith an audit by the Division. Asplaintiff forwarded copies of the1120X forms to the Division onMarch 1, 1989, these refund claimswere held to be subject to and barredby the N.J.S.A. 54:49-14 two-yearstatute of limitation period to file arefund claim.

The Court decided that the revenueagent’s finding of the additional lossfor FYE April 30, 1985, due to real-location of basis was an IRS change.Turning to the claimed losses for theFYE April 30, 1986 and 1987, theCourt found that these losses werethe flow-through effects of theJuly 27, 1990, RAR relating to theFYE April 30, 1985, amended re-turn. Therefore, the Court deter-mined that the FYE April 30, 1986and 1987, losses were IRS changesbecause the July 27, 1990, RAR didnot directly change the tax liabilityfor those years.

Both plaintiff and defendant agreedthat the IRS final determination, forpurposes of N.J.S.A. 54:10A-13, re-ferred to the IRS October 26, 1990,letter. However, the parties dis-agreed as to when the 90-day periodcommenced for purposes of filingthe IRA-100. The Court ruled thatthe date of the IRS final determina-tion letter commenced the 90-dayperiod reasoning that if date of tax-payer receipt controlled then evi-dence of receipt would be solelybased upon the plaintiff’s testimony.The Court noted that the IRS was notrequired to send the final determi-nation by certified or registered mail.Finding that the IRS final determi-

nation was dated October 26, 1990,the Court calculated the 90th day asJanuary 24, 1991. Although plain-tiff mailed the IRA-100 on Janu-ary 23, 1991, the Division did notreceive the IRA-100 until January25, 1991. Consequently, the Courtheld that the IRA-100 was filed oneday late and therefore plaintiff wasnot able to file a refund claim pur-suant to N.J.A.C. 18:7-13.8(d). In re-fusing to exercise equitable powers,the Court noted, among other things,that plaintiff could have deliveredthe IRA-100 by hand or overnightservice and thereby timely filed theform. As to upholding theregulation’s condition that the timelyfiling of the IRA-100 was requiredto extend the statute of limitationperiod, the Court noted that this is-sue had previously been decided inSharps, Pixley, Inc. and that theregulation had not since beenchanged by the Legislature.
Gross Income TaxKeogh Plan Contributions – Johnand Barbara Reck v. Director, Di-vision of Taxation, decided Decem-ber 19, 2002; Supreme Court of NewJersey No. A-93 September Term2001.

Plaintiff husband is a partner in anaccounting firm. Contributions oneach partner’s behalf were made bythe partnership to a qualified Inter-nal Revenue Code (IRC) 401(a)Keogh plan. In calculating his dis-tributive share of partnership incomefor the 1992 and 1993 tax years,plaintiff deducted those contribu-tions. The Division of Taxation de-nied those deductions on the basisthat only 401(k) Keogh Plan contri-butions were deductible per statute.

In a 5–2 decision, the majority of theNew Jersey Supreme Court upheldthe Appellate Division’s ruling that

the partnership’s pensionplan contributions are deduct-ible only under a 401(k) plan sub-stantially for the reasons expressedin the Appellate Division’s opinion.The Appellate Division found thatalthough N.J.S.A. 54A:6-21 statedthat gross income does not includeemployer contributions on behalf ofits employees to a 401(k) plan, itdoes not address 401(a) plans.Hence, the Appellate Division rea-soned that 401(a) contributions arenot deductible even though the con-tributions are not expressly prohib-ited as deductions by statute.

The minority of the New Jersey Su-preme Court dissent would haveupheld the Tax Court’s reasoningthat the partnership’s contributionson behalf of partners to the KeoghPlan are deductible in calculating thepartner’s distributive share of part-nership income because the contri-butions constitute ordinary andnecessary deductible business ex-penses pursuant to N.J.S.A.54A:5-1b, which defines net profitsfrom business.

Partnership’s Discharge of In-debtedness Income – Michael andPatricia Scully and James Scully v.Director, Division of Taxation, de-cided January 13, 2003; AppellateDivision Nos. A-1816-01T3 and A-2360-01T3.

