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Lee v. Director, Division of Taxation

A-3784-01T2 (N.J. Super. App. Div. 2003) (Unpublished)

TAXATION; STATUTE OF LIMITATIONS—Where no tax return has been filed, the statute of limitations does not begin to run and submitting information during an audit or during litigation over unpaid taxes does not qualify as filing a return.

The president and sole officer of a corporation was found to be personally liable for sales taxes not collected by his corporation for the period of October 1, 1983 through June 30, 1989. The corporation was audited in 1991 and a letter was sent to the corporate officer advising him that his company had been found liable for sales tax. A notice of assessment was issued shortly thereafter. The officer challenged the assessment “on the ground that he believed that [his corporation’s] services were not subject to the sales tax.” That matter worked its way through the Division of Taxation and, in late 1997, the Tax Court vacated the assessment against the corporation, holding that the [corporation’s] services were in the nature of trash and garbage removal and therefore exempt from taxation under the sales tax statute.” In April 1999, the Appellate Division reversed the tax court decision and reinstated the tax assessment. Then, a month later, the Division of Taxation issued a notice of personal liability to the corporate officer.

The corporate officer argued that the “assessment against him [was] barred by the statute of limitations governing sales tax proceedings.” There is a four year statute but it has an exception reading: “that where no return has been filed as provided by law the tax may be assessed at any time.” Notwithstanding the statute, the corporate officer contended “that his submission of information during the 1991 audit and subsequent judicial proceedings constitute[d] ‘a de facto or constructive filing of a return sufficient to trigger the running of the statute of limitations.’” The Court rejected the officer’s argument because the “statutory language [was] ‘clear and unambiguous,’ [and] it must be enforced as written and without ‘judicial interpretation.’” Prior case law had “described the return-filing mandate of [the statute] as ‘clear and unambiguous’ hence there was ‘no need to apply maxims of statutory construction.’”

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