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Cooper v. Director, Division of Taxation

A-2074-01T2 (N.J. Super. App. Div. 2002) (Unpublished)

NJ SAVER REBATE— The statute that allows a partner in the ownership of his or her residence to collect the NJ Saver Rebate cannot be extended by implication to the shareholder of a corporation that owns the house.

An individual formed a corporation to hold title to his residence. This was done to avoid paying an outstanding child support judgment. He applied for a NJ Saver Rebate and was denied the rebate by the New Jersey Division of Taxation because “[i]n no case does a corporation itself qualify for a rebate.” The lower court disagreed, determining instead, “that the sole shareholder of a corporation should be treated the same way as a partner of a [partnership], who is entitled to a rebate ‘to the extent of the applicant’s interest as a partner therein.’” The Appellate Division disagreed with the lower court and found that the rebate is granted to “residents who pay property taxes on a homestead that is owned as such.” “Homestead” is defined as “a dwelling house ... which constitutes the place of the claimant’s domicile and is owned and used by the claimant as the claimant’s principal residence… .” Here, the individual was clearly the “claimant” because he personally petitioned for a rebate in his own name. Nonetheless, even though he was “domiciled” in the subject property, the property was not “owned” by the “claimant.” It didn’t matter to the Appellate Division that a partner of a partnership might be entitled to a homestead allowance because there is a specific statute that so provides, but it does not extend that benefit to shareholders of a corporation. According to the Court, “[n]othing in the legislative history [made] it ‘abundantly clear’ that the Legislature intended to treat corporations and partnerships alike for purposes of rebate eligibility.” The Court speculated that the difference in treatment arose out of the fact that the corporate form insulates stockholders from the liabilities of their corporation, but a partner is jointly and severally liable for everything chargeable to the partnership.

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