The Appellate Division affirmed theTax Court’s holding for plaintiff forsubstantially the reasons in the TaxCourt opinion that was summarizedin the New Jersey State Tax News,Volume 31, Number 1, Spring 2002,page 15, and is reprinted below forthe reader’s convenience.

Plaintiffs Michael Scully andJames Scully each own a


Spring 200314

48.5% limited partnership in-terest and a 1% general part-nership interest in Port-O-CallAssociates, a New Jersey lim-ited partnership (the “Partner-ship”). Additionally, eachowns 50% of the corporatestock of a Pennsylvania corpo-ration that owns a 1% generalpartnership interest in thePartnership.

The Partnership purchased ahotel with a $7 million mort-gage. Subsequently, the mort-gagee became insolvent andthe mortgage was assigned toa corporation that acted as thereceiver. Thereafter, the re-ceiver sold the mortgage loanto Optimum Mortgage Invest-ment Company for approxi-mately $2 million less than thenote’s principal balance.Optimum’s mortgage purchasewas financed by the plaintiffspursuant to an agreement thatpaid Optimum a fee and obli-gated Optimum to assign themortgage to plaintiffs. There-after, plaintiffs assigned themortgage to the Partnership.

The Partnership’s Federal in-come tax return reported thecurrent principal balance of thenote as a capital contributionand the $2 million differencebetween the previous and cur-rent principal balance of themortgage as debt-forgivenessincome. The Partnership’sPennsylvania information re-turn reported the same capitalcontribution but reported the$2 million difference as “Netprofits from business…apportioned to Pennsylvania.”

The Director determined thatthe Partnership realized dis-charge of indebtedness incomein the amount of approximately$2 million, the difference be-tween the prior mortgage prin-cipal balance and the amountof the mortgage principal whenthe plaintiffs contributed theloan to the Partnership whichthereby discharged the mort-gage debt. The Director con-tended that this amount isattributable to plaintiffs as dis-charge of indebtedness incomethat occurred “within a busi-ness entity” under N.J.S.A.54A:5-1(k) and (b).
The issue before the Court waswhether partners are subject togross income tax on dischargeof indebtedness income real-ized by the Partnership. Rely-ing on Smith v. Director theCourt determined that apartnership’s discharge of in-debtedness income must arisein the ordinary course of part-nership business operations tobe includable in the partner’sgross income. Otherwise thedischarge of indebtedness in-come would retain its charac-ter, and as such, discharge ofindebtedness, is not a categoryof income subject to gross in-come tax.

Holding for plaintiffs, the Court de-cided that the transaction generatingthe income was the discharge of theloan not the plaintiffs’ contributionof the mortgage loan to the Partner-ship. The Court found that neitherthe discharge of the loan nor the fi-nancing of the hotel was part of thePartnership’s ordinary business forpurposes of N.J.S.A. 54A:5-1(b).The Court noted that there were very

few, if any, circumstances where dis-charge of indebtedness incomewould be includable in a partner’sdistributive share of partnership in-come under N.J.S.A. 54A:5-1(k)because it is unlikely that a partner-ship would receive discharge of in-debtedness from third parties as aregular part of its businessoperations.

Partnership’s Discharge of In-debtedness Income – Richard andSharon Miller v. Director, Divisionof Taxation, decided January 14,2003; Appellate Division No. A-2287-01T3.

The Appellate Division affirmed theTax Court’s holding for plaintiff forsubstantially the reasons in the TaxCourt opinion that was summarizedin the New Jersey State Tax News,Volume 31, Number 1, Spring 2002,page 15, and is reprinted below forthe reader’s convenience.

Plaintiff Richard Miller is apartner of a New Jersey gen-eral partnership (the “Partner-ship”). The Partnership’s onlyasset is one piece of real estateencumbered by a mortgage thatis owned as real estate invest-ment. This real estate is leasedto a law firm some of whosepartners are partners in thePartnership. When the realestate’s value dropped signifi-cantly below the principal bal-ance of the mortgage loan, themortgagee reduced the princi-pal balance upon the Part-nership’s request for areduction.

