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Hennefeld v. Township of Montclair

22 N.J. Tax 166 (2005)

TAXATION; DISABLED VETERAN’S EXEMPTION; DOMESTIC PARTNERSHIP ACT—The New Jersey Domestic Partnership Act requires municipalities to grant same-sex couples the entire disabled veteran’s property tax exemption, as if married, if the couple has been joined by a civil union and has registered under the Act.

A same-sex couple purchased a home as joint tenants with the right of survivorship. Prior to the purchase, one of the pair had served in the military for fifteen years and shortly after his discharge from the service, he was declared totally disabled by the Veteran Administration. As a result of his disability, the municipality granted the couple a fifty percent disabled veteran’s exemption on the jointly owned property. This was because the exemption was limited to the disabled veteran’s half interest. Twenty years later, the couple was issued a license and certificate of civil union by the state of Vermont. Three years later, the couple was legally married in Canada. Shortly thereafter, the couple applied to the municipality’s tax assessor for a one hundred percent disabled veteran’s tax exemption pursuant to the New Jersey Exemption Statute. The tax assessor denied the application on the basis that the couple did not qualify for the exemption because their marriage did not classify as a “traditional marriage” between a man and a woman. The couple appealed the tax assessor’s determination to the county board of taxation and re-conveyed the property to themselves as tenants by the entirety. The board of taxation upheld the tax assessor’s decision. The couple then filed a complaint in the New Jersey Tax Court seeking the full one hundred percent tax exemption. In support of their action, the couple argued that: 1) the Exemption Statute requires that they receive a one hundred percent exemption since they have always owned the property as joint tenants and as tenants by the entirety; 2) the New Jersey Domestic Partnership Act (DPA) authorizes the recognition of their Vermont civil union entitling them to the full exemption; 3) other New Jersey statutes support them receiving the full exemption as tenants by the entirety; and 4) their legal marriage in Canada should be recognized in New Jersey entitling them to the full exemption. In response, the municipality argued that the DPA should not be applied retroactively because it was enacted a couple of months after the couple’s application for full exemption. It also asserted that for the prior twenty years, the Exemption Statute had been interpreted to apply to marriages between a man and a woman only.

The Court ruled that the couple was entitled to the one hundred percent tax exemption as a registered couple under the DPA. It held that the DPA required it to fully recognize the couple’s Vermont civil union, which afforded the couple similar property rights as a heterosexual married couple. The Court, however, refused to recognize the couple’s Canadian marriage, ruling that it was contrary to New Jersey public policy. Accordingly, the Court ordered the municipality to grant the couple the full tax disabled veteran’s exemption pursuant to the DPA and the Exemption Statute.


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