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Blue Diamond Disposal, Inc. v. Director

August 2, 2007


On appeal from a Final Judgment of the Tax Court of New Jersey, No. 5008-2004.

Per curiam.


Argued Telephonically April 17, 2007

Before Judges S.L. Reisner, Seltzer and C.L. Miniman.

Plaintiff Blue Diamond Disposal, Inc. (Blue Diamond), appeals from a final judgment of the Tax Court of New Jersey affirming a final determination of the Director, Division of Taxation, that Blue Diamond performs garbage removal services, and as a consequence, those services were subject to the then-extant six-percent sales tax under N.J.S.A. 54:32B-3(b)(4). We affirm.

The facts are undisputed. Blue Diamond is a solid waste hauler licensed by the State of New Jersey. Among other services, it supplies empty dumpsters to property owners and their contractors, tenants, and others to permit them to dispose of solid waste located on their property. An empty dumpster remains at the property until the customer notifies Blue Diamond to remove it. Blue Diamond then picks up the dumpster and hauls the waste to a disposal site. The employees of Blue Diamond do not pick up trash from the ground and put it in the dumpster, nor do they clean the property in any other fashion. If the disposal site rejects the contents of the load, Blue Diamond returns the load to the customer.

On February 8, 2002, the Director notified Blue Diamond that the Division would perform an audit of its business. The audit period was July 1, 1998, through March 31, 2002. From the audit, the Division determined that Blue Diamond owed approximately $26,319.70 in unpaid sales taxes, interest and penalties. A notice of assessment was mailed on October 25, 2002, and Blue Diamond timely protested the assessment. After a February 18, 2004, conference with the taxpayer, the Division issued a final determination as follows:

Blue Diamond Disposal[,] Inc[.,] is providing the service of removal, transportation, and disposal of solid waste. Transactions Audit assessed Sales tax on [those services that] were not on a contractual basis for a term of 30 days or more. Taxpayer business constitutes the maintaining[,] servicing or repairing real property under N.J.S.A. 54:32B-3(b)(4) or maintaining[,] servic[ing] or repairing tangible personal property under N.J.S.A. 54:32B-3(b)(2). There is no provision in the Sales Tax Act to allow for a corporation that holds a Solid Waste Transporter License to be exempt from Sales Tax.

The parties before the Tax Court agreed that the issue to be decided was purely a question of law and the matter was decided summarily. The Tax Court judge concluded that the particular dumpster service provided by Blue Diamond was a "trash removal service" as defined in N.J.A.C. 18:24-13.2 and, because the service was for less than a thirty-day term, was subject to the tax on sales under N.J.S.A. 54:32B-3.

On appeal, Blue Diamond contends that it does not maintain, service or repair real property and, thus, is not subject to a sales tax under N.J.S.A. 54:32B-3(b)(4). It also urges that charges for the transportation of a customer's property to a disposal site are exempt from such taxation under the provisions of N.J.S.A. 54:32B-8.11.

Blue Diamond has the burden to prove that its services do not fall within the scope of N.J.S.A. 54:32B-3(b)(4). Newman v. Dir., Div. of Taxation, 14 N.J. Tax 313, 318-19 (Tax 1994), aff'd o.b., 15 N.J. Tax 228 (App. Div. 1995):

The act presumes that the enumerated services are taxable until the party challenging taxability can prove otherwise. Hospital Portrait Svc. [Co.] v. Director, Div. of Taxation, 6 N.J. Tax 305, 314 (Tax 1983), aff'd o.b. per curiam, 7 N.J. Tax 431 (App. Div. 1984), certif. denied, 101 N.J. 235 (1985). Moreover, the Director's assessment is presumptively correct, and plaintiff bears the burden to prove the contrary. Atlantic City Transp. Co. v. Director, Div. of Taxation, 12 N.J. 130, 146 (1953) ("The settled rule is that there is a presumption that an assessment made by the proper authority is correct and the burden of proof is on the taxpayer to show otherwise."). [Id. at 318.]

See also GE Solid State, Inc. v. Dir., Div. of Taxation, 132 N.J. 298, 306 (1993).

"It is settled that '[a]n administrative agency's interpretation of statutes and regulations within its implementing and enforcing responsibility is ordinarily entitled to our deference.'" Wnuck v. N.J. Div. of Motor Vehicles, 337 N.J. Super. 52, 56 (App. Div. 2001) (quoting In re Appeal by Progressive Cas. Ins. Co., 307 N.J. Super. 93, 102 (App. Div. 1997)). "Absent arbitrary, unreasonable or capricious action, the agency's ...

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