The Partnership reported thereduction in the principal bal-ance as other income on itsFederal income tax return but


15Spring 2003

did not report it on thePartnership’s New Jersey taxreturn. Plaintiff’s FederalSchedule K-1 reported his pro-portionate share of the mort-gage reduction as other incomebut did not report it on eitherplaintiff’s Schedule NJK-1 orNew Jersey gross income taxreturn. The Director deter-mined that the mortgage reduc-tion resulted in forgiveness ofindebtedness income to thePartnership and thereby wasincludable in the partner’s dis-tributive share of partnershipincome.

The Court applied its legalanalysis in Scully, above, to thefacts of this case. The Courtnoted that there were three dif-ferences between the casesmost notably that in the instantcase there was no question thatthe Partnership received dis-charge of indebtedness incomeand that here the real estate isowned as an investment as op-posed to as a hotel and restau-rant. As in Scully, the Courtstated that discharge of indebt-edness income “is taxable to apartner only if attributable to apartnership’s ordinary busi-ness operations.”

The Court ruled that the plain-tiff was not subject to the grossincome tax on thePartnership’s discharge of in-debtedness income because theincome relating to the mort-gage loan is not includable inthe Partnership’s net profitsfrom business. The transactioninvolving the mortgage loan is

in the nature of a capital trans-action, not an ordinary busi-ness operation. Moreover, theCourt added that even if theloan transaction constitutedpart of the partnership’s ordi-nary business operations, theincome-generating event is thereduction in principal balance,which is not part of thepartnership’s ordinary busi-ness operations.
Property Tax Relief ProgramsNJ SAVER Rebate: Eligible Resi-dent – Joel Cooper v. Director, Di-vision of Taxation, decidedDecember 6, 2002; Appellate Divi-sion No. A-2074-01T2.

Plaintiff is the sole shareholder of acorporation that has the sole purposeof holding title to plaintiff’s primaryresidence. Plaintiff resides in thisresidence and filed for an NJSAVER rebate. Although the Divi-sion denied his NJ SAVER rebatebecause title to the property was heldby a corporation, the Tax Court re-versed and ruled that in this case thesole shareholder of a corporationshould be treated the same way as apartner of a partnership, who is en-titled to a rebate to the extent of hispartnership interest. See New JerseyState Tax News, Volume 31, Num-bers 2/3, Summer/Fall 2002, page 33.

The Appellate Division reversed,holding that plaintiff was not entitledto the rebate because the corporationheld title to the property. The Ap-pellate Division reasoned (1) that thestatute was clear and unambiguouson its face as it included ownershipthrough partnerships but not throughcorporations on the list of eligiblelegal entities, (2) that there was noth-ing in the legislative history indicat-

ing that the Legislature in-tended to treat partnershipsand corporations alike, and (3) be-cause there is a legal distinction be-tween a corporation and itsshareholders. !

In Our LegislatureMiscellaneousUse of Fiduciary Funds — P.L.2003, c.33 (signed into law onMarch 24, 2003) permits fiduciariesto employ and compensateaccountants from fiduciary funds forservices rendered to the estate ortrust without reducing the commis-sions due to the fiduciary, providedsuch accountings are not the usualservices provided by the fiduciary.

The law also allows out-of-Statebanks with trust offices in New Jer-sey to receive equal treatment underState law as New Jersey banks withrespect to the simultaneous fiduciaryadministration of trusts and admin-istrative work done for operators ofmutual funds.

This act took effect immediately,except for the subsection pertainingto employing and compensating ac-countants from fiduciary funds,which takes effect on June 22, 2003.

Property Tax Relief ProgramsProperty Tax Reimbursement —P.L. 2003, c.30 (signed into law onMarch 14, 2003) changes the annualdeadline for filing an application toJune 1. The law provides thatproperty tax reimbursement checksare to be mailed to eligible applicantson or before July 15, except thatpayments for applications filedduring the period May 1 throughJune 1 will be mailed on or beforeSeptember 1 annually. This act tookeffect immediately. !

