June 23, 1995
FEDWAY ASSOCIATES, INC., PLAINTIFF-APPELLANT,
DIRECTOR, DIVISION OF TAXATION, DEFENDANT-RESPONDENT.
On appeal from the Tax Court of New Jersey whose decision is reported at 14 N.J. Tax 71 (Tax Ct. 1994).
Approved for Publication June 23, 1995.
Before Judges Petrella, Havey and Brochin.
The Tax Court concluded in a written opinion, Fedway Associates, Inc. v. Director, Division of Taxation, 14 L. Ed. 2d 71 (Tax Ct. 1994), that Fedway Associates, Inc. (Fedway) is not entitled to a use tax exemption under the Urban Enterprise Zones Act (N.J.S.A. 52:27H-61 to -97), for purchases of tangible personal property made for its employee incentive and marketing programs. Specifically, the Tax Court concluded that these purchases, which included such items as corkscrews, napkins, calendars, golf bags, and home electronic equipment, did not carry an entitlement to a use tax exemption under N.J.S.A. 52:27H-79.
One of Fedway's two locations for its wholesale distribution of wines and alcoholic spirits business is in the Kearny urban enterprize zone. Fedway purchases items of tangible personal property at this location to provide incentives to its sales staff and as promotionals to its customers, through its sales staff. *fn1 Because its Kearny location is in an urban enterprise zone Fedway paid no sales or use tax on these items, claiming exemption under N.J.S.A. 52:27H-79.
The Division of Taxation audited Fedway's purchases between October 1, 1986 and September 30, 1989, and concluded that Fedway was not entitled to the use tax exemption. It issued a final determination that Fedway owed use tax in the amount of $93,736.98, plus interest of $47,818.28 to August 20, 1991, for a total amount of $141,555.26.
Fedway argues on appeal that the Tax Court misinterpreted the applicable Urban Enterprise Zones Act provisions concerning its purchases for its employee incentive program. It also argues that the Judge misinterpreted the act's provisions concerning its purchases for its give-away employee incentive program. Fedway claims entitlement to the use tax exemption because the purchases at issue are the type contemplated by the Legislature when it created urban enterprize zones.
The findings and Conclusions of the Tax Court Judge are adequately supported by the record.
We affirm substantially for the reasons expressed by Judge Lasser in his written opinion reported at 14 L. Ed. 2d 71.