On appeal from Superior Court, Law Division, Hudson County.
Petrella, Bilder and Gaynor.
[213 NJSuper Page 24] The State of New Jersey appeals from the dismissal of a criminal indictment against Carmroc Corporation, trading as Spartan Furniture of West New York, and two individual defendants, Rocco Pescatore and Carmine Pescatore. The indictment
charged the defendants with third degree theft of sales taxes collected (N.J.S.A. 2C:20-9), third degree misapplication of entrusted property, sales tax receipts (N.J.S.A. 2C:21-15), and 21 additional violations under the New Jersey Sales and Use Tax Act (N.J.S.A. 54:32B-1 to 29) (Sales Tax Act) and the State Tax Uniform Procedure Law (N.J.S.A. 54:48-1 to 54:52-4).*fn1
The trial judge, relying on the reasoning in People v. Valenza, 60 N.Y. 2d 363, 469 N.Y.S. 2d 642, 457 N.E. 2d 748 (Ct.App.1983), concluded that a criminal prosecution for a Sales Tax Act violation can only be brought within the provisions of the Sales Tax Act, thereby limiting criminal prosecution to the disorderly persons penalty prescribed by N.J.S.A. 54:32B-26(b). On this appeal the State argues that the disorderly persons penalty prescribed by N.J.S.A. 54:32B-26(b) is not the exclusive penalty for violations of the Sales Tax Act, and that the indictment, founded upon statutory provisions outside of that act, should be reinstated.
The indictment was based upon claims that defendants allegedly failed to remit approximately $34,000 in State sales taxes which had been collected by them, and had intentionally filed false quarterly returns for the periods involved. The State contends that its proofs would show that in some cases the defendants sought to avoid charging the sales tax by putting out-of-state customer addresses on invoices when, in fact, delivery was to be made in New Jersey. In other cases defendants allegedly charged the tax to the customer, but failed to remit the tax. The State alleges that false tax returns were being filed during the course of this conduct. In seeking the indictment
the Attorney General's office obtained and utilized defendants' tax records.
There is no dispute that the provisions of N.J.S.A. 54:32B-26(b) encompass the conduct alleged to have been engaged in by defendants. Indeed, defendants rely on this provision in contending that the disorderly persons penalties of subsection (b) are the exclusive criminal sanction for violations of the Sales Tax Act. However, defendants argue that a correct interpretation of this provision effectively precludes the State from seeking harsher criminal penalties. Specifically, defendants argue that the State may not proceed under subsection (a) which incorporates by reference the State Tax Uniform Procedure Law, N.J.S.A. 54:52-1, et seq., which makes the filing of false returns, false swearing and maintaining false books a misdemeanor (N.J.S.A. 54:52-1, 3 and 4) or under the Criminal Code, N.J.S.A. 2C:1-1, et seq., specifically those provisions which make theft (N.J.S.A. 2C:20-9) and misapplication of entrusted property (N.J.S.A. 2C:21-15) third degree crimes.
N.J.S.A. 54:32B-26 provides:
(a) Any person failing to file a return or to pay or pay over any tax to the director within the time required by this act shall be subject to such penalties and interest as provided in the State Tax Uniform Procedure Law, subtitle 9 of Title 54 of the Revised Statutes. Unpaid penalties and interest may be determined, assessed, collected and enforced in the same manner as the tax imposed by this act.
(b) Any person failing to file a return or failing to pay or pay over any tax required by this act, or filing or causing to be filed, or making or causing to be made, or giving or causing to be given any return, certificate, affidavit, representation, information, testimony or statement required or authorized by this act which is willfully false, or willfully failing to file a bond required by this act, or failing to file a registration certificate and such data in connection therewith as the director by regulation or otherwise may require, or to display or surrender a certificate of authority as required by this act, or assigning or transferring such certificate of authority, or willfully failing to charge separately the tax herein imposed or to state such tax separately on any bill, statement, memorandum or receipt issued or employed by him upon which the tax is required to be stated separately as provided in subsection (a) of section 12, ...