Spring 200316

May

SUN. MON. TUE. WED. THU. FRI. SAT.

1 2 3

4 5 6 7 8 9 10

11 12 13 14 15 16 17

18 19 20 21 22 23 24

25 26 27 28 29 30 31

Apr

il


1 2 3 4 5

6 7 8 9 10 11 12

13 14 15 16 17 18 19

20 21 22 23 24 25 26

27 28 29 30

April 25PPT-40 Petroleum Products

Gross Receipts Tax—Quarterly return

April 30NJ-927 & Gross Income Tax—NJ-927-W Employer’s quarterly report

GCC-1 Motor Fuels Tax—Carrier’smonthly report

DSF-100 Domestic Security Fee —Quarterly return

May 1ST-18B Sales and Use Tax—

Annual use tax return forqualified businesses

May 12CWIP-1,2 Cigarette Tax—Whole-

saler’s informational report

CDIS-1,2 Cigarette Tax—Distribu-tor’s informational and salesreport

CR-1 & Cigarette Tax—Whole-CNR-1 saler’s monthly report of

non-New Jersey stampedcigarettes

May 15CBT-100 Corporation Business

Tax—Annual return foraccounting period endingJanuary 31

CBT-150 Corporation BusinessTax—Installment paymentof estimated tax for 4th, 6th,9th, or 12th month of cur-rent tax year

NJ-500 Gross Income Tax—Employer’s monthlyremittance

April 10CWIP-1,2 Cigarette Tax—Whole-

saler’s informational report

CDIS-1,2 Cigarette Tax—Distribu-tor’s informational and salesreport



April 15CBT-100/ Corporation BusinessCBT-100S Tax—Annual return for ac-

counting period ending De-cember 31


HR-1040 Homestead Rebate—Application

NJ-1040/ Gross Income Tax—NJ- Resident return for calendar1040EZ year filers

NJ- Gross Income Tax—1040NR Nonresident return for

calendar year filers

NJ-1041 Gross Income Tax—Fiduciary return for calendaryear filers

NJ-1065 Gross Income Tax—Part-nership return for calendaryear filers

NJ- Gross Income Tax—1040ES Declaration of Estimated

Tax, Voucher 1 for calendaryear filers

April 21CR-1 & Cigarette Tax—MonthlyCNR-1 report of cigarettes sold or

used by distributors andmanufacturers

MSS-1 Cigarette Tax—Monthlyreport by manufacturers ofspecial shipments of taxablecigarettes into New Jersey

GA-1D Motor Fuels Tax—Dis-tributor’s monthly report ofgallons of fuel sold or used

GA-1J Motor Fuels Tax—Jobber’smonthly report of gallons offuel sold or used

GA-1X Motor Fuels Tax—Importer’s monthly report ofgallons of fuel imported

MFT-10 Motor Fuels Tax—Monthlyreport by seller-user of spe-cial fuels sold or used

MFT-14 Motor Fuels Tax—Monthlyexport report

MFT-60 Motor Fuels Tax—Monthlystorage facility operatorreport

SCC-5 Spill Compensation andControl Tax—Monthlyreturn

SCC-6 Spill Compensation andControl Tax—Public stor-age terminal informationreturn

ST-20 New Jersey/New YorkCombined State Sales andUse Tax—Quarterly return

ST-50 Sales and Use Tax—Quarterly return

ST-250 Combined Atlantic CityLuxury Tax/State SalesTax—Monthly return

ST-350 Cape May County TourismSales Tax—Monthly return

ST-450 Sales and Use Tax–SalemCounty—Quarterly return

TP-20 Tobacco Products Whole-sale Sales and Use Tax—Monthly return

UZ-50 Combined State Sales andUse Tax/Urban EnterpriseZone Sales Tax—Monthlyreturn

