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Aetna Burglar & Fire Alarm Co. v. Director

July 11, 1997.


The opinion of the court was delivered by: Axelrad

Aetna Burglar & Fire Alarm Corporation ("Aetna"), a New Jersey corporation, appeals from a sales tax deficiency assessment in the amount of $19,926.46, plus interest, imposed on its receipts from the installation, servicing and monitoring of fire and burglar alarm systems located in New Jersey, for the period of July 1, 1991 through June 30, 1994. During that time Aetna did not collect or remit any sales tax.

The parties filed cross motions for partial summary judgment on the issue of whether the services performed by taxpayer are "telecommunications" within the meaning of N.J.S.A. 54:32B-2(cc), and, if so, are subject to sales tax pursuant to N.J.S.A. 54:32B-3. For the purposes of these motions, the parties have stipulated to the following facts about the services provided by Aetna:

a) Among other services, Aetna monitors burglar and fire alarm systems installed at various New Jersey residences and businesses.

b) The systems are connected to a master panel at the customer's location and linked to the customer's existing telephone service.

c) Aetna does not install or provide telephone service at its customer's location.

d) When an alarm is activated, the panel seizes the telephone line and electronically initiates a telephone call which sends a message to a computer at a central station located in Pennsylvania.

e) Once an electronic message is received, the person monitoring the computer telephones the relevant Aetna customer to determine if an emergency actually exists and, if necessary, telephones the appropriate emergency services authority and contact persons requested by the customer.

f) Aetna bills its customers for alarm monitoring services at a flat monthly rate, not on the basis of the number of alarm signals transmitted to the central station or for any telephone calls made by or in response to the Aetna alarm.

g) Aetna also provides "opening and closing" services to a number of its commercial customers. "Opening and closing" services allow the panel of the customer's burglar alarm system to transmit an electronic message via telephone to the Pennsylvania central station on a regular basis when the location is unlocked or secured. The service can include a phone call to the customer, if the location is not opened or closed by a specified time each day.

Services are subject to sales tax only if enumerated in N.J.S.A. 54:32B-3(b)-3(f). Newman v. Director, Div. of Taxation, 14 N.J. Tax. 313, 316 (1994), aff'd, 15 N.J. Tax. 228 (App.Div.1995). Application of New Jersey sales tax to "telecommunications" and "all services . . . provided in connection therewith" was accomplished through the 1990 amendments to N.J.S.A. 54:32B-2 and - 3. L. 1990, c. 40. N.J.S.A. 54:32B-3(f) specifically provides for a tax on "the receipts from every sale, except for resale, of intrastate or interstate telecommunications charged to an address in this State, regardless of where the services are billed or paid" (emphasis added).

"Telecommunications" are defined in N.J.S.A. 54:32B-2(cc) as:

The statute goes on to define "interstate communication" as that which either originates or terminates inside the State, and "intrastate communication" as that which originates and terminates within the State. N.J.S.A. 54:32B-2(dd) and (ee).

In construing a statute, the court must first consider its plain language. Where the words of a statute are clear and their meaning and application plain and unambiguous, there is no reason for judicial construction. Board of Educ. v. Neptune Tp. Educ. Ass'n, 144 N.J. 16, 25, 675 A.2d 611 (1996); Cumberland Holding Corp. v. Vineland City, 11 N.J. Tax. 457, 462 (1991); Sutherland, Statutory Construction, Sec. 46.01 (5th ed. 1992). The language of the statutes at issue is clear. They expressly tax those services provided in connection with or by means of "telecommunications." N.J.S.A. 54:32B-2 and -3. Since burglar and fire alarm systems are not specifically enumerated, however, the court must determine whether such services fall within the definition of "telecommunications."

Aetna asserts that the definition of "telecommunications" is ambiguous and, as such, any uncertainty in statutes levying taxes should be construed in favor of the taxpayer. Fedders Financial Corp. v. Director, Div. of Taxation, 96 N.J. 376, 385, 476 A.2d 741 (1984). The court finds that the statute is not unclear or of doubtful meaning. Amerada Hess Corp. v. Director, Div. of Taxation, 107 ...

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