Goldmann, Halpern and Lora.
Petitioner Olin Mathieson Chemical Corporation appeals from a judgment of the Division of Taxation ordering it to pay to the State the additional corporation business tax assessments for the years 1959, 1960 and 1961 and dismissing its petitions challenging those assessments. Involved here is the applicability of N.J.S.A. 54:10A-19.1(b) to the case at hand.
The facts are stipulated. Olin Mathieson, a Virginia corporation authorized to do business in this State since 1952, filed New Jersey corporation business tax returns for the tax years in question and paid the full amount of its indicated tax obligations. The final return for 1959 was filed October 10, 1960, for 1960 on October 18, 1961, and for 1961 on October 16, 1962. On August 15, 1967 the United States Treasury Department advised petitioner that,
for the purpose of computing federal income taxes, its 1959 and 1960 returns had been recomputed and adjusted upwards. Three days later petitioner, as it was obliged to do within 90 days by N.J.S.A. 54:10A-13, notified the Corporation Tax Bureau in the Division of Taxation of this recomputation. The Bureau requested petitioner to furnish certified copies of its federal tax returns for 1959 and 1960; Olin Mathieson complied with that request but indicated that if the Bureau levied additional assessments for 1959 and 1960, it would protest them because more than five years, the period specified in the applicable statute of limitations (N.J.S.A. 54:10A-19.1(b)), had passed since it filed its final returns for those years. Nonetheless, the Bureau as a result of the recomputations levied additional assessments against petitioner on September 6, 1967, in the amount of $5,163.16 for 1959 and $3,614 for 1960, with 6% annual interest from the original due dates of the respective returns.
A similar sequence of events occurred with regard to petitioner's 1961 tax. Olin Mathieson received word of the recomputation of its 1961 taxable income from the Internal Revenue Service, apparently in the early spring of 1968. The corporation notified the State of this on April 16, 1968. On May 1, 1968 the Bureau levied an additional assessment in the amount of $3,503.99, with 6% annual interest from the original due date of the 1961 tax return.
Olin Mathieson timely appealed from these additional assessments to the Division of Tax Appeals and furnished appropriate security pursuant to N.J.S.A. 54:10A-19.2. Petitioner did not quarrel with the result of the federal recomputations or with the accuracy of the Bureau's computations of assessments. However, it contended that it was not subject to additional assessments because of the expiration of the applicable five-year statute of limitations. The State's position was that N.J.S.A. 54:10A-19.1(b), when read in the context of the entire Corporation Business Tax Act, did not foreclose its levy of the additional assessments
in question. It conceded that all of petitioner's actions in this matter were taken in good faith.
N.J.S.A. 54:10A-19.1(b) provides in pertinent part:
Except in the case of willfully false or fraudulent return with intent to evade the tax, no assessment of additional tax shall be made after the expiration of more than five years from the date of the filing of a return; provided , that where no return has been filed as provided by law, the tax may be assessed at any time. * * *
The State relies on Regulation 16:10-6.100 promulgated by the State Tax Commissioner under the authority given him by N.J.S.A. 54:10A-27 to prescribe and issue rules and regulations consistent with the Corporation Business Tax Act for the interpretation and application of its provisions. That regulation was designed to effectuate N.J.S.A. 54:10A-13, which contains this relevant language:
If the amount of the taxable income for any year of any taxpayer as returned to the United States Treasury Department is changed or corrected by the Commissioner of Internal Revenue * * * such taxpayer shall report such changed or corrected taxable income * * * within 90 days after the final determination of such change or correction * * * or as required by the commissioner, and shall concede the accuracy of such determination or state wherein it is erroneous. Any taxpayer ...