2003 tax calendar

17Spring 2003


1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30

June

May 20CR-1 & Cigarette Tax—MonthlyCNR-1 report of cigarettes sold or

used by distributors andmanufacturers

MSS-1 Cigarette Tax—Monthlyreport by manufacturers ofspecial shipments of taxablecigarettes into New Jersey

GA-1D Motor Fuels Tax—Dis-tributor’s monthly report ofgallons of fuel sold or used







SCC-6 Spill Compensation andControl Tax—Publicstorage terminal informationreturn

ST-21 New Jersey/New YorkCombined State Sales andUse Tax—Monthlyremittance

ST-51 Sales and Use Tax—Monthly remittance



ST-451 Sales and Use Tax–SalemCounty—Monthlyremittance



GA-1D Motor FuelsTax—Distributor’smonthly report of gallonsof fuel sold or used







SCC-6 Spill Compensation andControl Tax—Public stor-age terminal informationreturn

ST-21 New Jersey/New YorkCombined State Sales andUse Tax—Monthlyremittance

ST-51 Sales and Use Tax—Monthly remittance



ST-451 Sales and Use Tax–SalemCounty—Monthlyremittance



June 25PPT-41 Petroleum Products

Gross Receipts Tax—Monthly return

June 30GCC-1 Motor Fuels Tax—Carrier’s

monthly report

May 27PPT-41 Petroleum Products

Gross Receipts Tax—Monthly return

May 30GCC-1 Motor Fuels Tax—Carrier’s

monthly report

June 2PTR-1,2 Property Tax Reimburse-

ment—Application

June 10CWIP-1,2 Cigarette Tax—Whole-

saler’s informational reportCDIS-1,2 Cigarette Tax—Distribu-

tor’s informational and salesreport



June 16CBT-100 Corporation Business

Tax—Annual return foraccounting period endingFebruary 28


NJ-500 Gross Income Tax—Employer’s monthlyremittance

June 20CR-1 & Cigarette Tax—CNR-1 Monthly report of cigarettes

sold or used by distributorsand manufacturers

MSS-1 Cigarette Tax—Monthly re-port by manufacturers ofspecial shipments of taxablecigarettes into New Jersey

Spring 200318

State of New JerseyDepartment of the Treasury

Division of TaxationTechnical Services

Information and Publications BranchPO Box 281

Trenton, NJ 08695-0281

FIRST-CLASS MAILU.S. POSTAGE

PAIDTRENTON NJ

PERMIT NO. 21

from the director�s deskNew Jersey taxpayers participating in the Internal Revenue Service’s (IRS) Offshore Voluntary Com-pliance Initiative for those using illegal tax shelters will avoid State prosecution if they amend theirNew Jersey income tax returns and remit to the State by October 15, 2003, all taxes, penalties, andinterest due.

The IRS has implemented several programs designed to investigate illegal tax shelter arrangementsand those who promote them. The Offshore Voluntary Compliance Initiative targets individuals whodeposit income into offshore bank accounts and later use credit cards issued by the banks acceptingsuch deposits in order to reclaim the untaxed funds. Recently, the IRS obtained a large volume ofoffshore credit card records and has begun identifying individuals making use of these illegal taxshelters. The IRS is offering anyone engaged in such activity the opportunity to avoid Federal civilfraud penalties and criminal prosecution by voluntarily correcting their tax returns and disclosinginformation related to their offshore financial accounts prior to April 15, 2003. Participants in thisprogram must also pay any taxes, penalties, or interest owed.

In conjunction with the efforts of the Internal Revenue Service, New Jersey will grant special consid-eration to individuals who participate in the Offshore Voluntary Compliance Initiative. This presentsan opportunity for taxpayers to avoid criminal prosecution as well as penalties for fraud, and to estab-lish a clean slate with the State.

Those interested in taking advantage of the Offshore Voluntary Compliance Initiative and correctingunreported income tax liabilities to New Jersey should contact the Division of Taxation at 609-292-2163 or by mail at Division of Taxation, Individual Tax Audit Branch, P.O. Box 288, Trenton, NJ08695-0288.

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