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Senna v. City of Wildwood

2006 WL 2068770 (N.J. Super. App. Div. 2006)

LIMITED LIABILITY COMPANIES; TAXATION — A single member limited liability company, even though considered to be a disregarded entity under tax law, must still be represented by an attorney in proceedings before courts or boards of taxation.

The sole member of a single member limited liability company filed appeals in the Law Division from judgments of a county Board of Taxation. The municipality successfully had the matter dismissed because the individual sole member of the limited liability company was not an attorney and no substitution of a New Jersey attorney was made within the time period provided by the lower court to do so. The individual argued that as a the sole member of a single member limited liability company, he was “the only one with a substantial interest in the outcome of the litigation.” He also contended that he was essentially a sole proprietor and therefore fell under an exception to the court rules that would allow a sole proprietor of a business to represent himself or herself at trial. He also noted that under the rules of the United States Tax Court, he could appear before that court. Lastly, he argued that if all of those arguments were unavailing, the appropriate remedy for the lower court “would be to allow him to acquire a substitution of attorney.” In prosecuting the appeal, he made one additional argument which was that “his election to hold title to the properties in the form of a solely owned LLC [had] no affect [sic] on his right to protect his property and [was] not an election to forego his right of representation pro se ... .”

The Appellate Division was not persuaded by any arguments and pointed to a precedential trial ruling of the New Jersey Supreme Court: “This Court has observed repeatedly that, while a taxpayer is free to organize his affairs as he chooses, nevertheless, once having done so, he must accept the tax consequences of his choice, whether contemplated or not ..., and may not enjoy the benefit of some other route he might have chosen to follow but did not.” According to the Court, the individual “chose the LLC form to organize his businesses and own the subject properties. The prohibition of lay representation of limited liability companies under [the Court Rules] was clear and unambiguous.”

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