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Kagan v. Director, Division of Taxation

A-1431-08T2 (N.J. Super. App. Div. 2009) (Unpublished)

TAXATION; HOMESTEAD REBATE — The “good cause” standard that allows the late filing of a homestead rebate application encompasses delays caused by a taxpayer’s need to provide daily assistance to a spouse where the uncontested medical condition of the spouse shows the need for such a deep involvement in the spouse’s care.

A woman suffered a stroke. Her husband assumed most of his wife’s former duties, such as meal preparation, and assisted her with her daily therapy regimen. A few months later, the husband filed the couple’s joint state and federal income tax returns but failed to file a timely homestead rebate application. A year later, the husband contacted the New Jersey Division of Taxation who informed him that it had not yet received his application. In response, the husband submitted the rebate application, but it was denied. He then submitted a doctor’s letter that described his wife’s medical condition and his deep involvement in her care. The Division again notified the husband that his application was untimely and denied the application. The taxpayer challenged the Division’s determination.

The Tax Court reversed the Division’s holding, concluding that this taxpayer should have received his homestead rebate. It found that the taxpayer met the statutory “good cause” standard because his wife’s medical condition and incapacity made it difficult to address non-recurring items, such as applying for the annual homestead rebate. The Court also interpreted the statutory good cause standard to encompass situations when “it becomes too difficult because of medical situations.” The Director appealed, arguing that the medical evidence submitted by the taxpayer was insufficient to satisfy the statutory standard, particularly because the taxpayer was not himself incapacitated.

The Appellate Division affirmed. In doing so, it took note of a prior decision held that a taxpayer’s severe and incapacitating illness coupled with a good faith attempt to file a timely application excused the taxpayer’s failure to comply with the strict terms of the program. Later rulings held that an applicant must submit medical evidence if he or she alleges incapacity due to illness or hospitalization. Here, the taxpayer testified that he had a doctor’s note that his wife required his daily assistance and the Division did not contest the medical condition of his wife. The Court concluded that the “good cause” standard required a case-by-case assessment. In the instant case, the Court found that it was undisputed that the taxpayer’s wife was so incapacitated that he assisted her in virtually all of her activities. Consequently, since the Court believed they were “an elderly couple who [were] doing the best they can,” it held that the medical good cause exception had been satisfied when the taxpayer’s spouse was incapacitated and the taxpayer attended to their daily needs.


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